Homebuyer Advice

Pit Falls of Post-Closing Occupancy Agreements

More sellers want to stay in their home after closing, sometimes for weeks or months. In many cases, they want to do it for a fraction of the fair market rent or even for free. Agreeing to their request gives some buyers an edge over the competition in a bidding war, but it comes with risks.

The Post-Closing Occupancy Agreement allows the Seller to remain in the property for a designated period after the Buyer takes ownership of the property. As easy as a post- occupancy agreement sounds, there are serious implications arising out of a Seller requesting to remain in occupancy of residential property after the Seller conveys title to the Buyer.

When the seller continues to live in the home after closing, all the risks lie with the buyer. What could go wrong? Plenty…. How long will the seller stay? How much will they pay, or will they pay at all? Who is responsible for utilities, HOA fees, property taxes, insurance, pool and yard maintenance, et. al.? If they want to extend the lease, is that possible? What if they decide not to move out? What if the property is damaged after the closing? What if they do not pay the bills?

Despite all these potential and very serious problems, there are some things you can do as a buyer to protect yourself if you decide to agree to this arrangement. Of paramount importance is to retain an attorney to review the Purchase Contract before signing and to prepare the lease or post-occupancy terms prior to Closing. Considerations that need to be negotiated with the Seller include but are not limited to….

Enter a formal lease?
Security deposit?
Escrow proceeds from the sale to cover damages, unpaid bills, et. al.?
Seller secure renters’ insurance.
Capture the entire rent payment from Sellers proceeds at closing and hold in escrow?
Require a walk-through of the property in advance of returning the Seller’s proceeds held in escrow?
Hold back fund in escrow if they fail to vacate the property on the agreed to date?
Can the lease be extended or terminated early?
Who will be occupying the property?

Transactional agents will be very casual about post-occupancy agreements and assume that everything will go as planned. Buyers need to assume that things will go wrong and make sure that they are protected once they close on the property. Always us an Exclusive Buyer Agent to ensure that you are represented by a fiduciary.

Filed under: Blog, Boca Raton real estate, contracts, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Homebuyer Advice, House Closings, post closing occupancy, Real Estate, Real Estate Closings, South Florida Real Estate by Kim Bregman
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How To Save On Homeowner’s Insurance

Homeowner’s insurance costs are increasing nationwide and is becoming a larger expenditure in the homeowner’s budget.

Florida homeowners insurance costs vary depending on where you live, the age of your home, your home’s characteristics, and other factors. In addition to the cost of the home, the on-going expense of insuring a property should be a consideration when selecting the home you want to purchase. It may prove beneficial to purchase, for a little more money, a new home with impact glass, a new roof, updated plumbing and electrical and one that is not frame construction.

Several factors affect how much homeowner insurance costs and you can make informed decisions in advance of purchasing a home to minimize the cost of insurance.

Location:

The closer you are to the ocean or Intracoastal waterway or if you are in a flood zone will certainly increase the risk of water damage and insuring a home.

The amount of coverage and replacement cost:

What you paid for your home has no impact on what you need to insure your home for. The sales price of your home includes land and land cannot be insured for fire, wind, theft, etc.

Furthermore, the market value can be based upon location, age and how strong or weak the market is. That is why it is very important that you insure your home for the replacement cost value of your home or what it would cost to rebuild your home brand-new with current building codes and materials.

Your home’s age and condition:

Your insurance premium may be higher if you have a home that was built before 2000 and the advent of stricter building codes. One reason is that older homes often have features or construction materials that not as weather resistant as newer construction. Another reason is that older homes may have outdated plumbing or electrical systems that insurers view as higher risk. The home’s condition is also important, even if it’s newer. Insurers often pay special attention to the roof, roof configuration, roof systems, etc. because leaks due to a worn-out roof can cause expensive damage inside your home.

Home Design and Upgrades:

Features of the home you are buying, such as impact glass or storm shutters, reinforced roofing and updated utilities can decrease insurance costs. If you already own a home, these types of improvements can help decrease the risk for fire and water damage.

In addition, given that Florida is a hurricane prone state, Florida requires companies to offer discounts through wind-mitigation improvements.

Discounts are available for the following safety features:

Roof Shape
Roof Bracing of Gable End Roof Deck Attachment
Roof Covering
Roof-to-Wall Connections
Secondary Water Resistance
Doors
Protection of Openings (windows and other openings)

The initial costs for adding a few of these features can be high, but the long-term financial investment can decrease your Florida homeowner’s insurance coverage costs and make your home safer.

If your house presently has any of these features, you may want to have a home wind-mitigation examination completed to submit to your insurance agent or company to add the additional discounts.

Home security and safety features:

Some companies will offer discounts for having a smoke alarm, alarm system or dead-bolt locks, however a number of companies provide additional discounts if you install a home home generator and/ or a fire and burglar alarm that rings at a monitoring station. These systems can be costly and not every system qualifies for a discount rate. Before you decide to buy such a system, discover what kind your insurer suggests, how much the device will cost and how much you will save on your premiums.

Your credit history:

Establishing a solid credit history can cut your insurance coverage costs. Many customers do not recognize that credit is a factor in how insurance providers evaluate you. Many people do not understand the impact credit plays in insurance coverage and well as mortgage costs, but Insurers have found that policyholders with poor credit tend to make more claims and spend less to maintain their properties.

Due to this finding, most insurance companies reward a favorable credit history with extra discounts, once again lowering your homeowner’s insurance premium.

Your deductible:

Increasing your deductibles will help lower your premium. Insurance is to cover you for large catastrophic events; by increasing your deductible you will be saving every year. Just make sure you’ve set aside enough money to cover a larger deductible if you need to file a claim—and to cover more minor repairs on your own.

Additional Discounts:

Insurance Companies might offer additional internal discounts. Not every company offers the exact same discounts, and these types of discounts will vary by company if available.

