Slide 1

Serving South Florida

Slide 2
For over 30 years

20 Blogs

COVID-19 South Florida Resources

Quick Facts

If you live in Broward County, you can call this hotline to have your questions answered: 954-357-9500.

If you live in Palm Beach County, you can call this information line with your questions: 561-712-6400.

The Sun Sentinel posted drive-through testing sites in South Florida here.

Please be aware of financial scams. You can learn more and report them here.

Tele-Health

Medicare: Medicare has temporarily expanded its coverage of telehealth services to respond to the current Public Health Emergency. Learn more here.

Florida Blue: Florida Blue’s network of primary care doctors and specialists will be able to treat patients virtually at their normal office visit rates. Visit the Florida Blue website, the Florida Blue app, the Teladoc app, or by calling Teladoc directly at 800-835-2362.

Baptist Health: Baptist Health is offering telehealth services through its Care on Demand platform. If you or someone you know has cold or flu-like symptoms, visit here using code CARE19.

Cleveland Clinic: Cleveland Clinic Florida is encouraging the use of its Express Care Online Virtual Care services as much as possible during the outbreak. Click here for more information.

Cigna: Cigna is offering COVID-19 specific resources for enrollees. Click here for more.

Humana: Humana has agreed to waive telemedicine costs for all urgent care needs for the next 90 days. This will apply to Humana’s Medicare Advantage, Medicaid, and commercial employer-sponsored plans and is limited to in-network providers delivering synchronous virtual care. More information here.

COVID-19 Public Website and Call Center

Please visit the Florida Department of Health’s dedicated COVID-19 webpage for information and guidance regarding COVID-19 in Florida.

For any other questions related to COVID-19 in Florida, please contact the DOH’s dedicated COVID-19 Call Center by calling 1-(866) 779-6121. The Call Center is available 24 hours a day. Inquiries may also be emailed to COVID-19@flhealth.gov.

County Health Departments

If you’re concerned that you may have contracted the coronavirus, please contact your healthcare professional or county health department:

Broward County: 954-467-4700
Palm Beach County: 561-840-4500 
Miami-Dade County
: 305-324-2400

Additional Resources 

Bank Regulators have also instructed banks and servicers to be proactive in extending help to homeowners:

Banks have posted their own policies and ways for consumers to contact them for assistance:

Consumer Financial Protection Bureau (CFPB)

Protect Your Credit: The CFPB is urging consumers to protect their credit(link is external) during this pandemic.
Protect Yourself Financially: The CFPB has a number of resources(link is external) focused on financial protection, both short and long term, such as paying bills, income loss, and scam targeting.  Resources include contacts for housing and credit counselors, debt collectors, and state unemployment services.

Department of Labor (DOL)

DOL has provided resources for employers and workers(link is external) in responding to COVID-19 and including the impact on wages and hours worked and protected leave (these resources are primarily for businesses and employers).

Environmental Protection Agency (EPA)

Americans can continue to use and drink water from their tap as usual. EPA has provided important information about COVID-19(link is external) as it relates to drinking water and wastewater to provide clarity to the public. The COVID-19 virus has not been detected in drinking-water supplies. Based on current evidence, the risk to water supplies is low.

Federal Housing Administration (FHA)

Immediate Foreclosure and Evictions Relief for Homeowners for the Next 60 Days

The U.S. Department of Housing and Urban Development (HUD) has authorized the FHA to implement an immediate foreclosure and eviction moratorium(link is external) for single family homeowners with FHA-insured mortgages for the next 60 days. Read the full press release(link is external).

FHA Q&A Form

FHA continues to run single family business operations. FHA has created a Q&A form available on their website to keep interested parties updated on their procedures during the COVID-19 crisis. Please refer to https://www.hud.gov/program_offices/housing/sfh(link is external)  for the most current information.

Federal Housing Finance Agency (FHFA)

FHFA has instructed Fannie Mae, Freddie Mac and their servicers to be proactive in providing assistance to homeowners including forbearance. In addition, FHFA imposed a moratorium on eviction and foreclosures on mortgages backed by the GSEs:

Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac have issued similar guidance:

  • Homeowners who are adversely impacted by this national emergency may request mortgage assistance by contacting their mortgage servicer
  • Foreclosure sales and evictions of borrowers are suspended for 60 days
  • Homeowners impacted by this national emergency are eligible for a forbearance plan to reduce or suspend their mortgage payments for up to 12 months
  • Credit bureau reporting of past due payments of borrowers in a forbearance plan as a result of hardships attributable to this national emergency is suspended
  • Homeowners in a forbearance plan will not incur late fees
  • After forbearance, a servicer must work with the borrower on a permanent plan to help maintain or reduce monthly payment amounts as necessary, including a loan modification

Fannie and Freddie have also created pages with additional information:

Internal Revenue Service (IRS)

The IRS has also created a Coronavirus Tax Relief section(link is external) on their website with updated information for taxpayers and businesses (these resources are for businesses and not specifically for consumers).

FIRPTA Withholding – Foreign Investment in Real Property Tax Act

Foreign Investment in Real Property Tax Act

FIRPTA (Foreign Investment in Real Property Tax Act) Withholding is the Withholding of Tax on Dispositions of United States Real Property Interests

The disposition of a U.S. real property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding.

FIRPTA authorized the United States to tax foreign persons on dispositions of U.S. real property interests.

Persons purchasing U.S. real property interests (“transferee”) from foreign persons, certain purchasers’ agents, and settlement officers are required to withhold 15% of the amount realized.

