If you have ever purchased or sold real estate in the state of Florida then you know there are some very important things that you should understand. Of course you should always have a local REALTOR® representing you in your transaction, but here are some of the most common questions we hear from our clients. Just about every one of these questions deserves its own article, so we’ll point you in the right direction and please call us to discuss any of these questions in more detail.
Q: Should I Homestead my Florida property?
A: Homesteading your property in Florida can be a huge tax advantage, especially if you don’t have a property homesteaded in another state. Florida law provides for a $50,000 homestead exemption and once your property is homesteaded your annual assessment shall not increase more than the lower of 3% or the percentage change in the Consumer Price Index (CPI). Consult with your tax adviser and visit the Broward County Tax Appraiser web site for more information.
Q: What type of insurance do I need on my Florida property?
A: Insurance can be a very complicated issue in Florida, so one of the first things we do with our clients is refer them to several of our trusted local insurance agents. Every property is different, so estimating insurance costs can be extremely difficult until you actually locate a property. Windstorm coverage is typically the most expensive policy and fluctuates greatly depending on the roof structure and the types of windows and/or shutters. A 4-point inspection, wind mitigation inspection and recent elevation certificate should give your insurance agent enough information to provide you with a quote. The wind mitigation inspection determines how “hurricane proof” your property is and the elevation certificate determines your flood zone, and whether your lender will require flood insurance or not. Most policies are only required if your property is financed by a bank, and some owners choose to “self insure”. Of course we don’t recommend that unless you are very risk tolerant and have the resources to cover any losses.
Q: What should I know about buying waterfront property in Florida?
A: This is one of those areas that truly requires a local waterfront expert. There are many types of waterfront property available, from boating property with a dock slip to a high rise condominium on the beach. Each of these properties is unique and understanding how the waterfront affects a property and its value is of utmost importance when buying or selling real estate in South Florida. Do you understand the local setbacks and whether your boat will legally fit at your new dock slip? Is it possible to put in a boat lift? Should you buy behind a fixed bridge? In the case of beach front real estate, how does the CCCL (Coastal Construction Control Line) affect your property? Should you buy a condo on the beach or the Intracoastal? These are all important questions and as local waterfront experts we have most of the answers. For starters, review the Waterfront Property section of our web site and read our buying guides A Boater’s Guide to Buying a Home and Buying a Waterfront Condo.
Q: Are termites really a big problem in Florida?
Termites are technically in every state, and Florida certainly has its share of termites and other wood destroying organisms. Most properties have had them, currently have them or will eventually get them. This shouldn’t be cause for concern, but you should definitely get a WMD (Wood Destroying Organism) inspection on any property you purchase, even condos. Homeowners should consider annual inspections and warranties that most pest control companies offer. Termite mitigation is rarely a huge expense and most properties that have been well maintained shouldn’t have significant issues. However, if your inspection turns up significant previous damage or a live infestation of termites, and if the seller won’t work with you to remedy the situation then consider moving on to a different property.
Q: Should I get a mold inspection when purchasing property?
Getting a “real” mold inspection from a qualified inspector can be quite expensive, so we don’t recommend one on every property. Most general inspectors have an eye for signs of mold and will recommend a mold inspection if they feel it is warranted. Many general inspection companies offer mold inspections also, but if there are signs of mold and you want to be sure about the extent of the problem, we always recommend you hire a separate inspection company that specializes in mold inspections.
Q: How can I find out which school districts are the best?
Whether you have children or not, a good school district is important and can affect the property values for a neighborhood. Of course, this isn’t really a factor for some properties like beachfront condominiums, but for neighborhoods that house more primary residences you should at least be aware of the school district you are investing in. There are several good online resources, but Great Schools is one that we frequently recommend. Consider that school district boundaries can change on an annual basis, so don’t depend on the Internet or MLS listings for school district information. Work with your REALTOR® to review the most recent boundary maps when determining your actual school district.
Q: How do I know what a Florida property is really worth?
A: Florida offers one of the most diverse inventories of real estate in the country. Furthermore, many different property types exist in close proximity to each other, so performing a proximity search for comparable sales or relying on an Automated Valuation Model like Zillow is not recommended. For starters, whether you are buying or selling, make sure you are working with a local real estate professional who understands property values in the area. There are many factors to consider like property type (condos, single family, etc.), waterfront vs. non-waterfront, ocean access, amenities, walk-ability, school district, property condition, etc. For more information read our blog post What Is Your Property Really Worth?
Q: What is FIRPTA and how will it affect my real estate transaction?
FIRPTA stands for Foreign Investment in Real Property Tax Act and because of the popularity of Florida to foreign investors, FIRPTA is something you should discuss with your REALTOR® to make sure you comfortable with how it may affect your real estate transaction. Even if you are a US citizen FIRPTA can affect you if you are purchasing property from a foreign seller. Most transactions involving a foreign seller require that funds be withheld at closing to cover any tax liabilities. Determining the nationality of the seller early in the transaction and applying for a withholding certificate in advance (if necessary) is always recommend. Bottom line, FIRPTA can be very complicated, involving different exemptions, forms and disclosures, so please consult with your REALTOR®, closing agent, attorney and tax adviser. More on FIRPTA withholding from the IRS.
Q: What do I need to know about Condominium Associations?
A: Condos are obviously a very popular type of real estate in Florida, so understanding how condo associations work is very important. This is also a very complicated topic and more deserving of its own blog post. However, there are a couple things that every buyer should know about condos in the state of Florida. First of all, when purchasing a condo you are entitled to receive current copies of the condo declaration, articles of incorporation, bylaws, rules, most recent year-end financials and frequently asked questions for the association. Once you are in receipt of these documents you have 3 days to review them and you may cancel your contract for any reason within this 3 day period. Furthermore, you should never sign a purchase agreement for a condo unless it includes a condo rider or condo addendum that specifically outlines these rights. Bottom line, when purchasing a condo, it is imperative that you work with a local REALTOR® who understands the local associations and always take your time to review all the documents, no matter how labor intensive it may be.
Q: Do I need an attorney to buy or sell real estate in Florida?
A: The simple answer is no, you do not need an attorney, but in specific circumstances your REALTOR® may recommend that you have an attorney review specific documents or consult with you on unusual circumstances. In most cases your transaction will be closed with a closing agent who is also an attorney and most of the time those attorneys will assist you with legal matters as they arise, sometimes for no fee or for a discounted fee depending on the situation. Closing agents make most of their money collecting premiums on title insurance policies, so if you are the one paying the premium don’t be afraid to ask their advice on legal matters. If the closing agent is being paid by the buyer (common in Broward county) then the seller may want to have their own attorney prepare and/or review their closing documents. Of course, we always recommend that both buyers and sellers consult with a dedicated real estate attorney throughout the transaction, but it is not always necessary and certainly not required in the state of Florida.
Again, buying and selling real estate in Florida can be very complicated, so it is imperative that you consult with the proper professionals throughout your transaction including inspectors, insurance agents, mortgage brokers, attorneys and of course your local real estate professional, preferably a local REALTOR® member.