3 potentially costly mistakes when buying a home or condo

There are several potential mistakes you could make when buying Florida residential real estate and I’m going to cover three here that I think are important to keep in mind.

Tea first skips home inspection (s). It is your choice whether or not to do them, but I always recommend doing a home inspection and a termite inspection.

Whether your purchase is an as-is sale (where the seller would not make any repairs for items that come up on an inspection), it is very important that you know if there are any current problems with the property and what the potential future is. problems there may be. This is especially true with foreclosed properties.

This is especially important in Florida when buying property.

1) There are termites here and if you are buying a wood frame home, there could be hidden damage that can create major problems down the road. Even with concrete block houses, if the exterior is stucco and lowers too close to the ground, the termites will be given something to eat and a possible way to climb onto your roof frame.

2) Your air conditioning system should work well and continue to function properly because you will definitely need it in the summer months. It is important to know both the age of the system and whether it is working as it should.

3) The biggest expense is usually the roof and in Florida intense sun and heavy summer rains can shorten the life of a roof. You need to know how old the roof is and roughly how long it is likely to last, as well as whether there are recent or current leaks.

I had a customer who discovered on inspection that the roof of the house they were buying had worn much faster than it should and that it was going to need a replacement even though it should have lasted another 3-5 years. We were able to negotiate with the seller on this and found that the price dropped another $ 5000 because of this.

Another good example of why this is important is a client who had a contract on a foreclosed property about a year and a half ago. It was a spacious house built about 16 years ago and it was everything I wanted and at a better price than I expected. We could both tell there was work she would have to do with it, but it still seemed like a good deal. However, the home inspection showed us that he was probably making a mistake.

She would have needed to replace the roof, air conditioner, ductwork, and water heater in addition to what we already knew (appliances, hardwood floor repair areas, pool screens). That was bad enough, but then the inspector noticed that there was a gap between the crown molding and the ceilings on some of the walls at the back of the house. We could see that there was already caulking in the gap from a previous gap and that now even the caulking was opening. The inspector’s opinion was that there was a soil settlement problem; possibly to the point of being a sinkhole, and that was something that just kept getting worse over time (hence the new gap in the caulking). Fortunately, my client’s contract was written so that he could cancel and get his deposit back due to the extent of the necessary repairs.

If you had tried to save a few hundred dollars by not having a home inspection, it could end up costing you tens of thousands of dollars.

Tea second costly mistake it comes from incorrect or incomplete information about what your future financial obligations will be for taxes and / or monthly association fees.

With both houses and condos you will have annual property taxes. The amount of taxes you will pay may be much higher than what the current owner was paying due to the Florida homestead exemption, so you need to determine what your taxes are likely to be.

A good example of this is a relative of mine who bought a newly built house in 2005. I warned him at the time that his taxes would go up next year and that he should be prepared by saving additional money as the amount his bank would collect each month for the taxes on your loan payment would fall short. Unfortunately, he didn’t pay attention, and then in late 2006, after that year’s tax bill came in, he noticed that his monthly loan payment had increased by around $ 200 and he was quite upset and didn’t understand why. I looked at his statement and saw that the increase was strictly due to tax reserves and went over it again with him.

For condos and townhouses (and in some cases houses as well), you may have to pay a monthly maintenance or association fee. If the association has a stable financial position and a good level of reserves, those rates should remain somewhat stable. However, if the association is not in a stable financial position or has not booked adequate reserves, it may end up in a position where thousands of dollars are assessed at some point in the future for a roof repair, replacement. of windows. etc. (occurs mainly with complex condos).

To avoid this, you should obtain a copy of the association’s most recent financial statement and review it within the allowed time period. You should also find out from the association what percentage of homeowners are behind on their dues. Condo communities that were built in Florida during the boom or that were ‘condo conversions’ during the boom years are experiencing many foreclosures due to the amount of sales that went to investors and due to falling values. If too many people do not pay their dues, it can result in an increase in dues to homeowners who are paying to cover annual expenses. This is something that is seen more in areas like Miami, but it is also something that I have seen in some complexes in this area.

A local complex where buyers made the mistake of not verifying that the association had adequate reserves was valued at tens of thousands of dollars when its roof, windows, railings and carports had to be replaced a few years ago. That, in addition to the drop in property values ​​since 2006, ended up being very costly for those homeowners.

Tea 3rd costly mistake You are trying to buy a property without being represented by a good buyer representative (real estate agent). It’s easy for a deal to go bust if the buyer or seller gets upset about something and there is no “cushion” to dampen it on its way to the other side. Some states like New York require both buyer and seller to have an attorney represent them for most of the process after a buyer chooses a property they wish to bid on. Florida does not, although you can have an attorney represent you if you wish. Therefore, when buying a property in Florida, you can continue without anyone representing you, but if you do not know all the ins and outs of the process, you risk making mistakes that can lead to unnecessary costs, lose your deposit, lose the property you want. shopping and other problems you could have easily avoided.

An example of this was a client of mine who was interested in purchasing a condo that had sold for over $ 900,000 in 2005 and had a short sale price of $ 199,900 in a nice community with an incredible view of the water and beautiful improvements. . The seller or his agent did not disclose that the community had legal problems with the developer and that all owners were likely to be assessed at least $ 5,000 in the near future. Fortunately I learned of this from another agent who had sold properties in that complex and informed my potential buyer. Since then, the situation has only gotten worse and the value of condos has plummeted.

Also, if you don’t have a competent purchasing agent and the sales agent doesn’t know what they are doing or is making mistakes and you trust them, you can end up with problems that you wouldn’t have had otherwise. Buying real estate can be stressful and you don’t need to compound the stress with problems that you shouldn’t have to deal with and that you don’t necessarily know how to handle properly. A competent buyer’s agent can help you keep your stress level to a minimum and help you with the things that come up and that are stressful to help you get through them. Taking into account that in most cases you do not have to pay the buyer’s agent commission (normally it comes from the commission paid by the seller to his agent), you should take advantage of this type of help.

Copyright 2010 Ron Nedd