These discounts might include:

· Discounts for seniors or retirees

· Gated Community Discounts

· Accredited Builder Discounts

· Newer Roof Discounts

· Companion Policy Discounts

· Electronic Policy Distribution Discounts

· Bundling with auto insurance

Your local agent will usually review these with you, but it is also a good idea to evaluate your quote and ask if any extra discounts might be available.

Shop around:

If you’re buying homeowners insurance for the first time, comparing options among several providers is essential. However, don’t focus exclusively on price. It’s also vital to research claims satisfaction among policyholders and exactly what the limits for your coverages are (mold, sinkhole, sewage back-up, et. al.)

Also, when you inquire about a homeowner’s policy, consider your customer experience. Is the agent willing to answer all your questions, discuss your options, and help you decide on a policy that suits your needs?

Filed under: 2022 Real Estate, Blog, Boca Raton real estate, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Flood Insurance, Florida Real Estate, Home Buyer Advice, Home Buyers, Homebuyer Advice, Homeowners Insurance, Hurricane Preparedness, Real Estate, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate, Uncategorized by Kim Bregman
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Short-Term Rentals As Investments

Companies such as Airbnb and VRBO have brought the short-term rental market into the mainstream, making it easier than ever for investors to profit from real estate ownership.

Rather than getting tied into long-term leases, property owners can capitalize on local demand for temporary and vacation rental housing. In recent years, the industry has transformed from a side-gig for homeowners looking to make extra income into a booming industry in many markets across the country.

Although considered great investments, these types of properties require proper management and good knowledge of a local real estate market.

A short-term rental is a property that has a lease term of fewer than 12 months. It could be a single or multi-family home, a condominium, or a townhome. An owner typically buys this type of property with the intent of leasing. It is important to understand the leasing restriction of the community or municipality.

South Florida is an ideal location for a successful short term rental investment and more and more people are looking to real estate to diversify their investment and hedge against inflation.

A short-term property can be profitable under the right management. But don’t think that it will generate passive income without much effort. Before you invest your money, you must look at several components that determine whether your property will create a profit or not.

– Vacation destinations are considered the best for these types of properties, as they are often favored by tourists because of their competitive prices over expensive hotels and five-star resorts.

– Local laws and regulations set a stage up for the real estate market. For example, some cities, like Delray Beach and Boca Raton have strict policies when it comes to how many days your property can be occupied. These types of restrictions could limit your ability to generate a steady income.

If you want to buy a property in the area that is favorable toward short-term rentals, make sure to use a Realtor that is familiar with local laws and regulations governing the real estate market. Additionally, you should also find out what the rules are for a platform such as HomeAway, VRBO or Airbnb.

“Zoning can be an issue zoning and municipal ordinances will dictate which properties can and cannot be used as Short Term Rentals ( STR). This differs from one city to the next. Likewise, municipalities might dictate how many properties within certain boundaries can be used as STRs. For buyers, knowing what the zoning regulations are before purchasing a property is key.

Even if the property is turnkey, investing in the necessities to ready the property for rental could be a considerable. Furnishing, equipping, and securing a property property to make it safe and well-performing are additional costs that an investor needs to consider in their ROI analysis. The cash outlay can be significant in the beginning and may take a fair amount of time for the property to breakeven and start to generate a positive cash flow.

Owning and operating short-term rentals is considered a business by most local governments, and owners must comply with specific workplace regulations and business licensing rules established in their local communities. There are transient occupancy taxes that are also required to pay. Knowing local and government regulations is crucial to operating an STR.

Owners of STRs should not think they can outsmart the local governments. Cities and Counties are becoming much savvier on tracking Short Term Rentals using data mining, machine learning, and other technologies. Right now, governments can find out when, where, and for how long properties have been rented. As technology continues to expand, it’ll be important for buyers to make sure they are adhering to local guidelines; otherwise, their investment might cost them in fines and legal fees rather than make them money.

Since STRs are rental properties and therefore investments of a specific nature, the normal loan pre-approval likely won’t be enough. A lot of lenders will not finance for STRs or hotel properties.

When shopping for a mortgage it is important to make clear to the lender how the buyer intends to use the property, and merely stating that it will be used as an investment isn’t enough. Likewise, a regular homeowner’s insurance policy won’t cover an STR either. You will need to secure insurance specific to owning a rental property and it will be more expensive than a normal Homeowners Insurance Policy.

A short-term rental property is one of the best ways to generate a steady income from a few hundred dollars to a few thousand dollars a month. Although it’s often considered a form of passive income, running it requires real estate prowess, time and money investment, and excellent communication skills. However, with the right management and favorable market conditions, a real estate investment can become a successful enterprise and generate thousands of dollars per year.

Filed under: 2022 Real Estate, Blog, Boca Raton real estate, downtown boca raton, Exclusive Buyer Agency, Exclusive Buyer Agent, Florida Real Estate, Foreign Home Buyers, Home Buyer Advice, Home Buyers, Homebuyer Advice, Homeowners Insurance, International Home Buyers, International investors, Jupiter FL Gated Communities, Real Estate, Real Estate Investment, real estate news, Real estate trends, second home, short term rentals, South Florida Real Estate, vacation home by Kim Bregman
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Using Home Equity To Buy Another Property

Interest rates are rising and so it the equity in your current real estate holdings. There are alternatives to financing a second home or investment property other than a traditional mortgage. If you have a large amount of equity in your first home, you could obtain enough money through a Home Equity Loan to pay for most—if not all—of the cost of a second home.

Using a home equity loan (also called a second mortgage) to purchase another home can eliminate or reduce a homeowner’s out-of-pocket expenses. However, taking equity out of your home to buy another house comes with risks.

If you’re interested in using home equity to purchase a new home, the value of your house will need to be high enough to support the loan, and you’ll have to meet your lender’s requirements. Here’s how to get a second mortgage to buy another house.

1. Determine the amount you want to borrow. Before taking equity out of your home to buy another house, decide how much you want and need. Home equity loans limit how much you can borrow. In most cases, you can only access up to 85% of the equity in your home.