Withholding is intended to ensure U.S. taxation of gains realized on disposition of such interests. The transferee/buyer is the withholding agent. If you are the transferee/buyer you must find out if the transferor is a foreign person. If the transferor is a foreign person and you fail to withhold, you may be held liable for the tax.

One of the most common exceptions to FIRPTA withholding is that the transferee (purchaser/buyer) is not required to withhold tax in a situation in which the purchaser/buyer purchases real estate for use as his home and the purchase price is not more than $300,000.  However, buyers should be aware that while they may meet the withholding exemption they are still responsible for the seller’s tax liability, interest and penalties should the seller not file a US income tax return to report the sale and pay any relevant taxes.

Note to Non-Resident Buyers – If you purchase property from a non-resident seller and an exception to FIRPTA withholding does not apply then you must ensure that FIRPTA is satisfied as part of the closing.  Check your settlement statement prior to closing where you should see 15% of the sales price withheld on the seller’s side of the settlement statement.  Request a copy of the withholding certificate from the closing agent and, if withholding was calculated, request a copy of forms 8288, 8288-A and front and back of cancelled check.  Retain these documents in a safe place along with your settlement statement and other closing documents.

Foreign Investment in Real Property Tax Act (FIRPTA) Withholding

U.S. Tax law requires that a non-resident alien who sells an interest in U.S. real property is subject to withholding, for tax purposes, of 15% of the gross sales price (i.e. $45,000 on a property with a sales price of $300,000). The withheld amount is required to be forwarded to the IRS, by the Closing Agent, within 20 days of the date of closing. These funds are held until the IRS is satisfied that all taxes due by the non-resident are paid. In order to apply for a refund you can either:-

File U.S. tax returns for each year that rental income was received, reporting all income and expenses; file a final U.S. tax return in the year following the year of sale, to report the sale and recover the balance of cleared funds. This process can take up to eighteen months depending on when, during the tax year, the property is sold.

File prior year tax returns (where required) plus an application for early release of cleared withholding on or before the date of closing. By making this submission, the 10% withholding remains with the Closing Agent whilst the IRS processes the Withholding Application and issues a Withholding Certificate for the cleared funds – usually around 90 days.

Please note that applying for and receiving a Withholding Certificate does not eliminate your requirement to file a final U.S. income tax return to report the sale transaction. In fact, when your final tax return is filed you may receive a further tax refund depending on the number of owners and length of time that the property was held.

In order to ensure a timely release of your funds it is extremely important that the following is obtained PRIOR to closing:-

Buyer’s names, address and SSNs – if U.S. Citizens

Buyer’s names, address and ITINs – if non residents

Or, if the buyers are non residents and do not have ITINs, the buyer’s completed Form W-7 (one per buyer) and authenticated copy of the picture page of their passport(s)

Without this information the Application for a Withholding Certificate and early refund will be rejected. We suggest that you request your Realtor prepare your sales contract contingent upon the buyers providing the above information.

Who’s responsible for FIRPTA withholding on the sale of U.S. property?

Foreign Investment in Real Property Tax Act (FIRPTA) was established in 1980 to ensure the withholding of estimated amount of taxes which may be due on the gain from the disposition or transfer of a U.S. real property interest from a foreign person.

If you purchase U.S. real property from a foreign individual or corporation then you are required to make sure that the seller pays any taxes due on the property.  The buyer must execute or have executed the correct forms including the sellers name, address and social security number or individual taxpayer identification number.  15% of the gross sales price must be withheld and submitted to IRS or held in escrow whilst an application for reduced FIRPTA withholding is timely filed and processed.

If the buyer does not take care of the withholding and the seller is a foreign entity who leaves without paying their tax then 15% will be taken from the buyer.

Most buyers are unaware that it is their responsibility to determine if the transferor/seller is a foreign person and subject to FIRPTA withholding.  In reality, the settlement agent (Title Company or Attorney) may be instructed to deduct the 15% and submit to IRS or hold in escrow whilst an application for reduced FIRPTA withholding is submitted to IRS for processing.

Why Fla. is the Best State for Retirement

Sunshine, beaches and a laid-back lifestyle have made Florida one of the top destinations for retirees looking to live out their golden years in peace and comfort.

Now a new study from WalletHub.com has named the Sunshine State the best place in the U.S. to retire based on its affordability, quality of life and healthcare. The website pointed out that nearly a third of non-retirees have no retirement savings or pension and said it made its choices to help retirees find the states that offered the most bang for their buck.

Rounding out the top five for 2016 after Florida were Wyoming, South Dakota, South Carolina and Colorado.

At the bottom? Vermont, Connecticut, Hawaii, Washington D.C. and Rhode Island.

Here are the top six reasons why Florida is the best place to retire, according to WalletHub.

Hole in one!
From Seminole Golf Course in Juno Beach (the state’s top ranked links, according to GolfDigest) to Trump National Doral, Florida has the most golf courses per capita in the nation.

Company
Looking for new friends? You won’t be lonely in the Sunshine State, which has the highest percentage of people aged 65 or over of any state.

Out on the town
It’s not Broadway, but theatergoers in Florida have more and better options than ever before. The state has the sixth-most theaters per capita in the U.S.

Help at home
The cost of hiring a nurse and other in-home help can break the bank for many seniors. But Florida has the eighth-lowest cost of in-home services of any state.

