Doing Your Due Diligence?
In Florida, home sellers (and their listing agents) are required to disclose any defects that are not readily observable and materially affect the property value. (Ch. 475.2701, F.S.) With that being said, there may be times when certain defects are unknown to the current homeowner.
The home inspection is a major step in the due diligence process of purchasing real property and serves to protect the buyer from expending money on a property that may be worth less than anticipated if material defects later become known. Moreover, oftentimes the lender will require a home inspection and/or a Wood Destroying Organism (WDO) report prior to approving a loan for closing.
Q: What does a home inspector examine?
A: The home inspector will examine the exterior and interior construction of the property, the mechanical and electrical systems, as well as the plumbing system. Below is a list of the common elements observed during a home inspection.
- Topography and foundation or crawlspace
- Driveway, sidewalk, porch & patio areas
- Walls, siding, trim, windows & doors
- Garage(s) and/or carport(s)
- HVAC and/or wall unit(s)
- Electrical system
- Plumbing, well/septic system
- Energy efficiency
- Radon gas
- Lead-based paint
- Other external concerns
Are home inspectors licensed?
A: In the state of Florida, home inspectors are required to be licensed. Check with your state’s division of licensing or ask your local real estate agent.
- Use a Seller’s Property Disclosure Statement when you are buying/selling a residential property.
- During your walk-through, inquire of any observable defects/recent repairs.
- Contact your local government’s permitting department to inquire of any open/closed permits on the subject property. The most important aspect of this step is to ensure that any work done in the past was permitted, up to code, and that all permits are closed. Finding out there is an open permit prior to closing can cause delays and frustrate the closing process, not to mention the potentially high repair costs that may surface.
In closing, it is highly recommended you hire a licensed, insured, and experienced home inspector, ask the seller for a property disclosure statement, and check the property history with your local permitting department. While these tasks may be a bit tedious, your real estate professional should be there to guide you through the process and ensure that you have a smooth closing!
Okay, so I have been experimenting with Canva and I love the capabilities for digital & print media. So far I have only used the graphics online, but you could easily print the pdf’s for, let’s say, open house brochures. Here’s a sample piece I created to market the neighborhood I live in:
As you can see, I introduce three properties within the Town Center development: Esplanade (Condos), 5 Thousand Town (Luxury Apartments), and The Uptown (also Luxury Apartments). The 4th main image is part of the shopping center.
You may note that I also added two pop-out images of the rooftop fire pit and the pool deck touching the 5 Thousand Town image. These are especially useful for highlighting some of your listing’s “special” features that draw in your prospect’s attention.
Well friends, that’s it for today’s lesson. I hope you enjoyed this post and I look forward to seeing you again inside the blog.
Posted in Real Estate Sales Tips, Uncategorized
Tagged billards, digital media, dining, firepit, fitness center, Florida, gym, Jacksonville, luxury, massage, pool, property, real estate, restaurants, sales, shopping center, spa, wellness
Step One: Negotiation
This is where offer and acceptance of a purchase price are negotiated between a buyer and a seller, the purchase contract is then signed, and the escrow period begins.
Step Two: Due Diligence
Here, an escrow account is opened to hold the good faith deposit until closing. The due diligence period is a timeframe allowed for the buyer (and the lender) to conduct a reasonable inspection of the subject property to ensure that it is in marketable condition. This is done by ordering a home inspection, a property appraisal, title search, and a land survey. If financing is involved in the purchase transaction, the lender will begin the loan qualification process concurrently during this period and will issue a “clear to close” when all of the supporting materials for the buyer’s (mortgagor) loan file have been collected and verified. Meanwhile, the title company will work with the lender to prepare all of the necessary transfer docs: warranty deed, mortgage, promissory note, and escrow instructions (payoff instructions for the seller’s existing mortgage, if applicable) and other closing costs.
Step Three: The Closing
Making it to the closing table is an exciting time for most home buyers. The contract is fully executed, loan funds are disbursed (usually by wire transfer from the lender), the buyer pays the remainder of the purchase price and other closing costs as necessary, illustrated on the Hud-1 settlement statement, and the seller tenders clean title (and the keys) to the new homeowner. Congratulations!
4 Common Legal Problems That May Arise Prior to Closing
Statute of Frauds
- The SOF traces back to the original English Statute of Frauds of 1677. It requires certain types of contracts, such as contracts for the sale of land, to meet 3 requirements:
- Terms of the Contract (Parties, Price, and Property Description).
- The Contract Must be In Writing (whether it be a formal contract or an informal note handwritten on a napkin).
- Signature (the contract must be signed by the party accepting the offer – the “offeree”).
- Almost every contract for the sale of real property, unless the contract specifically expresses otherwise, includes either an express or implied promise that the seller will deliver a merchantable (marketable) title. That is to say that the title will be valid and free of any clouds (encumbrances).
- Two Types of Unmarketable Title:
- (a) Less than Fee Simple Ownership (ex: seller has a life estate);
- (b) Encumbrances on the Title (ex: lot is subject to a “right of way” easement).
