It is of course impossible to talk completely about closing the deal on your Florida property without making sure the right finance is in place – and that’s a big enough subject to justify a whole section of this book all to itself.

So, to let us follow the buying process through to its conclusion without getting too bogged down in the details of mortgages, currency transfers and so on, I’ll cover some financial matters very broadly for now – and then return to them in detail in the next section.

THE DEAL ISN’T CLOSED UNTIL……
Purchasing a property in Florida has two key stages:

1. Once you have found the property you want, you will sign an agreement of sale. This commits both you and the seller to the deal, but usually only within the context of a number of conditions or clauses that you must both satisfy.

There are a number of contingencies that are commonly included, but you can include anything that is agreed by you and the seller. It is certainly common to make an offer contingent upon the outcome of the various inspections described later in this chapter, and you may make the sale conditional upon you getting the right kind of mortgage, or upon the seller providing appropriate documentation to prove ownership, and so on.

2. The final stage is “settlement” or “closing”, and brings with it a significant range of different fees. We’ll look at these in more detail later, but a useful leaflet from the US Department of Housing and Urban Development contains full details of everything to account for – and handy tables to help you keep track of all the costs involved.

TIME IS OF THE ESSENCE
This Is Important! In Florida, “time is of the essence” isn’t just a saying – it’s fundamental to the way contracts are written and enforced. Any commitment to action by a specific date is binding, and British buyers especially must pay careful attention to every date that is included in the contract. The most common areas where time is of the essence are:

• Deposits. In a typical contract the buyer will give a smallish deposit with the initial offer, with a second deposit due within a specific number of days. If you fail to get this second deposit to the appropriate party by the due date the seller could declare you in default and sell the property to another buyer.
  
  
• Time to Accept the Offer. If the contract is going back and forth between seller and buyer while price negotiation is taking place, both parties need to pay particular attention to the clause “Time for acceptance”. If either party fails to meet these time scales the offer or counter offer could be withdrawn.
  
  
• Mortgage/Financing Contingency. If the contract is subject to mortgage financing be sure that both application and approval dates are realistic and adhered too.
  
  
• Who is Responsible for Title Insurance? If the seller is responsible for providing a title insurance commitment by a certain date and fails to deliver the buyer may well use this as a way out of the contract and claim default by the seller.
  
  
• Property Inspections. You typically have a very limited time frame to have your home inspections carried out. If you do not complete these inspections within the given time frame you probably have lost that right and not only will you be unable to claim any compensation for repairs, you may be stuck buying a home that requires costly repairs you were unaware of.
  

If you don’t meet each milestone as it comes up, the seller can pull out of the deal, and will probably keep any deposit you have already paid.

That might not be likely to happen if you have a motivated seller who is keen to sell to you, but in a “hot” area with rising prices, the current owner could have received a higher offer after your initial agreement of sale. Under these circumstances, they might look for any loophole to get out of the agreement – and date-related default is the most common way out.

TRUSTED ADVISORS
Before you can make a final commitment to a property, you need to enlist the support of a team of professionals who will protect your interests and avoid costly mistakes.

MORTGAGE AGENT
There are many critical differences between how mortgages work in Florida and the USA, and there can be serious consequences if you get the wrong kind of mortgage for the property you buy – or the way you plan to use it.

We’ll talk a lot more about mortgages in the next section, but suffice to say it’s essential that you find an independent mortgage agent (also called mortgage brokers or mortgage planners) who understands and is experienced in your kind of purchase – second home, retirement property, investment property, etc – and works extensively with UK citizens buying in Florida.

Independent Appraiser
The job of the professional appraiser is to determine the “value” of a property by gathering and analysing information about the property and the surrounding area – their objective being to prevent you form paying too much for a property, and to prevent the lender from lending more money than a property is worth.

The concept of “value” in this context can have several meanings:

Market Value
Market value is the “most probable” price that a willing seller and a willing buyer will arrive at through negotiation. It assumes:

• Both parties are motivated
  
  
• Both parties are “market-aware”, that is they are well-informed and well advised of current values
  
  
• A reasonable time is allowed for other people to view the property
  
  
• Payment is by some “conventional” method – cash or mortgage
  
  
• Negotiation of the transaction is genuine, with both parties completely independent of each other with no relationship between them
  

There are however at least two different approaches that might be used to arrive at a “market” value.

Cost Approach Valuation
The cost approach to valuation assumes that value is based on a very down-to-earth model that assumes the price someone will pay for a property is based only on the land value, plus the cost of construction and an allowance for desirability, minus depreciation.

This type of approach to valuation is appropriate where you are buying a property for your own exclusive use.

Income Approach Valuation
The income approach to valuation is based upon the estimated net income from renting the property or the operation of another business type based upon the property itself (as opposed to simply operating out of the property).

In most cases, the amount a lender will advance on a property is based on the lesser of the asking price or the appraisal, so an income approach valuation may be essential to raise sufficient financing for a property in a competitive seller’s market.

An appraiser will arrive at their valuation based on a number of physical factors:

• Condition both inside and out
  
  
• Room layout and floor plan design
  
  
• A reasonable time is allowed for other people to view the property
  
  
• If the home has been updated and modernised
  
  
• Size (square footage)
  
  
• Measured dimensions (including garage and outbuildings)
  

The appraiser will usually only consider property that is “fixed” to the land, so swimming pools and tubs that are above ground and small sheds and so on without fixed foundations will not usually factor in the valuation. Bear that in mind from both a buyer and seller’s point of view.

An appraiser also factors in information from a variety of sources, including the Multiple Listing Service, tax assessors’ records, courthouse records, private interviews (if information cannot be found publicly), other appraisers and their personal knowledge of the area.

HOME INSPECTOR