Low taxes
Many retirees don’t realize they may need to pay federal and state taxes on Social Security income and withdrawals from IRA and 401(k) funds. Florida’s low taxes make it the 10th-best state for retirees come tax season, according to WalletHub.

A night at the museum
Miami’s burgeoning cultural scene means locals don’t have to travel to New York for their museum fix. From the Pérez Art Museum Miami to the under-construction Patricia and Phillip Frost Museum of Science to HistoryMiami, South Florida museums are on the upswing. Nationwide, Florida has the 15th-most museums per capita.

So what are you waiting for? Florida is calling.

 

Miami Herald, Written by Nicholas Nehamas

Home Buying Tax Deductions

One of the major differences between owning a home and renting one is the allowable home buying tax deductions.

The tax deductions can have a serious impact on the overall cost of comparing renting vs. buying. One of the advantages of owning a home is the tax savings benefit. If you have purchased a home in the last year you are going to want to make sure that you have

The list below summarizes the deductions that many people forget about when buying Real Estate. While those that have owned a home before may be familiar with some of these tax deductions many first time homebuyers are not.

This is just a guideline for you to have a more detailed conversation with your tax professional. Tax laws change each year and those who pay state income taxes may have other deductions available to them as well.

Mortgage Points:

Points paid when taking out a mortgage are tax deductible if they are used to reduce the mortgage interest rate. Points or origination fees paid when you buy a home or other Real Estate are generally valid home buying tax deductions in full for the year that you pay them. It should be made clear that origination charges from the lender that constitute a “service fee” are not tax deductible.

Another method you could make is to amortize the points over the term of the mortgage. This choice is usually made only when your itemized deductions are less than the standard deduction for the year you purchased the home.

Additionally when you refinance a mortgage the points must be deducted over the term of the loan. If you deduct points over the term of the loan and sell the home or refinance it again before the loan expires, you can deduct in the year of the sale or refinancing any points that you didn’t previously deduct.

Prorated Mortgage Interest

When you are buying a home, depending on when in the month the home is closed, the buyer pays either a small or large amount of pro-rated mortgage interest for that month they close. This amount of prorated mortgage interest can be written off. Refer to your final HUD settlement statement for the exact figure.

Prorated Real Estate Taxes

Sometimes a seller will pay the local tax collector’s office for Real Estate taxes prior to the closing. In some circumstances, however, the buyer will pay a pro-rated portion of the taxes for the year at closing.

Construction Loan Interest For New Homes

As long as the construction period doesn’t last more than two years before you make the new home your “principal residence,” you can write off the interest for that new construction loan.

Mortgage Prepayment Penalties

It is not all that common today to find mortgages with prepayment penalties, however it is certainly not impossible to have one. If your mortgage does include a prepayment penalty and you finish all the loan payments early, the penalties will be tax deductible. While not all that common it is still a tax break worth checking into.

Mortgage Interest Tax Deduction

From a tax perspective one of the best features of owning a home or other real estate is the ability to claim a mortgage interest tax deduction on your tax return. Mortgage interest is tax deductible on mortgages of up to 1 million dollars ($500,000 if married and you are filing separately) as long as you use the money to buy, improve, or build an addition on your home and the mortgage is secured by the property.

Additionally, the interest you pay on loans secured by your home and used for a purpose other than to buy, build or improve your home is tax deductible for loans up to $100,000 ($50,000 Married Filing Separately). In other words if you used a home equity line of credit to purchase a car the interest on this 2nd mortgage would be tax deductible as well. This is a home buying tax deduction you absolutely do not want to miss!

Real Estate Investment Glossary of Terms

Chances are, when you think about investing in real estate the first thing that comes to mind is your home. For many people, their home is the single largest investment they will ever make. But have you ever stopped to consider that once you purchase a home it becomes part of your overall portfolio of investments? In fact, it’s one of the most important parts of your portfolio because it serves a dual role as not only an investment but also a centerpiece to your daily life.

Though a home is one of the largest investments the average investor will purchase, there are other types of real estate investments worth investing in. The most common type is income-producing real estate.

In the context of portfolio investing, real estate is traditionally considered an “alternative” investment class. That means it is a supplementary investment used to build on a primary portfolio of stocks, bonds and other securities.

One of the main differences between investing in a piece of real estate as compared to stocks or bonds is that real estate is an investment in the “bricks and mortar” of a building and the land it is built upon. This makes real estate highly tangible, because unlike most stocks you can see and touch your property. This often creates substantial pride of ownership, but tangibility also has its downside because real estate requires hands-on management. You don’t need to mow the lawn of a bond or unplug the toilet of a stock.

Here are eight real estate investing numbers you need to know.

1. Your Mortgage Payment:

For a standard owner-occupied home, lenders typically prefer a total debt-to-income ratio of 36%, but some will go up to 45% depending on other qualifying factors such as your credit score and cash reserves. This ratio compares your total gross monthly income with your monthly debt payment obligations. For the housing payment, lenders prefer a gross income-to-total housing payment of 28 to 33%, depending on other factors. For an investment property, Freddie Mac guidelines say that the maximum debt-to-income ratio is 45%.

2. Down Payment Requirements:

While owner-occupied properties can be financed with a mortgage and as little as 3.5% down for an FHA loan, investor mortgages typically require a down payment of 20 to 25% or sometimes as much as 40%. None of the down payment or closing costs for an investment property may be from gift funds. Individual lenders will determine how much you need to put down to qualify for a loan depending on your debt-to-income ratios, credit score, the property price and likely rent.