2. Prepare for the application process. Your approval for a home equity loan will depend on multiple factors. The value in your home will determine the maximum amount of equity available, and your financial information will determine how much of that equity you can borrow. In addition, your lender will look at your credit score, income, other outstanding debts and additional information.

3. Shop around for a home equity loan. When taking out a home equity loan for a second home, you can use any lender. The loan does not have to be with your current bank or mortgage company. So the best way to get a competitive interest rate is to shop around and get quotes from multiple lenders. As you compare, look at the interest rate, loan terms, fees and estimated closing costs. You can also negotiate with the lender on the rate or a particular term.

4. Apply to the loan with the best terms. Once you’ve determined the loan with the best terms, you’re ready to apply. You’ll submit the application and provide the requested information. Your lender will order an appraisal of the home or determine the value using another method.

5. Close on the loan. After you go through the underwriting process, your loan will be ready to close. Before finalizing the loan, make sure you understand the terms carefully. Also, know that the Three-Day Cancellation Rule allows you to cancel a home equity loan without penalty within three days of signing the loan documents.

Before you use a home equity loan for a second home, consider the pros and cons of taking equity out of your home to buy another house.

Pros:

· You’ll reserve your cash flow. Using home equity to buy a second home keeps cash in your pocket that you would otherwise use for the home purchase. This increased cash flow can result in a healthier emergency fund or go towards other investments.

· You’ll increase your borrowing power. Buying a house with equity will allow you to make a larger down payment or even cover the entire cost — making you the equivalent of a cash buyer.

· You’ll borrow at a lower interest rate than with other forms of borrowing. Home equity products typically have lower interest rates than unsecured loans, such as personal loans. Using home equity to purchase a new home will be less expensive than borrowing without putting up collateral.

· You’ll have better approval chances than with an additional mortgage. Home equity loans are less risky for lenders than mortgages on second homes because a borrower’s priority is typically with their primary residence. This may make it easier to get a home equity loan to buy another house than a new separate mortgage.

Cons:

· You’ll put your primary residence at risk. Using a home equity loan to buy a new house can jeopardize your primary home if you’re unable to handle the payments.

· You’ll have multiple loan payments. Taking equity out of your home to buy another house means you’ll potentially have three loans if you have a mortgage on both your primary residence and the second home in addition to the home equity loan.

· You’ll pay higher interest rates than on a mortgage. Home equity products have higher interest rates than mortgages, so you’ll be borrowing at a higher total cost.

· You’ll pay closing costs. When using equity to buy a new home, you’ll have to pay closing costs, which can range from 2% to 5% of the loan amount.

Other options for buying a house with equity

Using a home equity loan to buy another house is just one path borrowers can take. Here are a few additional options for using equity to buy a new home.

Cash-out refinance

A cash-out refinance is one way to buy another property using equity. A cash-out refinance accomplishes two goals. First, it refinances your existing mortgage at market rates, potentially lowering your interest rate. Secondly, it rewrites the loan balance for more than you currently owe, allowing you to walk away with a lump sum to use for the new home purchase. Taking equity out of a home to buy another with a cash-out refinance can be more advantageous than other options because you’ll have a single mortgage instead of two. However, interest rates on cash-out refinances are typically higher than standard refinances, so the actual interest rate will determine if this is a good move.

Home equity line of credit

A home equity line of credit (HELOC) is another option for using home equity to purchase a new home. HELOCs are similar to home equity loans, but instead of receiving the loan proceeds upfront, you have a line of credit that you access during the loan’s “draw period” and repay during the repayment period. This method of using equity to buy investment property can be helpful if you’re “house flipping” because it allows you to purchase the property, pay for renovations and repay the line of credit when the property sells. However, interest rates on HELOCs are typically variable, so there is some instability with this option.

Reverse mortgage

Homeowners 62 or older have an additional option of using equity to buy a second home — a Home Equity Conversion Mortgage (HECM). Commonly known as a reverse mortgage, a HECM allows borrowers to access home equity without making payments. Instead, the loan is repaid when you leave the home. Reverse mortgages provide a flexible way of using equity to buy another home, as borrowers can choose between receiving a lump sum or a line of credit. However, keep in mind that while you won’t make payments with a reverse mortgage, interest will accrue. This causes the loan balance to grow and can result in eating up all the home’s equity.

Alternate forms of financing for purchasing a second home include:

Private money lenders
Seller financing
Peer-to-peer lending
Hard Money Loans
Personal Loans

Filed under: Blog, Boca Raton real estate, cash out refinance, contracts, Down Sizing, Exclusive Buyer Agency, First Time Homebuyers, Florida Real Estate, Foreign Home Buyers, HELOC, home equity, Home Financing, Homebuyer Advice, House Closings, International Home Buyers, International investors, Mortgage Information, peer to peer lending, private money lender, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, Real estate trends, Refinancing, Retirement, Reverse Mortgage, second home, Self Directed IRA, Seller Financing, South Florida Real Estate, vacation home by Kim Bregman
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Apps To Facilitate Your Move

Buying a home and moving is stressful on many levels. Here are some Apps to make the moving an easier endeavor. Like other productivity apps that can be downloaded on your smartphone, move-planning apps will help you keep everything organized.

Dolly: So you’ve arrived at your new home and realized you don’t have the person-power to haul that bedroom furniture upstairs? No problem! Dolly (free, iOS, Android) connects you with helpful delivery people looking to make a few bucks. These strong-backed guys and gals have no qualms about carrying your furniture to its new resting place in your new home and there’s never any haggling over price.

Flying Ruler: Flying Ruler will help you measure anything in your home. Not sure if that sofa will fit in your new living room? Is it too large to come through the front door? Flying Ruler can help you be sure. This app is a tape measure, ruler, protractor, and a goniometer.

