Basic Guidelines for Making an Offer on Your Florida Dream Home

Gayle Kurtzer-Meyers

Making an offer

Along with numerous hot spots across the nation, the Florida real estate market has been on fire throughout 2021. Nevertheless, many potential homebuyers are still watching and waiting and wondering when to buy and when to pass.

Meanwhile, properties are selling as soon as they're listed. Single-family detached homes are in high demand. Many of these homes sell for more than the asking price as potential buyers compete for the sale.

Homebuyers will need all the help they can get to snag a good deal on real estate in 2022; waiting for that "just right" home to materialize can be frustrating. However, you can use this time to learn what a Florida property purchase will involve. Then, when the right home appears, you'll be ready to act.

Make the highest possible down payment.

To get a conventional single-family home loan in the U.S., you'll need between three and 20 percent of a total loan value as a down payment. You'll also need a credit score of 620 or more.

The more substantial your down payment, the better the terms you can expect; in addition, the monthly payments will be lower and total interest will be reduced.

Mortgage loans that don't require a down payment

If you can't afford a down payment, but you want to buy a house, you might qualify for a loan from the Department of Veterans Affairs (VA) or the U.S. Department of Agriculture (USDA). With VA loans, you can even avoid paying for mortgage insurance.

The Federal Housing Administration (FHA) will give you a loan if you submit a down payment of at least three percent and your credit score is at least 570. If your score is between 500 and 570, you'll need a 10 percent down payment.

The only drawback of a zero or low down payment is that you'll pay more in interest over time. Your monthly payments will be high as well.

Assemble the required documents

Check your credit score and conduct a thorough review of your credit report. Know where you stand with the credit reporting agencies, and address any unfavorable information in your file.

Here's what you'll need to provide:

  • · Most recent tax returns
  • · Banking information
  • · Proof of employment
  • · Proof of income
  • · Renting history
  • · Government-issued photo identification

Enlist the help of a Real Estate Buyer's Agent

A buyer's agent can guide you through all aspects of the homebuying experience. Because they have inside information, they can help you find homes with the features and characteristics that meet your needs. In addition, they can alert you to listings you might have missed.

Buyer's agents can prepare offers and counteroffers for your home purchase and walk you through the closing. The seller pays all real estate costs and commissions so that buyers can consult with agents free of charge.

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Determining how much you are qualified to purchase/Photo by Anthony Shkraba from Pexels

Do the homework with prequalification.

With prequalification, you can determine the loan amount you'll be financially qualified to obtain. The offer will be based on your income, assets, and estimated credit score. Prequalification won't show up on your credit report.

The lender will verify your information and issue a preapproval letter stating that you have the means to buy a house. You can prequalify at lender websites through their online portals.

Prepare for market increases.

Experts believe that strong demand will continue throughout 2022 unless inflation exceeds wages.

"Much of what drove high price growth this year will follow us into next year. We will expect to see prices rising at extremely high levels for the first few months." -Nicole Bachaud, Zillow economist

According to the latest Apartment Guide and Rent.com report, the national average rent for a one-bedroom apartment increased by more than 20 percent in 2021.

Companies are raising salaries by almost four percent in 2022. However, even salary increases may not offset the rising cost of housing. Higher rents make it harder for tenants to save for a house, too.

COVID-19 is the X factor that could drive the demand for housing one way or another, depending on what the virus does next. If it goes away, people might consider a return to the cities.

If it gets worse, people will flee the cities significantly. Either way, you'll have to think on your feet to navigate the swiftly moving current of the 2022 real estate market.

Explore alternative financing sources

You may qualify for various financing opportunities, including first-time homebuyer grants and subsidized mortgage loans. These alternatives are worth exploring.

When challenged to find financing, a down payment assistance program might work. It's a risky option, but it can put you back in the homebuyer game.

Make a competitive offer.

You never know when the house you've been dreaming of will materialize. So be ready to take action when it does. If a home feels right, it probably is. So trust your inner knowing, and make an offer on the spot.

Remember that there are dozens of potential homebuyers eyeing the same property, and they won't hesitate to act unless you act first.

Including a competitive escrow deposit with your offer will tell the seller that you mean business. Ensure that any submission includes all the necessary forms to be considered an executed contract.

When multiple offers are on the table, you can submit an escalator clause saying that you will meet competing bids up to a given amount. Again, your buyer's agent can help you set it up.

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"Do not send an "I love your house" letter./Photo by Ron Lach from Pexels.

Don't send love Letters to the seller.

Somewhere along the line, homebuyers began to send "love letters" to sellers and property management companies listing all the reasons they loved a particular home. The objective was to make the offer stand out in a tight and competitive market.

Unfortunately, those letters can violate the Fair Housing Act and result in messy litigation. The civil penalty for a violation is $16,000 plus court costs and fees.

Expect higher closing costs.

Average Florida closing costs are about 2.58 percent of the purchase price. In addition, buyers and sellers alike pay various taxes and fees at closing. To reduce those expenses, you can ask the seller to cover some or all of the costs for you.

Sellers already pay for real estate fees and commissions, but it doesn't hurt to ask. Alternatively, you could roll your closing costs into your mortgage.

You might be wondering who pays for the title insurance. It depends on the county where you buy property. In 60 percent of Florida counties, the seller pays for title insurance. In the other 40 percent of counties, the buyer foots the bill.

After moving into your new home, you can get a $25,000 exemption for the first $50,000 of your property's assessed value. The house you are claiming must be your permanent residence, and you must be the actual owner of the property as of January 1 of the current tax year.

"Courage and commitment are prerequisite for purchasing a home , but immense cannot begin to describe the rewards."-HomeStratosphere.Com-

This article is for informational purposes only. It should not be considered Financial, Real Estate, or Legal Advice. The market fluctuates; therefore, not all information will remain the same. Consult a financial or real estate attorney before making significant real estate decisions.

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I am a Licensed Community Association Manager for the State of Florida and a published author. My top articles are about Florida RE, property management, and the many beautiful venues and activities available in the Sunshine State. Thank you for reading my work and joining me on the journey.

Kissimmee, FL
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