- During the executory period (the time between the contract signing and the closing) the buyer is seen as the equitable owner of the property once the contract is signed. As such, the buyer bears the risk of loss should the property be damaged or destroyed.
- In order to minimize such risk, the buyer may request a provision in the contract that specified the owner bears the risk of loss should the property be damaged or destroyed prior to closing. (This makes the most sense as the seller typically has property insurance coverage already in place.
- Another alternative is for the buyer to purchase an insurance policy on the subject property during the executory/escrow period. Generally speaking, the liability runs with the land. In other words, whomever is living in the home usually takes liability of loss or damage.
Seller’s Duty to Disclose
- Most jurisdictions require the seller of residential real estate to disclose all known defects that:
- (a) materially affect the property value; and/or
- (b) are unknown to the buyer and are NOT readily observable by a reasonable buyer.
Describing Real Property
There are 3 Principal Types of Property Descriptions Used in the Continental United States.
- Subdivision Map: Lot & Block Parcel #’s are recorded in public records.
- Metes & Bounds: Descriptions are based on topographic features.
- Government Survey: Public Land Survey System or PLSS (Section, Township, and Range)
I created this digital video commercial for my side business, IREM Agency. What do you think about it?
Are You Considering Relocation & Retirement in Florida, But Not Sure Where to Start?
These 5 Buyer Action Steps can Help Guide You Through the New Construction Home Buying Process.
- Get Your Lender Pre-Qualification Letter First. Before you start looking for a home, you should know exactly what your buying power is and know what you’re ideal monthly payment is (and how far you’re willing to stretch yourself without breaking your bank).
- Decide on Your Ideal Community. In real estate, the three most important words are: location, location, location. But choosing the state, city, and neighborhood aren’t the only things to look for. Most buyers are looking for a specific lifestyle that accompanies their new home. What type of amenities are you looking for? What are your favorite recreational activities? How far is the community from those places of interest?
- Home Site Selection. Picking the perfect plot can be a pesky proposition! Alliteration intended 😉 While the floor plan you choose will likely have a lot to do with the site options available, you may still want to consider the advantages of a corner lot (typically lots of back yard space, great for families with small children) vs. the benefits of an interior lot (less mowing area). Other considerations include choosing a water or golf view (more expensive) over a view of your future neighbor’s back yard.
- The Floor Plan. This is one of my favorite selections. With many home models, elevations, and structural design options, you’ll probably be stuck trying to decide which style you like more than the others. If you are planning to stay in the home for the long road, you’ll probably want to consider how the home plan will benefit you today, but also how it can accommodate you in 5 to 10 years from now also.
- Customizing the Construction. New Home Builders generally have design centers where you can select the final touches for your new home plans, from color options to interior finishes. The task can be daunting, but it’s also very exciting too! My advise is relax, take your time, and enjoy the process. This is your opportunity to vision cast your “ideal” environment.
Finding the right city & community can be a challenge, especially when you are relocating from a different region, state, or even a foreign country.
In closing, having a fully-executed action plan will help alleviate stress and enable you to have fun in the home shopping process. Still, with all of the elements to consider, it may be more beneficial for you to have an expert in real estate to guide you through each step of the process.
As a relocation specialist with Better Homes and Gardens Real Estate Lifestyles Realty, in Jacksonville, Florida, it would be my privilege to assist you in finding your ideal Florida dream home. Call or text me, cell: (786) 327-6326, for more information about how I may be of service to you.
If you’re considering the purchase of a hotel investment, these 5 cities show positive trends in retail growth, which indicates more discretionary income, and are among the top 15 markets for higher occupancy rates YTD.
1. Los Angeles
3. New York
While Millennials are showing traction towards indie hotels (for a unique experience) the demand is higher for branded hotels. Demand is above supply with the highest growth shown in the upper upscale segment:
Upper Midscale: 43%
Upper Upscale: 51%
The long view: hotels have shown 10+ percent NOI growth for the past 5 years in a row and an average 20% ADR growth since 2010. The arbitrage between Cap rates & the 10-Year Treasury is about 500 bps, and is expected to continue into mid-2018, making hotels an attractive investment!
If you are interested in a feasibility study of a specific market segment, please contact me for a proposal.
Sources: Marcus & Millichap Research Services, Smith Travel Research, LVCVA
Image Source: Freeimages.com
Whatever impresses clients today will be considered boring tomorrow. Take an old “Art Deco” hotel and modernize the interior, like this lobby at The Essex House in South Beach, and you will have reinvented yourself for the present time.
By scanning the remote environment for emerging trends, you can pinpoint what customers want and reinvent yourself time & time again. Because the only way to thrive in an overly-saturated hospitality market, like South Beach, is to evolve. The only thing you can always expect to be constant in life – is change.
A hilarious grammar lesson from puppets.
I’m sharing this because I see these errors all the time! Too funny.