Google Keep: Google Keep (free, iOS, Android) is the ultimate sharable note application. When you’re planning a move you will quickly find yourself making lists … and then making lists of those lists. That’s where Google Keep’s shareable, synced lists and notes come in so incredibly handy. When things get really hectic you can even record voice memos and Google Keep will actually transcribe them into readable text for you to browse later.

Handy: With Handy you can schedule a move-out or move-in cleaning by a vetted and background-checked professional. You can also book handyman services like furniture assembly, TV mounting or picture hanging to help you settle into your new home. Moving assistance is available, too! You’ll leave with your home in better condition than you found it in, and your new place feeling like home right away.

Magicplan: Floor plans are a crucial tool for envisioning your new living space and deciding where to place furniture and home goods. Use Magicplan on your phone or tablet to scan and measure rooms, then compile them using their drag-and-drop interface to create a complete floor plan.

MakeSpace: If you’re downsizing or moving to a home short on storage space, MakeSpace will come in handy. Just book an appointment, and its team of professional movers will come to pick up your stuff and haul it off to storage. When you want your items back, schedule a delivery, and the team will return your goods. MakeSpace will bring complimentary supplies, like bubble wrap and free MakeSpace bins.

Meta ( Facebook) Marketplace: If you’ve ever moved you already know that you eventually get to a point where you’ve packed up all the important stuff and would rather just throw everything else in the garbage than wrap it, box it and haul it. That’s no longer necessary because there are people all over your town who will buy your old stuff and they’re on Facebook Marketplace (free, iOS, Android).

MoveAdvisor: MoveAdvisor is another comprehensive moving app allowing you to take inventory, find movers and establish a moving timeline all in one place. The app itself is free of charge to download and use, but you’ll have to pay for any services you book.

Moved: Designed to be your personal moving concierge, Moved manages the entire moving process for you. The app is a one-stop shop for your move. It will organize your move every step of the way, from finding movers, hiring packers and selling unwanted items, to updating your address and even hiring cleaners and painters. The service also helps you find moving professionals, affordable packing materials, and storage facilities

OfferUp: OfferUp is the largest mobile marketplace in the United States to buy and sell goods locally, and you can do so straight from your phone! Just take photos of the items you’re selling, describe the items and set a price. Buyers can message you through the app and make an offer, then arrange to meet you and retrieve the item.

RideShipper: You’ve got a car, bike, boat, or something else you need shipped? With RideShipper you fill in the free vehicle shipping quote and you get almost instantly up to 4 estimates from reputable shipping companies.

Sortly: Sortly is an inventory app built with small businesses in mind, but also great at cataloging all your beloved items and ensuring that they make it to your new home in one piece. Use your smartphone camera to snap images of items and Sortly automatically catalogs them for you. You can add barcode info for additional details and check off items as you’re unpacking.

TaskRabbit: Need someone to help you move, pack, unpack or help with almost any moving-related task you may need? With Taskrabbit you’re able to state the task you need done and get matched with a freelancer (referred to as “Taskers” on the platform) who can do it for you.

TurboScan: One thing you don’t need to haul along to your new home is piles and piles of papers you’ve let stack up over years of home office neglect. You could scan them with your printer, but that would take forever, so download the TurboScan app (free, iOS, Android) and capture perfect scans of every document in mere seconds.

Unpakt: Moving companies are everywhere, but which one will give you the best rate? Get rid of the stress of searching for the best deal and let Unpakt find it for you. Compare prices between a variety of local and reputable moving companies and even contact the mover of your choice right from the app. Unpakt offers a price guarantee that only changes if you add or remove an item or service.

Filed under: apps, Blog, Boca Raton real estate, Down Sizing, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Maintenance, Homebuyer Advice, Interior Design, Moving Apps, Real Estate, real estate news, South Florida Real Estate by Kim Bregman
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Florida Closing Cost Primer for Buyers

Closing costs are inevitable when you’re buying or selling a property. While they vary from state to state, the amount you’ll pay in Florida depends on both the property and the county it sits in. As a buyer, you’ll have to cover most of the fees and taxes. In Florida, you’ll also have to post a fee for documentary stamps (or doc stamps), which is a percentage of the sales price. Then there are the taxes. You’ll likely be subject to property and transfer taxes.

Neither party is responsible for 100% of the closing costs in Florida, which includes fees, taxes, insurance costs and more. The buyer typically pays between 3% to 4% of the home loan’s value and is responsible for the bulk of the fees and taxes. The seller usually pays between 5% to 10% of the home’s sale price. Closing costs also vary among counties.

Condos are regulated by the Florida Condominium Act. The legislation lays out your rights to the property and gives you an “undivided interest” in all the common areas of the building. You’ll have to pay a monthly maintenance fee or a yearly homeowners association fee to cover the servicing of those areas that fall under the “undivided interest.” The fee isn’t tax-deductible.

If you are getting a mortgage The fees shown on the Good Faith Estimate can be difficult to understand but can be broken down into five sections.

One-time fees

Appraisal fee
Reinspection fee
Credit application, credit report and credit supplement fees
Mortgage origination fee
Lender’s title insurance policy (optional owner’s title insurance)
Escrow fee
Home inspection fee (optional)
Closing attorney fee
Courier fee
Bank processing fee
Recording fee
Notary fee
Loan discount points

Recurring fees

Homeowners insurance
Property taxes and tax servicing fees
Mortgage insurance premiums
Flood certification fee (in some areas)

Appraisal fees

Lenders typically require an appraisal as part of the underwriting process, before financing a home purchase. Appraisals will vary in price depending on the location and size of the property. The lender hires an appraiser to provide the fair market value of the home, and the buyer pays the lender.

Mortgage origination fee

Every lender will charge a mortgage origination fee, which covers their service and administrative costs. The average loan origination fee is 1% of the total loan amount. Buyers should shop for lenders with both experience and low origination fees.

Title insurance policy fees

Lenders typically require borrowers to purchase insurance to protect the financial institution from future title claims. This policy is called lender’s title insurance and the cost depends on the location and size of the property.