3. Rental Income to Qualify:

While you may assume that, since your tenant’s rent payments will (hopefully) cover your mortgage, you should not need extra income to qualify for the home loan. However, in order for the rent to be considered income, you must have a two-year history of managing investment properties, purchase rent loss insurance coverage for at least six months of gross monthly rent and any negative rental income from any rental properties must be considered as debt in the debt-to-income ratio. (Besides creating ongoing income and capital appreciation, real estate provides deductions that can reduce the income tax on your profits.

4. Price to Income Ratio:

This ratio compared the median household price in an area to the median household income. Before the housing bubble burst, the price-to-income ratio in the U.S. was 2.75, while at the end of 2010 the ratio was 1.71. The average between 1989-2003 is 1.92 according to Fiserv, Inc., Federal Housing Finance Agency, Moody’s Analytics.

5. Price to Rent Ratio:

The price-to-rent ratio is a calculation that compares median home prices and median rents in a particular market. Simply divide the median house price by the median annual rent to generate a ratio. At the peak of the U.S. market in 2006, the ratio for the U.S. was 18.46. The ratio dropped to 11.34 by the end of 2010. The long-term average (from 1989 to 2003) was 9.56. As a general rule of thumb, consumers should consider buying when the ratio is under 15 and rent when it is above 20. Markets with a high price/rent ratio usually do not offer as good an investment opportunity.

6. Gross Rental Yield:

The gross rental yield for an individual property can be found by dividing the annual rent collected by the total property cost, then multiplying that number by 100 to get the percentage. The total property cost includes the purchase price, all closing costs and renovation costs.

7. Capitalization Rate:

A more valuable number than the gross rental yield is thecapitalization rate, also known as the cap rate or net rental yield, because this figure includes operating expenses for the property. This can be calculated by starting with the annual rent and subtracting annual expenses, then dividing that number by the total property cost and multiplying the resulting number by 100 for the percentage. Total rental property expenses include repair costs, taxes, landlord insurance, vacancy costs and agent fees.

8. Cash Flow:

If you can cover the mortgage principal, interest, taxes and insurance with the monthly rent, you are in good shape as a landlord. Just make sure you have cash reserves in hand to cover that payment in case you have a vacancy or need to cover unexpected maintenance costs. Negative cash flow, which occurs most often when an investor has borrowed too much to buy the property, can result in a default on the loan unless you are able to sell the property for a profit.

Terms To Know When Buying A Home

If you’re a first-time homebuyer, you may feel overwhelmed by all the terminology you hear during the process. Here are some of the terms you are likely to hear.

Listings: Real estate agents frequently refer to homes for sale as “listings.” A “listing” on a website shows information about the home, like the price and number of bedrooms.

Comparative Market Analysis (CMA): This is an evaluation of comparable recently sold homes in a neighborhood (known as “comps”) to determine a fair price range for a certain home on the market.

Dual agency: Dual agency occurs when the listing agent selling a home also serves as the buyer’s agent. In most cases, it’s not a good idea for one agent to represent both parties in a real estate transaction. The listing agent’s job is to sell a home at the highest price; the buyer’s agent aims to negotiate the lowest price for his buyers. In this case, the agent and his client’s interests aren’t aligned. Some buyers feel that a dual agent will be more motivated to write an offer on his own listing since he’ll get double the commission from both sides of the deal. This could be a possibility, but chances are the buyers won’t get the home for the best price when working with the listing agent.

Appraisal: When you apply for a mortgage, your lender will require an appraisal of the home you want to buy. A licensed appraiser will estimate the home’s value based on comparable homes that have sold in the area and an investigation of the property.

Contingencies: When you put in an offer on a home, you can specify certain conditions that must be met before the deal will go through – these are called contingencies. You have to make sure you can actually get the loan (a financing contingency), that the inspection doesn’t show anything too crazy (inspection contingency), and that the appraised value is close to what you’re offering to pay (appraisal contingency). Those are just a few common examples; there are several other types of contingencies, which you should discuss with your agent.

Good Faith Estimate (GFE): An estimate of a loan’s total costs that lenders are required to provide to borrowers within three business days of the borrower submitting a loan application. The estimate includes the interest rate, principal, mortgage insurance and mortgage fees for the loan. Remember, this is just an ESTIMATE. The HUD-1 Settlement Form (see below) will detail the actual costs.

Mortgage insurance: This insurance protects the mortgage lender against loss if a borrower defaults on his loan. There is both private and public mortgage insurance. Private mortgage insurance (PMI) is required for borrowers of conventional loans with a down payment of less than 20 percent. Alternatively, many homebuyers will opt for a Federal Housing Administration (FHA) loan, which is insured by the federal government and backed with taxpayer dollars.

Earnest money: The money buyers pay within one to three business days after agreeing with the seller on a price for the home to show that they’re serious about the offer. The money is usually 1 – 3% of the purchase price (though sometimes it’s a fixed amount) and is deposited into an escrow account via a cashier’s check or money order.

Escrow: A neutral third party or attorney that handles the exchange of money and documents once mutual acceptance is reached on an offer. Escrow handles the transfer of the buyer’s loan documents and property taxes and works with a buyer’s lender and real estate agent to make sure that the title of the home is clear of liens before the transfer of ownership. In addition, escrow agents prepare the HUD-1 settlement form that lists the costs of the transactions that both the buyer and sellers must pay at closing.

