Video Summary

What should a first-time homebuyer know before making an offer on a home?  Well, I don’t know that this is advice for the first-time homebuyers or all homebuyers whenever you are getting ready to purchase a house.  It is called due diligence, and so the first thing you need to do is research the price.  Now how do you go about that?  Well, it takes work and effort, and I suggest that you look at several houses.  The more houses that you look at, whether you like them or not, you then have a sense of the value that you are getting or you are not getting, as far as the price is concerned.  So look at more than one house before you make an offer so you get comfortable with it.

I would also, if you are interested in purchasing a particular house in a particular neighborhood, that you ask the Realtor that’s showing you the property if they wouldn’t do a comparative market analysis so that you know how much the other houses are selling for in the neighborhood or have sold for.  That’s called a CMA, and the Realtor should be able to do that by pulling up comparable sales in the neighborhood.  This is the work you need to do as far as the price is concerned.

You also need to check into whether or not the property is in a flood zone, particularly if you are going to have financing, and that the flood insurance may – well, it is an extra expense.  If you are in an area that does require flood insurance, it’s going to be an extra cost to you on a monthly basis in your mortgage payment.  If you are paying cash, then you do not need flood insurance ever, then you have to get comfortable with that.

You need to have an inspection of the property or have one done to see does the roof leak?  That’s a huge expense, no matter how much the useful life is.  You need to have the air conditioning checked out to see how long is it going to last.  It may be operational, but it may be 15 years old.  It may not be very energy-efficient.  Now all these factors may be factored into the price of the property, but you need to understand whether you are looking at a substantial layout as far as funds are concerned.

One of the bigger concerns, particularly in Pasco, Hernando, Hillsborough, and Pinellas areas, is whether or not the property has ever suffered or suffers from a sinkhole, whether the sinkhole has been repaired or not repaired.  With the Realtor that’s handling the transaction, you will see where they will give you a disclosure, and the disclosure should indicate whether or not there has ever been a sinkhole on the property and whether it’s been repaired.  If there is a notation that there has been a sinkhole, you should ask for the soils report and also the engineer’s certificate to ensure that the property has been repaired pursuant to the engineer’s report.

You also need to just take note to see who you are purchasing the property from.  If you are purchasing it from an LLC or a corporation or even bank-owned property, you are not going to have any assurances that if there was a nondisclosure of an asset, whether knowingly or unknowingly, you are going to have no recourse since it’s usually an entity and your money has been spent.  So I can’t urge you enough to go through and do the due diligence to make sure that you don’t have a soils report.

You also need to ask to get insurance and see if you can get insurance.  You won’t be able to get sinkhole coverage because it’s very expensive, and they do check the property prior to issuing the insurance.

All of this has to do with due diligence, which costs you money and you may not be able to recoup that – but also that your home inspector will also tell you about the appliances.  You also need to check with the building department or have someone check to see if there are any open permits.  Also look to see if any improvements have been done without any building permit being pulled.  A prime example is this, if you are looking at property out on the water and it’s an elevated home, if the downstairs has been completed, that’s probably below where the flood plain, and therefore it’s not insurable and could require you in the future to have that removed.  All these items that you need to work on, whether you’re a first-time homebuyer or just a homebuyer.

Then you may wish to hire an attorney to review your contract to see if you can build in these protections so that when you do the due diligence that you have a right to terminate the contract.  Also write in as far as your financing is concerned, and also check with a lender to find out how much you are going to be able to borrow.  One of the other things you’ll find is that the financing is also going to be controlled by the lender’s appraisal and they are going to base the loan on the bank’s appraisal, not necessarily on the purchase price.

So these are a few of the things that I would suggest any homebuyer, whether it’s first time or not, to look into, and then you may want to hire an attorney to help you, to guide you through this, particularly if you are not in town to be able to do all this due diligence.  So if you need representation or a lawyer to help you, well, give me a call at 727-847-2288.  Thank you.

Video Summary

Should I sign an exclusive buyer representation agreement?

Exclusive buyer representation agreements are usually executed if you have an unusual request as a buyer, certainly in commercial transactions where they have to search to find a particular piece of property.  If you are in need of finding a piece of property which needs to fit your particular needs, I would think that you would want to sign an exclusive buyer arrangement because they will have to do a lot of work to try and locate and find a particular property and they have a certain real estate commission.