Owners title insurance protects the Buyer from future claims against the title. The customary party that pays for the Owners Title Policy varies by County in Florida. In Sarasota,Collier, Miami-Dade and Broward County, the Buyer pays for title insurance and chooses the title company. In all other counties, it is the Seller’s responsibility.

Escrow fees

During the purchase and sale transaction, your funds will enter a holding account managed by a third party — an escrow company. When the transaction is complete, the escrow representative will disperse your down payment, fees, and loan proceeds to the appropriate individuals.

Home inspection fee

A home inspection is a common contingency for a home purchase. As the buyer, you can hire an inspector to evaluate the condition of the home and its systems prior to purchase. Home inspection costs vary depending on the size and age of the property. You will pay the inspector for their service out-of-pocket, and this amount is separate from the purchase and sale transaction.

Attorney Fees

Florida is a Title Theory state and does not require that an attorney be used to close a real estate transaction. Private real estate attorneys, or borrower’s attorneys, are an additional and optional cost for buyers who want a specialist to assist them with contract-related issues or professional advice beyond the scope of their agent’s abilities. Private real estate attorneys charge by the hour or charged a fixed rate for the transaction and rates vary based on their level of expertise and services provided.

Documentation fees

During a financed home purchase, several institutions need to process information and create official records.

The courier fee allows lenders to send your documents to necessary parties
The bank processing fee pays the bank for handling the necessary loan documentation.
The lender uses the recording fee to pay the county to file a public record of the transaction.

Loan discount point fees

When locking your interest rate with your lender, you’re allowed to buy down the rate. To do this, you pay “points” — essentially, paying interest in advance. One point is equal to 1% of the loan; but that does not translate to a 1% drop in interest rate. Not all buyers choose to buy down their interest rate, but when they do, the rates vary by lender.

Homeowners’ insurance

As a stipulation of your financing, you will be required to purchase homeowners’ insurance. You will continue to pay the insurance premium on a yearly or twice-yearly basis directly to your insurer, or monthly via an escrow payment that is part of your monthly mortgage payment to your loan servicer. Homeowners insurance policy fees range based on the amount of coverage and the size of the property.

Property taxes

Your property taxes will be prorated based on your closing date. Some buyers pay their taxes in lump sums annually or biannually. If you don’t pay this way, you might escrow the taxes, which means they would be included as an escrow line item in your monthly mortgage payment to your loan servicer. Property taxes are paid in arrears in Florida.

Mortgage insurance premiums

If your loan amount is more than 20% of the value of the home, you are typically required to pay insurance to protect your lender’s investment. Mortgage insurance is generally escrowed but may vary from lender to lender. Some lenders will also charge a one-time application fee for mortgage insurance.

Flood insurance

Depending on the location of your property, you may also be obligated to purchase flood insurance to help protect your lender’s investment. Flood insurance policies range by risk level, based on location and are a Federal Program and the pricing cannot be competitively shopped for.

What are the closing costs for cash buyers?

Cash buyers are still required to pay for things like notary fees, property taxes, recording fees, and other local, county and state fees. Unlike a buyer who is using financing, cash buyers won’t have to pay any mortgage-related fees. But most cash buyers still opt to pay for things like appraisals, inspections, and owner’s title insurance.

Closing costs can vary depending on where you live in Florida, the type of property you buy and how much it sells for. While the seller forks over some money, the buyer pays for the bulk of the fees and taxes, which typically add up to 2.5% of the average sale price depending on the time of year you close ( proration sensitive).

Filed under: 2022 Real Estate, appraisal, Blog, Boca Raton real estate, closing costs, contracts, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Flood Insurance, Florida Real Estate, Foreign Home Buyers, Home Buyer Advice, Home Buyers, Home Financing, home Inspections, Homebuyer Advice, Homeowners Insurance, House Closings, Mortgage Information, Mortgage Interest Deductions, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, Relocation, South Florida Real Estate, Tax deductions, Title Insurance, Uncategorized by Kim Bregman
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2022 South Florida Real Estate Projections

Nationally, expect slower housing price appreciation, easing inflation and rising interest rates in 2022, according to a survey of more than 20 top U.S. economic and housing experts by the National Association of Realtors® (NAR). “Overall, survey participants believe we’ll see the housing market and broader economy normalize next year,” Yun said. “Though forecasted to rise 4%, inflation will decelerate after hefty gains in 2021, while home price increases are also expected to ease with an annual appreciation of less than 6%. Slowing price growth will partly be the consequence of interest rate hikes by the Federal Reserve.”

Fed boosts to interest rates do tend to move rates higher on longer-term loans, such as 30-year mortgages. Yun expects the 30-year fixed mortgage rate to increase to 3.5% as the Fed raises interest rates to control inflation but noted this is lower than the pre-pandemic rate of 4%.

In South Florida Home prices are projected to continue to grow, but slower than the past year. “We don’t expect to see the same price appreciation we had last year, though we don’t expect to see a decline in pricing,” said Eli Beracha, director of the Hollo School of Real Estate at Florida International University. A Realtor.com forecast predicts that South Florida housing prices may rise almost 6% over the next year, while a Zillow forecast predicts that home price appreciation could shoot up by 15%.

A few factors are going to cause slower price growth: more inventory as sellers try to capitalize on the hot market, new developments hitting the market and an increase in mortgage interest rates. Demand from foreign and out-of-state buyers will continue to drive South Florida’s housing market, but experts also expect new inventory to alleviate some of the pressure that has been fueling the pandemic-era housing boom.

Experts say the market will still favor sellers, as demand and limited inventory will keep the balance in their favor. Bidding wars and multiple offers on homes will probably still be a common.

The supply chain issues, and lack of labor will continue to lead to increased construction costs and thus higher prices for buyers.

Filed under: 2022 Real Estate, Blog, Boca Raton real estate, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Homebuyer Advice, House Closings, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate by Kim Bregman
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Home Design Trends for 2022

Home design trends that are expected to loom large in 2022 are an evolution of what started during the pandemic when life was disrupted, and more homeowners started reevaluating their surroundings.