HUD-1 settlement form: The official settlement document for the purchase and sale of real estate from the Department of Housing and Urban Development (HUD). The form is completed by the escrow agent or attorney handling closing and lists all costs of the transaction for both the buyer and the seller, including the cost of the property, the real estate agents’ fees, the lenders’ fees, the cost of title insurance and the escrow agent or attorney fees. To avoid surprises, agents will provide both buyers and sellers with a preliminary version of the HUD-1 one day in advance of the closing.

Closing costs: Be prepared to pay a lot of fees when you purchase a home. Typically, closing costs will amount to 2-5% of the purchase price of the home, and that doesn’t include the down payment. Common fees include excise tax, loan-processing costs and title insurance. For a more exact list of what you’ll be charged, ask for a “Good Faith Estimate” from your lender.

Title insurance: After all the negotiations are done and the seller has accepted your offer, you should receive a home title report within a week. Most mortgage lenders require you to pay title insurance as part of the closing costs; title insurers search the public records to make sure the home seller actually had rights to the title and that there are no liens on the home (like an unpaid contractor or unpaid taxes).

Deed: A legal document filed with the county that documents the transfer of home ownership. This is a document the buyer signs when her deal closes and she’ll receive a copy once the original is recorded by the county.

Exclusive Buyer Agency Duties

Exclusive Buyer’s Agents give buyers their undivided loyalty. Most real estate agents and buyer’s agents work in traditional brokerages that take listings. Because of that, they have an inventory that they must sell. In addition, if that brokerage brings both the buyer and the seller into the transaction, they get to keep the entire commission, making the transaction more profitable. These can be strong incentives to steer a buyer to one of their own listings. It also means that their buyer loses many of the benefits of hiring a real estate agent including negotiating on his behalf as well as the agent’s ability to point out reasons why the buyer might not want to purchase that particular property. Since Exclusive Buyer’s Agents must work in a brokerage that only works with buyers and never takes listings, a buyer can rest assured that the EBA will remain on their side throughout the entire transaction, getting the buyer the lowest price and the best terms possible.

Principles That Buyers Can Count On

The National Association of Exclusive Buyer Agents is an independent alliance of real estate professionals who provide client-level services and whose real estate companies do not accept seller-property listings. We, the members of this Association, set forth the following principles as the minimum professional standards, which will guide us in serving our Buyer-Clients. An Exclusive Buyer Agency relationship requires that we operate according to these fundamental commitments. The essence of Exclusive Buyer Agency practice is undivided loyalty to our Buyer-Clients. We recognize that it is our duty as real estate professionals to serve our clients with fidelity to these Standards of Practice. We also pledge to adhere to the Code of Ethics established by this Association.

1. A Buyer Agent will disclose that he/she is a Buyer Agent and define his/her agency relationship to a prospective Buyer-Client. A Buyer Agent will explain how different agency relationships may affect the level and type of service a

Buyer-Client may receive from a real estate agent.

2. Before entering into an agreement with a Buyer-Client, a Buyer Agent will determine if any conflict of interest may exist on his/her own part or that of a Buyer-Client. If a conflict should occur, a Buyer Agent should be precluded from representing a Buyer-Client, who should have the option of seeking representation elsewhere.

3. A Buyer Agent will provide a copy of these professional Standards and answer any questions a Buyer-Client may have about them.

4. A Buyer Agent will make him/herself available to his/her Buyer-Client in a timely manner.

5. A Buyer Agent will pledge absolute confidentiality to a Buyer-Client when representing him/her, thereby protecting that Buyer-Client’s ability to negotiate all aspects of the transaction.

6. A Buyer Agent will counsel a Buyer-Client regarding his/her financial qualifications and will assist that Buyer-Client in seeking and working with mortgage lenders. A Buyer Agent will not steer his/her Buyer-Client to any one lender but instead will assist him/her in evaluating interest rates and closing costs.

7. A Buyer Agent will discuss objectives and preferences in property styles, age, floor plans, and so forth with a Buyer-Client, then develop from this information a target property profile for him/her.

8. Based upon the target property profile, a Buyer Agent and his/her Buyer-Client will determine the appropriate level of property preview services to be provided.

9. With a Buyer-Client’s target property profile in mind, a Buyer Agent will search the real estate market, including properties for sale by owners and builders, to locate properties to show that Buyer-Client.

10. A Buyer Agent will discuss and evaluate the properties viewed with his/her Buyer-Client, comparing each property shown with the target property profile.

11. Before preparing an offer to purchase, a Buyer Agent will inform a Buyer-Client about any defects or problems he/she has observed or in any way discovered regarding the target property.

12. Before preparing a contract offer on behalf of his/her Buyer-Client, a Buyer Agent will prepare a comparative market analysis, including explanations and documentation, to determine the target property’s market value. A Buyer

Agent will not prepare an offer to purchase a property he/she has not seen.

13. Before a Buyer-Client signs an offer to purchase, a Buyer Agent will provide that Buyer-Client with an estimate of closing costs and, whenever possible, with the truth-in-lending estimate provided by the mortgage company.

14. A Buyer Agent will counsel his/her Buyer-Client and explain the choices available in completing a real estate contract. This real estate counseling is based upon a Buyer Agent’s experience in negotiation and real estate business decisions and is not legal advice. Legal matters should be identified and a Buyer-Client advised to seek legal counsel where appropriate.

15. Whenever possible, a Buyer Agent will prepare the contract offer on a form which has been designed to protect a Buyer-Client’s interest. A Buyer Agent will provide proper disclosures regarding agency representation and other matters as required by law.