If, however, you are simply in the market to buy a home and you are looking at the various listings, I would hesitate to sign an exclusive buyer arrangement, since you can look at any number of properties on your own or if other properties come up from other agents then you are certainly in a position to switch.

The other problem with exclusive buyer representation is if you become disenchanted with your agent, who is your exclusive agent, you have a difficult time in getting rid of them or having to pay them, particularly if there is a particular piece of property.  I would suggest that if you do not have any particular needs or specific type of property that is going to take great deal of research, you may not need to sign a buyer representation agreement.

If you have any questions give me a call at 727-847-2288.

Video Summary

How much money is saved if you pay cash for a closing versus obtaining a mortgage?

If you are a cash buyer your customary closing cost consists of recording the deed, if you wish a survey, the cost of the survey, a home inspection, which I would recommend, but you would pay for the cost of the home inspection and any termite inspections.  Otherwise your only cost that you have would be the cost of recording the deed.

You would need to look at the contract closely to make sure that there’s no closing fee by the title agent when you look at the contract.  If you obtain a mortgage or go get a mortgage from an institutional lender, you are looking at probably spending a couple of thousand dollars with the lender in order to pay their processing fees and their appraisal fees and various costs and charges including the documentary stamps and intangible tax on the mortgage.

It is going to cost you at least a couple of thousand dollars to go through the financial lender.  If you have an owner financing; meaning the seller is financing the property for you, you would still have documentary stamps and intangible tax on the note and mortgage which is $5.50 per $1000 that you would have and some additional recording costs and possibly closing fees and title insurance.

You save a substantial amount of money if you pay cash at closing versus obtaining a mortgage particularly from an institutional lender.

If you have any questions about that give me a call at 727-847-2288.

Video Summary

Can I finance a home for my children?

That has been something that’s been done for many, many years. Parents want to help out their kids and they sometimes take out a mortgage on their house in order to give their kids financing and they secure it with a note and mortgage.  Sometimes they do it so that if the child is married to someone that they are concerned about they will make sure that, if there’s a divorce or anything like that, that they are still protected to get their money back or they can afford to give a gift to the child.  That is something that has been going on for as long as I’ve been practicing law.

However Congress has now passed what is called the Dodd-Frank Act and it is very comprehensive; it is over 1,000 pages of legislation, and it is designed to control financial institutions in consumer financing.  Under this bill, they say that you have to comply with a qualified mortgage, which is a 30 year mortgage and has all sorts of requirements under it and interest rates that you must comply with, if you are going to provide financing to a third party; which would include your children.  This does not make any sense.

This does not apply to sellers who are selling their property and then taking back a note in mortgage; that is called a purchased money mortgage, and sellers can do that once a year.  It also does not comply with if its investment property and not their home.

In answer to your question is if you do do the financing for your children and your mortgage does not comply with Dodd-Frank it is subject to various penalties and I don’t know whether or not they would ever have a defense if they choose to assert it as to the enforceability or the penalties in a foreclosure action if you attempted to foreclose a mortgage that does not comply with Dodd-Frank.

They made it extremely difficult and it does not make any sense whatsoever and would hope that if you are frustrated by this you might want to write to your congressman or senator and suggest that the amendment be made to Dodd-Frank which would allow family members to lend money to other family members and not be subject to the regulation and the law under Dodd-Frank.  That is a very long answer and however it is unfortunate.

If you have any other questions I’ll try and answer them; about Dodd-Frank and owner financing.

My phone number is 727-847-2288.

Video Summary

Who pays for title insurance?  Well, title insurance is issued in conjunction with the sale of real property.  The sale of real property is governed by a contract between the buyer and the seller.  The provisions in the real estate contract indicate who is to pay for the title insurance premium and the closing cost as well as the other closing costs such as the documentary stamps.  It is controlled by contract.

The Pasco County or Tampa Bay Area it is customary for the seller to pay for title insurance.

If it is a cash transaction the only closing costs the buyer would have would be a home inspection, a survey, termite inspection, and the recording of a deed.  That is the custom in this area, although it is controlled by contract and if you are selling your home you can show that the buyer is to pay for the closing costs and pay for the title insurance.

The title insurance cost is usually shifted to the buyer if you are buying a new home from a developer; they usually shift that cost to you, to a buyer.

Hopefully I have answered your questions about who pays for title insurance and if you are selling your home and would like for me to prepare the contract please give me a call at 727-847-2288.