In 2021, the pandemic slowly dissipated and then, almost overnight, a variant came charging back. Our homes and how we use them has massively evolved in the past 2 years as we embrace multifunctional spaces and a sense of retreat. With wellbeing, mindfulness, and sustainability as catalysts for change, home decor trends for 2022 focus on maximalism and nurturing natural connections.

Waning Design Trends:

Whether it’s having multi-purpose rooms or furniture with innovative storage solutions, modern room-dividing tactics are here to stay.

Open shelving will likely be replaced. Over the past couple of years, people have spent more time at home and really used their kitchens. It is clear that open-shelving does not work for the way people are living today because it lacks the storage capacity of cabinets.

Gray is nearing the end of its decade of popularity. Neutrals like white, beige, and gray have all been popular colors throughout the home. But gray seems to be phasing out the quickest. Expect to see more bold and dramatic colors for cabinets and backsplashes next year. The use of wallpaper to add interest, texture and color is also a big trend along with florals.

2022 Design Trends:

Sustainability: Homes that are constructed with sustainability in mind have proven to incur lower maintenance costs, reduce expenditure on utilities and provide their owners with a higher return on their investment. In the coming year, this will accelerate and translate to use of eco-friendly, natural construction materials such as brick and stone for exterior walls. On the exterior of homes, we can expect to see a rise in drought-resistant landscaping including turf, and inside, natural elements such as repurposed natural finished wood and low maintenance flooring are going to be in high demand.

High-Speed Internet and Broadband: Home offices will still be a priority in 2022 as many people are continuing to work from home. Smart consumer devices in 2022 will be featured in homes to provide personalized solutions to the unique challenges we face in our day-to-day lives, whether it’s the angle that the sun shines on our TV screen, home robots, or monitoring our activity to provide fitness advice. The trend for all things domestic to become increasingly “smart” and capable of communicating and connecting with each other in more useful ways will continue throughout the next year.

Multi-functionality: Single-use spaces seem to be a thing of the past. In the light of architectural strides and design, interior design trends in 2022 will feature creative ideas on multifunctional rooms and furniture.

Home Theaters, Yoga Studios, Home Gyms: After losing appeal because they took up too much space, home theaters are popular again as homeowners seek more at-home entertainment. A newcomer to the trends list is a yoga studio or home gym as homeowners look for ways to unwind and stay fit at home.

Purple is the New Gray (or Black): Once considered the color of royalty, purple has become one of the “reigning” requests in the increasingly colorful world of home design. It’s a jewel tone that is both rich and neutral as a base for bright or more earthy hues and is the complementary color for green which is also high on the list of trendy colors for 2022.

Outdoor Space: Having a yard or balcony gained ground during the pandemic and remains a big draw for buyers. As homeowners spent more time outdoors, their wish list for that space evolved. More and more people added a pet to their household in the past year making yard space a high priority. A fire pit is also still high on wish lists, but an elaborate outdoor kitchen with a pizza oven and beer tap has waned in popularity—many found they rarely use these bells and whistles. What is universally popular and a good built in-grill, cabinetry and a covered space for dining and watching TV outdoors.

Maximalism: The minimalism of the last few years is fading, while maximalism is soaring. What that means is rooms are being filled with comfortable furnishings, rugs, art, and collections with character.

Kitchen Design: One of the hottest design trends in the kitchen are two islands; one is for food preparation and the other is for gathering and entertaining. As demand for hyper-flexible spaces rises, double islands have become a place for stay-at-home work, schooling, cooking and eating.

What Design Experts are Saying:

‘As people continue how to navigate connections during this new normal, they are looking to create comfort that works as effortlessly indoors as it does outdoors. Adding dimension to the living spaces is important – incorporating warm colors, rich textures, and softness is crucial for that sense of comfort and normalcy, especially as we enter a new year with the pandemic still with us,’ says Alex Gibson, founder of home decor and textile design brand Sien + Co.

Texture is going to have a moment in 2022 in every aspect of the home, from walls to furniture to décor. As people look to add dimension in new ways, we’re going to see a resurgence of plaster and venetian walls and a stray away from the velvet trend as people look towards more dynamic fabrics like boucle and corduroy. This will also be a popular trend due to the surge in neutrals. With less colors to work with, interesting textures can add flair to a space in an unexpected way,’ says Channa Alvarez, interior designer at Living Spaces.

Ben White, design and trade expert at Swyft says that sustainability and natural design will be key in 2022: ‘Sustainability and use of organic materials have become prominent in recent years. With the public’s increased exposure to climate change, the idea of sustainability has fed into the interior industry and our homes. This will translate into how we buy furniture; a move towards furniture items with reclaimed woods and accessories with recycled glass and metal. We are looking for upcycled, antique or used furniture which has a story to tell; not only does its origin create great conversations, but it’s a greener approach to furnishing the home. Investing in meaningless furniture and accessories is a thing of the past.”

Elliott and Kagner think we’ll see “more vestibules, hallways, libraries, console desks, pantries, and dressing spaces with a focus on displaying object collections” in 2022. “For furnishings, think: throne-like chairs, consoles, and sideboards. For accessories, look for generously scaled table lamps, large candlesticks, quilts and rustic linen, patterning, and heavily textured ceramics,” add the duo.

Filed under: Blog, Boca Raton real estate, Down Sizing, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home decorating, Homebuyer Advice, Interior Design, Real Estate, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate by Kim Bregman
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“Buyer Beware” of Newly Renovated Homes

‘Renovate’, according to the Merriam-Webster Dictionary means “ renew, restore, refresh, and rejuvenate all mean to make like new.” When the phrase “completely remodeled or renovated” is used in the description of a listing, many homebuyers expect the entire house to be completely updated. But in residential real estate, a house advertised as “completely remodeled” may have several big-ticket items, such as the roof, HVAC system, appliances, pool, and windows that are either original or close end of their useful life.