16. A Buyer Agent will develop contract negotiation strategies with his/her Buyer-Client, establishing pre-set limits on key points of negotiation when that Buyer-Client wishes to do so. A Buyer Agent will actively negotiate only on behalf of his/her Buyer-Client.

17. Before submitting a contract offer to a Seller, a Buyer Agent will counsel his/her Buyer-Client regarding the time requirements specified in the contract and will encourage that Buyer-Client to have professional inspectors inspect the property if the contract is accepted.

18. A Buyer Agent will counsel a Buyer-Client regarding the types of home inspectors, the suggested criteria for selecting home inspectors, and the comparative costs of inspection services. A Buyer-Client will select real estate inspectors. A Buyer Agent will encourage his/her Buyer-Client to be present during inspections.

19. A Buyer Agent will notify a Seller or a Seller’s Agent in writing of inspectors’ findings and of corrections/repairs mandated by a Buyer-Client. A Buyer Agent will specify a Buyer-Client’s desire to proceed or cancel the purchase contract whenever such notification is required.

20. A Buyer Agent will maintain contact with a Buyer-Client’s title company and mortgage company to make sure that his/her Buyer-Client’s interests are being protected.

21. A Buyer Agent will review a settlement statement with his/her Buyer-Client at or before closing, if possible.

22. A Buyer Agent will accompany a Buyer-Client on a property walk-through before closing.

23. A Buyer Agent will attend a closing with a Buyer-Client. A Buyer Agent should be prepared to support his/her Buyer-Client’s position at closing.

24. A Buyer Agent will keep records of transactions for a reasonable period of time and will provide this information to a Buyer-Client on request.

These Standards of Practice establish obligations that include all those consistent with the “Common Law of Agency” and are considered to be client-level, not customer-level, services. These obligations are, in many instances, higher than those mandated by law. If there is any case where the law requires a greater obligation than these Standards of Practice, then the requirements of the law must be followed. It is the duty of each individual Exclusive Buyer Agent to make himself or herself aware of the laws which may affect him or her.

The Foreign Buyers Guide – What you need to know about buying real estate in the United States

For many a foreign national, the United States has always been a great place to invest in.

Buying Real Estate in the United States does not give foreign owners any rights or privileges regarding legal stay or status. If you’re interested in staying in the states longer than allowed by a standard visa, contact an immigration lawyer.

By determining the primary use for your property and how long you plan to own it, you’ll be able to provide information to your real estate agent that will help guide the search and sale.

How will you use the Property?

Before you start your property search, it’s important to think ahead to how you’ll use the home once the deal is done.

  • Will this be a vacation home?
  • A home to stay in while doing business in the United States?
  • A home for your children while they attend college in the States?
  • An investment?
  • An eventual long-term residence?

The way U.S. real estate transactions are carried out may differ from your home country. Each State in the US has its own set of rules regarding the purchase of real estate, including the type of purchase contract used, the method of closing the sale and even the duties and titles of the individuals involved.

Several important U.S. real estate practices that are worth noting are:

  • In the United States, real estate listing information is shared by agents using multiple listing services ( MLS) and consumers can access that same information using real estate sites such as com or Realtor.com. In many other parts of the world, real estate is a fragmented business and buyers have to go from agent to agent to find a property.
  • In some countries, it is typical to pay a fee to the agents who are scouting properties on your behalf and showing you around. In the United States, the sales commission is paid by the seller who has a listing agreement with the Seller, so buyers don’t pay anything to have an agent work on their behalf if it is being advertised in the MLS system. It is always advisable for a buyer to work with an Exclusive Buyer Agent who will protect the buyer’s interest in the transaction. Make sure you ask any agent you contact what their “agency relationship” is to you. Each state has different forms of agency and many agents do not work for the benefit of the Buyer.
  • In the United States, real estate agents need licenses to operate. The licensing laws of each state differ regarding how much education is required, the type and depth of licensing examinations, and whether continuing education courses are required once an agent becomes licensed. The licensing system was designed to ensure real estate agents are qualified to guide consumers through the maze of finding, evaluating and financing real estate.

Foreign buyers will also want to give consideration to issues such as currency exchange rates, international wire transfers, banking systems, multi-national taxation and accounting issues, and import/export restrictions regarding currency and household goods. It is recommended that you consult with an accountant and attorney before finalizing any transaction.

Foreign buyers are eligible to buy single-family homes, condominiums, duplexes, triplexes, quadru-plexes and townhomes. Housing cooperatives or co-ops often have rules prohibiting foreign ownership. That’s because co-ops generally require that a buyer’s source of income be from the United States and that most of the majority of the buyer’s assets be kept in the U.S.

Financing or Paying Cash?

Qualified foreign buyers with a 30 to 40 percent down payment can often obtain financing for their U.S. real estate purchases. MANY BANKS REQUIRE FOREIGN BUYERS to have a specific amount ($100,000 or more) on deposit with the bank while others set loan limits of $1 million to $2 million. You may also be required to present a minimum of three months of bank statements.

The U.S. home loan market offers an array of safe, affordable mortgages, including some that will allow Muslims to buy a home without violating Islamic laws against paying interest.

Before applying for a U.S. mortgage, you must first establish credit and earn a good credit score. You can start building your credit score by opening U.S. bank and credit card accounts. You’ll also want to be sure to report all income on your tax returns. Lenders use this income information to determine how much money they’re willing to loan you to buy a home.