This is particularly true with investor “Fix and Flips”. Buyers may find a newly flipped home more appealing because much of it feels new – but not all flips are the same. In any given price range, every property you’re going to look at will have its pros and cons. You certainly don’t need to avoid properties that are being flipped, but there are some things to watch out for if you’re looking at one.

You can easily tell if the home is a flip by looking at the property records. If the home is back on the market just a few months after being purchased by a new owner, odds are it’s a flip. Flipped houses may seem up-to-date on the surface, but shiny new finishes can sometimes mask shoddy work. If you’re looking at a property that is being flipped, you’ll want to be sure to get it thoroughly inspected before you close and set aside money for any problems that may crop up because of renovations that were done on a tight budget and by an unlicensed contractor.

“Let the buyer beware” or “Caveat Emptor” exists for a reason. Home inspections do not necessary note the useful life left on roof, appliances and ACs since they are only checking to ensure that they are in “working order and free of defects”. With that in mind, here’s what to look for when a home is described as “completely remodeled” or represented as “new”.

Electrical:

The standard for household power used to be 60 amps. Today modern homes need as much as 200 amps to run all the electrical needs. High-definition televisions, computers, air conditioners, generators, and home automation devices require lots of power to run. Have a home inspector check the entry cable coming into the house and the electrical panel. If the house has original or outdated wiring, consider upgrading for safety and function purposes.

Electrical outlets all under the electrical upgrade category but it’s important to pay close attention to the electrical outlets in a home. We still see the old-fashioned 2 prong outlets in older homes. These older outlets do not have the ground wires to protect people and electrical devices in case of a fault. Today’s modern houses should have the 3 prong outlets for safety and function purposes. In kitchen, bathrooms, and exterior locations, look for GFCI outlets. These outlets protect against electrical shock. They have a test and reset button. GFCI’s are now code in all new construction.

Roof:

Depending on the size of a house and the style of shingles, a new roof can cost between $50-$100 per square foot of roof or more. The age of a roof is a very important consideration when buying a house. Your Exclusive Buyer Agent will find out from the Seller the age of the roof or will run a permit search in advance of writing an offer. If you move ahead with the purchase of the home, make sure your home inspector gives you an estimate on the remaining life of the roof not just how old it is.

. GFCI’s are now code in all new construction.

Water Heater & HVAC:

Most water heaters and AC units have an 8- to 12-year lifespan. If the heater is a high-quality water heater, it may last longer. Take a picture of the HVAC label and Google it to determine the age. If the unit has been well maintained, there will be a label from an HVAC company with service dates. Again, this can be done when you are touring a home. If you decide to purchase a house and schedule a home inspection, the inspector will confirm the age and condition of the HVAC unit and water heater.

Plumbing:

Plumbing problems can be very expensive. When you are touring a house that you like, turn on the faucets to check pressure. Look under sinks for signs of water issues. Look up at the ceiling to see if there are any stains. You can’t always see a plumbing problem but it’s a good idea to ask the seller if they have a record of plumbing maintenance, past leaks or insurance claims.

Foundation:

Look at the house exterior for signs of moisture or cracks. Examine the landscaping to see how well the yard is graded. Water should be moving away from the house, not toward the foundation. Again, this advice is for homebuyers as they tour a property of interest. Does the home have gutters directing the water way from the property?

General Warning Signs:

Seller has a spotty memory ….
Or says things like, “I haven’t lived here long.”
Offers no real estate disclosure form
New paint, tile, or flooring here and there

Landlords, flippers, and rehabbers often claim they don’t know a property well because they haven’t lived there — but all of them know a building’s ins and outs better than the buyer, especially if they have done work to the property.

Almost all states have a disclosure form where sellers address a property’s age and condition; its water source; the nature of its sanitary sewer system; and any structural defects, as well as matters such as lead paint or termites.

Florida, has a “Caveat Emptor” or “Buyer Beware” rule, which still requires the seller or seller’s agent to disclose anything that impacts the buyer’s health or safety but only if asked. In the case of a transactional agent, only if they have asked the Seller to tell them. There is no legal obligation to fill out a Sellers Disclosure Form and many Transactional Brokerages have a policy to NOT provide one.

What To Do:

Read the home inspector’s report carefully, including between the lines when the inspector uses phrases like, “a lot of issues” or “a major issue.” Ask your exclusive buyer agent to prod the sellers for more details. If the inspector couldn’t access certain places, ask why.
Ask for a disclosure form. Push for more answers to your questions. When a listing agent refuses to provide the standard disclosure form, I put all the questions in the form on an email and make it an Exhibit to the contract. The Seller has a legal obligation to answer questions asked directly.

Warning Sign #1: Cosmetic Cover-ups:

Fresh paint is a wonderful way to mask deficiencies. Paint can cover cracks in the walls or ceilings, mold, and water stains. New bathroom and kitchen tile hides cracks and structural damage. New carpeting is a recommended fix to cover floor tiles containing asbestos, poor sub-floors or previous leaks, but buyers likely still want to know what’s underneath.

What To Do:

Ask for receipts, permits, warranties and other documentation, such as photos taken during the renovations to authenticate that the work was done properly.

Warning Sign #2: Downplaying Problems:

Some sellers opt to move once a house reaches a certain age and requires major investment in maintenance and replacements.

Phrases like, “It’s always been that way,” “That’s not a big deal,” or “Show me a house that doesn’t have a problem.” ” It was that way when we bought it”

While these statements might be true, they can be indicators of large problems.

What To Do:

Look for signs of irregular maintenance, such as dusty air vents, old filters in the AC system, clogged gutters, and dying grass, just to name a few. Politely but firmly ask for more details, receipts, and documentation about anything the homeowner waves away.

Warning Sign #3: Camouflaging Decor

Some buyers will try to disguise things they can’t fix with whatever’s at hand. Large area rugs hide defects in flooring. Artwork hangs over wall cracks and holes, and strategically placed landscaping hides exterior foundation cracks. Acid washing a pool will delay determining the age and condition of the finish. Candles and air-fresheners can mask odors of nicotine, mold, pets, and other musty smells that a homebuyer might not detect until they move into the home. Having the music playing inside or outside the home can mask road or airport noise.

These items may be discovered at walk-through but by that time you have a loan in place and have lost weeks and waived your contingencies. It will then be a fight to secure credits at closing or close in escrow.

What To Do:

Ask to turn off the music or remove the scents and return at a later date during the inspection period.
Request that items be cleared from walls and garage to accommodate the inspector.
Don’t be rushed though the final walk-through. Is there anything that has deteriorated since the inspection? Anything that was hidden or unobservable?

Fix It, or Forget It?

It if the inspection uncovers things the seller didn’t originally disclose or explain in detail, you legally have the right to cancel the contract during the Contractual Inspection Period…..never waive this contingency. You and your agent also can negotiate for the seller to do the repairs or reduce the price so you can handle them yourself.

Filed under: Blog, Boca Raton real estate, contracts, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Home Buyer Advice, Home Buyers, home Inspections, Home Maintenance, home safety, Homebuyer Advice, Real Estate, Real Estate Investment, real estate news, South Florida Real Estate, Uncategorized, What Buyers Should Check When Buying an Older Home by Kim Bregman
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What is An Appraisal Gap and Appraisal Gap Coverage Clause?

An appraisal gap is the difference between the fair market value determined by the appraiser and the amount you agreed to pay for the home.

An abnormally high number of homes across the United States are being appraised below their agreed-upon sales prices, causing some deals to implode.With home prices soaring in recent months, buyers often pay above asking price to win bidding wars. As a result, CoreLogic estimated that about 13% of appraisals came in below the contract price in August.

A home appraisal is an evaluation and report performed by a licensed appraiser to determine a home’s fair market value. Lenders require a home appraisal to ensure the amount you agreed to pay for the home is equal to or less than the appraised value. To create a home appraisal, appraisers normally rely on factors like data from recent closed and pending sales. But since sales usually close a month or two after going under contract, rapidly increasing home values can sometimes skew appraisals that rely on home values recorded months earlier.

In today’s hot market, many prospective buyers will get into bidding wars and possibly waive the appraisal contingency or offer an appraisal guarantee up to a certain amount. In both cases, the buyer would have to come up with the difference in cash between the appraisal and the sale price, or their appraisal guarantee and the sale price.

The disparity underscores the risks buyers face in the current market, especially those stretching their dollars to win a bidding war. Mortgage lenders will typically offer only enough to cover the appraised value of a home, forcing buyers to either provide the balance, renegotiate, or terminate the deal if an appraisal comes in below the contract price.

Using An Appraisal Gap Coverage Clause:

If you want your bid to outshine the others, an appraisal gap coverage clause may be necessary. An “appraisal gap clause” is used in a sales contract to guarantee that the home buyer will cover the monetary gap between the appraisal and the sales contract if an appraisal gap becomes an issue.

The clause states how much of an appraisal gap you’re willing to cover. Since there’s no guarantee an appraisal will match the agreed-upon sales price, it’s often something sellers look for to know the offer will still stand even if the appraisal comes in a little low.

The main thing that needs to be noted is the monetary value of your appraisal gap guarantee. It’s not wise to state that you will cover an unlimited amount between the sales price and the appraised value. I recommend always putting in the maximum amount that you are willing to cover.

What Should You Do When The Appraisal Is Less Than The Offer?

You have several options when the appraisal is less than the offer including walking away from the sale, but that doesn’t work in every situation.

Here’s what to consider:

Pay The Difference

If the seller won’t negotiate to lower the purchase price, you’ll be on the hook to pay the difference unless you have an appraisal contingency in your contract. The appraisal contingency gives you a way out of the contract without losing your deposit. Without it, you must buy the home or risk losing your the money you have already put down into escrow.

Without a lower sales price, you’ll have to pay more for the home. Since lenders base your loan amount on the appraised value, you’ll need your agreed-upon down payment plus the difference between the sales price and appraised value.

What if you don’t have the cash?

Ask for gift letters from family members or leverage your investments. You may be able to use some retirement funds without paying a penalty. Talk to your 401(k) administrator or tax advisor to see what options you have. If you own other real estate, consider tapping into the equity and using the funds to cover the appraisal gap.

Renegotiate The Offer

If you have an appraisal contingency on your sales contract, you may be able to work with the seller. Start by requesting the seller to lower the price to the appraised value. This would eliminate the appraisal gap and your financial issues in buying the home.

Asking the seller to renegotiate can be risky in a seller’s market, so be careful. If the seller has a kick out clause, they could accept another offer that comes through. They still must give you the time to remove your appraisal contingency and seal the deal, but they can choose the other offer if you don’t.

Dispute The Appraisal

You can dispute the appraisal, asking for a reconsideration of value. However, this is not easy to do as you’ll need plenty of evidence to prove the appraisal is inaccurate.

You must prove one of the following:

The appraiser didn’t use appropriate comparable sales, and you have proof of more accurate options
The appraiser missed features or upgrades in the subject property
You found mistakes in the report
The appraiser only conducted a drive-by or exterior appraisal

Walk Away from the Sale

It’s not the most pleasant choice, but if you’re worried about paying more than a property is worth, sometimes walking away from the sale is the best option. If you’ve unsuccessfully renegotiated with the seller and disputed the appraisal to no avail, it may be best to look for another property.

Before you do this, talk to your attorney. If you didn’t include an appraisal contingency in your contract, you might risk your deposit. Sometimes other contingencies still help, though, especially a mortgage financing contingency.

Filed under: appraisal, appraisal gap, appraisal gap coverage clause, Blog, Boca Raton real estate, contracts, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Real Estate, real estate news, South Florida Real Estate, Uncategorized by Kim Bregman
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