While you don’t necessarily need to be a citizen or even have a green card to buy a home in the U.S., you will need an Individual Taxpayer Identification Number.

All cash purchases are permitted, but U.S. law mandates that cash transactions over $10,000 be reported to the federal government. The requirement for reporting involves everyone connected to the transaction (purchaser, real estate agents, attorneys and title companies). The government wants to know how you earned the money and that it was legally obtained. Cash buyers can potentially save money on mortgage application fees, loan origination fees, appraisals and title insurance.

Should I purchase U.S. property in my name?

Foreign investors can purchase property directly – in their own names – or through some sort of business entity, such as a domestic corporation, foreign corporation, limited partnership, joint venture, real estate investment trust or limited liability company.

How the property will be used should play into your decision. Additionally, the structure through which you purchase your property can have dramatic tax consequences. Your real estate attorney and accountant should be able to provide counsel concerning your options.

Do I have to travel to the U.S. for the closing?

While you may very well want to attend your real estate closing, it is not necessary. In the event that you cannot or choose not to attend your closing, you must execute a “Power of Attorney.” This is a written document authorizing another person to represent you and sign on your behalf.  Some lenders may require that you be present in the US to sign their loan documents.  This is something you should inquire about when selecting a lender if you do not plan on traveling for the closing.

How will a U.S. real estate purchase affect my taxes?

A foreign property owners’ tax liability in his home country will vary depending upon where the purchaser is from and whether that country has a tax treaty with the United States. Consult a tax attorney familiar with your home country’s treaty to get answers to tax-related questions.

The United States government requires that foreign nationals pay U.S. income taxes (state and federal) on any net income (rental revenues less expenses) received from rental property. If tax returns are not filed in a timely fashion, a tax of 30 percent of the gross rental income may be assessed. Even if you’re incurring losses in the early years of your investment and you don’t owe any taxes to the government, you still must file your tax returns in a timely manner or be subject to financial penalty.

What is FIRPTA?

FIRPTA refers to the Foreign Investment in Real Property Tax Act of 1980.  This ruling authorizes the United States to withhold income tax when property is sold, exchanged, gifted, transferred or liquidated by a foreigner. The Internal Revenue Service takes 15 percent of the proceeds and the state government will also take a percentage (if applicable). When a US tax return is submitted reporting the capital gains tax, if there is any refund due, that money will be refunded to the filer.

If the buyer of the home from the foreign national investor will reside in the home more than 50% of the time and the home sales price is under $300,000.00, the purchaser is not obligated to retain the 15% tax.

Why Use an Exclusive Buyer’s Agent for New Construction?

Because the builder’s agent’s job is to convince you to buy only their homes at the highest price. Your Buyer Agent’s job is to even the odds and negotiate for the lowest price and best terms for YOU!

It is foolish for a home buyer to enter into a new construction contract without an Exclusive Buyer Agent. The advantages are many; aside from the obvious ones. The fact that having buyer agent representation is often FREE cannot be repeated often enough. So too, should the misconception that not using a buyer’s agent will save money be constantly repeated – that simply doesn’t happen.

Remember that that site agent represents the builder/developer. Most real estate agents are sub-agents of the Seller or Transactional agent. In neither case do they have a fiduciary responsibility to the Buyer.

There is a listing contract in place that specifies the agent’s duties and the commission paid by the builder. When an unrepresented buyer contracts a home, the commission agreed upon does not change, it is simply reflects the listing broker (site agent) receiving both sides of the commission.

The site agent is legally bound to represent the best interests of the builder, not the homebuyer. They are expected to work to secure the builder the best deal; not do anything illegal of course but they will not – cannot – negotiate against their client. This is consistent throughout the course of the build; the builder is their client, the buyer is their customer.

Benefits of Using an Exclusive Buyer Agent for New Construction:

  • Compare and evaluate builders’ reputations and history of their construction quality and service
  • Help you compare and evaluate advantages and disadvantages of new construction homes vs. resale homes
  • Provide information about the community
  • Uses past sales with builders to maximize price and option concessions
  • Help buyer with evaluation and selection of a building lot and options. Lot location and certain options have a very real bearing on resale value.
  • Help buyer evaluate which options should be done by the developer during construction and which are more affordable to be done by an outside vendor post closing.
  • Truly negotiate on behalf of the buyer. Many builders are offering “free” options and upgrades, but some are also making additional price concessions.
  • Review the Agreement of Sale (PA) prior to buyer signing. This is not a legal review (only an attorney can do that), but an experienced agent will be able to spot terms and conditions that are atypical and of potential concern to the buyer. The agent may then be able to negotiate terms and conditions that are more favorable to the buyer but still acceptable to the builder. Keep in mind most new construction contracts are written by attorneys that represent the builder and these contracts are therefore heavily weighted in favor of the builder.
  • Recommend a real estate attorney for final contract, title commitment and to hold your escrow funds. The developer should never hold your deposits.
  • A buyer’s agent serves as an extra set of ears as a witness at court or arbitration – When the builders sales representative is familiar with all rules, features and prices and it’s all new to buyer – it is good to have experienced person on buyer’s side listening with buyer and taking notes, a lot of information is verbalized in short period of time.
  • Attend the signing of the Agreement of Sale
  • Assist with the buyer’s financing and review financing paperwork. This is especially important if the builder is tying “free” options and upgrades to the use of a builder-affiliated lender.
  • Check on the property during construction and keep a photo record at different stages.
  • Be your leverage with the builder as problems arise during construction
  • Keep everything in writing – Sometimes even the very nicest builder makes verbal promises that later become a point of contention. An experienced buyer’s agent is conditioned and trained to “put it in writing” even though at the time it doesn’t seem necessary.
  • Arrange for a final inspection with a license building inspector and generate a “punch list” to be completed before final closing.
  • Document and help resolve any issues with construction, financing, title, etc. throughout the process.
  • Attend a pre-settlement walkthrough with the buyer to make sure that all items are satisfactorily completed or that a proper punch list is established to assure completion after settlement.
  • Obtain and review a preliminary HUD-1 settlement statement to be sure it is accurate and advise the buyer of the amount needed for settlement.
  • Assist buyer with utilities, security and HOA requirements, decorators, service professionals, schools, et. al.
  • Attend settlement with the buyer.
  • A buyer’s agent will be there even after the home closes. It is routine for issues to arise during the first year of a new home. Site agents tend to forget a buyer’s name after the contract is signed.
  • NO ADDITIONAL COST TO YOU!
  • Common Mistakes That Can Delay the Loan Process

    The home mortgage industry can be confusing. Rates, points, caps—there’s a lot to take in. Take some time to educate yourself about the process—and be aware of the big missteps home buyers often make.

    Thinking Too Big

    Banks qualify their customers on their “debt-to-income ratios.” Simply, that’s the ratio of how much money you make vs. the money you owe to other institutions. Banks don’t take into account other expenses like your weekend entertainment and the tuition to your children’s school.

    Ask yourself, what goes into your budget every month? List it all out—restaurants, car payments, taxes, insurance, cable, cell phone, gym memberships, etc. You don’t want to find yourself spending all your money on your house. A good rule of thumb: No more than 30% of your gross income should go toward total housing expenses.

    Waiting for Pre-Approval/Pre-Qualification

    Besides offering a rough idea of how much home you can afford, a pre-approval gives you leverage when you make an offer on a home—it lets a seller know your offer can be seriously considered. One thing to know: You don’t have to secure your mortgage from the lender that “pre-approves” you. You’re free to take out a mortgage from the bank or lender of your choosing when you’re ready to buy.

    Getting the Wrong Loan for You

    Although it’s a classic, not everyone needs a 30-year fixed-rate mortgage. Today there are many different products, designed to accommodate different financial plans. Everyone’s life trajectory isn’t the same. Maybe you don’t plan to be in your house for more than five years; maybe you can afford to put more money down than most people. Take a moment to visit http://www.usa.gov/shopping/realestate/mortgages/mortgages.shtml that explains several of the different products out there. Talk to a trusted financial advisor if you’re having difficulty understanding the type of loan that’s best for you.

    Choosing Not to Shop Around

    When looking for a home loan, don’t go with the first quote from a bank. Shop for a loan the same way you would shop for any other big purchase. One percentage point on a mortgage rate can mean the difference of tens of thousands of dollars difference over the course of a loan.

    It might be a good idea to call an experienced mortgage broker who can access many banks across the country. Although the broker is a middleman, you won’t get charged anything extra. Brokers receive loans at wholesale rates and will pass them to you at retail. You might be able to get a better deal than reaching out to banks on your own. If you’re building a new-construction home, you might want to get a quote from an in-house lender like NVR Mortgage or compare developer financing incentives.

    Forgetting to lock in a rate

    Don’t rely on the verbal promises of a loan officer. Mortgage rates can change daily. If you find a great rate, lock it and get the rate quote in writing. Once a home mortgage rate is locked, your rate is guaranteed for a certain period—anywhere from seven days to a month or more.

    When do you lock in a rate? Basically, after an offer has been accepted, you’ll need to backtrack and figure out when you’re going to close. But know that the longer the lock-in, the more the loan will cost you in fees or rates. Why? Basically, the bank is hedging its risk—they don’t know if rates will change either.

    Don’t Spend, Change Jobs, Etc.

    Many new homebuyers make the mistake of rushing out to buy things to fill their home with as soon as the seller accepts their purchase offer and the lender pre-approves their loan. But there are still a few major hurdles to overcome before the keys are handed out. Here are some things to avoid during the home buying process to assure your transaction goes as smoothly as possible:

    • Don’t make an expensive purchase. It may be tempting to order that new sofa for your soon-to-be living room, but its best to avoid making major purchases like furniture, cars, appliances, electronic equipment, jewelry, or vacations until after the closing. Financing that furniture with a store credit card or even one of your own credit cards could jeopardize your credit worthiness during the time it means the most. Using cash to purchase big items can also create a problem because many banks take into consideration your cash reserve when approving your mortgage.
    • Don’t get a new job. Lenders like to see a consistent job history. Generally, changing jobs will not affect your ability to qualify for a mortgage loan – especially if you are going to be making more money. But for some people, getting a new job during the loan approval process could raise some concern and affect your application.
    • Don’t switch banks or move money around. As your lender reviews your loan package, you will likely be asked to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most loans require a thorough paper trail to document the source of all funds. Changing banks or transferring money to another account – even if its just to consolidate funds – could make it difficult for the lender to document your funds.

    Don’t disregard your lenders requirements.

    You may have been pre-approved for the loan but your work with the lender is far from over. In order to process your loan, you need to meet certain requirements. Your lender will need copies of your bank statements, W2s, tax returns, and other paperwork. It is up to you to get it to him or her as soon as possible. Failure to submit certain qualifying documents could cause you to lose your loan and the financing you need to buy your home.