Buying, Selling and Leasing Real Estate is a breeze when you’re experienced. For those who are new to it, we’ve assembled an ever-growing list of frequently asked questions.
First and foremost, Real Estate Professionals in Florida are not permitted to offer legal advice. Realistically, we shouldn’t even share our opinions. It’s not only improper, it’s illegal. The benefit of competent legal advice on a real estate deal stands on its own. There are so many things that can go wrong on a real estate deal that you may very well end up kicking yourself mightily if you don’t hire an attorney to help you with the transaction. We as real estate agents don’t get paid unless the deal closes (unless a buyer somehow becomes obligated to pay a commission by, for example, backing out of a deal or otherwise breaching an agreement). Our listing agreements will clearly state that real estate agents are not providing legal advice. Most real estate agents are typically not going to worry about the “what if’s” of the legal details (we’re not most real estate agents). We will never push a deal to closure just to make a sale. Instead, we always insist Buyers and Sellers use an attorney.
There are many similarities and also a wide variety of differences between the two. There are a variety of obvious things to deal with; however there are some very important contractual things which aren’t so obvious. Real Estate laws are written to protect home buyers, even if the buyer is experienced. When buying residential real estate, the buyer is deemed “unsophisticated in business” and offered a variety of protection inclusive of specific disclosures even through the financing process. When it comes to Commercial Real Estate; however, the Buyer is deemed “Sophisticated” and the ability to say “I didn’t know” is gone. First time commercial (investment) buyers should always be certain they have a trustworthy Realtor at their side and without question, a trusted attorney.
Commercial Real Estate refers to any dealing with the context of business. Generally speaking, anything which is not a house or condo is Commercial. More specifically, it could involve leasing of office space, ownership and rent of units in an apartment complex, retail properties or industrial assets. If you don’t live in it, it’s commercial.
Typically, for any property being sold as-is, the buyer is responsible for all repairs. In real estate, everything is negotiable and always consider speaking with an attorney.
In any market, price and condition are the two key factors in selling a property.
If a property isn’t getting activity needed to sell it’s probably because it’s overpriced for the market. Aside from price, go through the property looking for cosmetic defects which can be repaired and don’t forget landscaping. Curb appeal is half the battle in selling a property. After that, make sure the property has exposure. These days it’s not just the MLS or variety of residential or commercial listing services. There are a variety of advertising options and don’t forget one of the best: a sign.
In the most dire situations, perhaps if the property has been sitting for some time, another option is to remove the property from the market and wait for marketing conditions to improve, catching up to the price or, use this down time to make some repairs and positive changes.
Concealing issues is never good. If discovered, there is a breach of trust. If undiscovered and something bad happens as a result of non-disclosure, it’s just not right. Typical obligations to disclose are any defects or deferred maintenance which could or does affect the property’s value or safety. It is always wise to hire an inspector and be certain to ask for (as a Buyer) or offer (as a Seller) the Seller’s written disclosure prior to a home purchase and ask questions if it does not satisfy you entirely.
Minor repairs before putting your property on the market may lead to a better sales price. Most Realtors and attorneys will encourage an inspection or some kind of due diligence as part of a contract which allows the Buyer to back out if substantial defects are found. Once the problems are noted, buyers can attempt to negotiate repairs or lowering the price with the seller. Any known problems that are not repaired must be revealed as a material defect. You do not have to repair the problem, only reveal it and the house should be appropriately priced for that defect.
There are a few methods used to determine a property’s value; an appraisal, a comparative market analysis (CMA) and a BPO or Broker Price Opinion. Appraisals vary in cost, can take some time to complete and may be defendable in court. A comparative market analysis is an informal estimate of market value performed by a real estate REALTOR® or broker and is based on sales and listings that will compete with your property that are similar in size, style and location. Like an appraisal, a BPO may be defendable in court and is often performed by the broker.
Appraisers and Brokers performing a BPO review numerous factors and base information on recent sales of similar properties, their location, square footage, construction quality, excess land, views, water frontage and amenities such as garages, number of baths, etc.
The analysis or opinion should be in writing and should involve professionally accepted practices.
Have questions about BPOs? Read more here.
Property sells year round. While life happens and creates various needs, sales are often a function of supply and demand, as well as other economic factors. The time of year you choose to sell can make a difference in the amount of time it takes and the final selling price. During the summer, the market usually slows and in Florida, the end of July and August are often the slowest months for real estate sales. Spring and Fall are often the best times of year for sales; though, like the Summer slowdown, sales activity tends to slows again as buyers, sellers and REALTORS® turn their attention to the Winter holidays.
Generally speaking, you’ll have the best results if your house is available to show to prospective buyers continuously until it sells.
Unless you’re obtaining a loan from a bank, you don’t ever “need” one. However; the EPA has a strict rule: if you own the property, and it’s contaminated the problem is yours. There is no such thing as “oh.. I just bought it and didn’t know”. Your property = your problem to remedy.
In some situations, it makes sense to get one (such as buying a gas station or industrial property or a property which may be near gas stations or dry cleaners, for example). When it seems the chance of there being any problem is remote, it may be tempting to pass on doing an assessment. In reality, you’re probably doing yourself a disservice if you don’t get one, as any problem that arises could result in catastrophic liability exposure for you even if you didn’t cause the problem.
There are also different phases of environmental site assessments. They range from A “Phase I,” which involves an inspection of the property and review of various historical records. If there is possible evidence of contamination, or historical indication, the next step is a “Phase II”, which involves boring or drilling, and likely the testing of soil and/or water samples. If tests come back negative, then the transaction can proceed. If contamination is discovered, a Buyer can decide to cancel a deal or decide to go into a “Phase III” which is a cleaning of the soil and water.
For more information, contact us and we’ll point you to a specialist in this field.
Title insurance is an insurance policy that provides assurance to interested parties that there’s good and marketable title to the property being insured. This doesn’t mean that title insurance guarantees perfect title. The main benefit is protection to claims by others challenging ownership of a property. If the claim is proven true, and you, as owner paid for the property, title insurance will typically pay the claimant what they are owed, so long as they can prove their rights. Consult with an attorney or title company for more specific details.
YES. Florida Real Estate Laws require that a reasonable deposit be made within a specified time frame to enforce a purchase and sale agreement to make it effective (real). No deposit, no actual contract. On the flip side, if a deposit is due and not made, the contract is not enforceable by the Buyer, by whom the deposit was due. However; this places the Buyer in breach and could lead to legal woes if the Seller decides to take action versus just moving on to the next Buyer.
A “1031 exchange” refers to a method of deferring tax on the sale of an interest in real property allowed under section 1031 of the Internal Revenue Code. Essentially, it allows a seller to defer tax on a gain that would otherwise be realized on a sale of property if the proceeds from the sale were reinvested in like-kind property. It’s common for a 1031 exchange to be involved in a commercial real estate transaction.
A seller must contractually arrange to convey his or her interest in the property being sold in exchange for receiving an interest in another piece of commercial property. If cash is involved, an escrow company or facilitator usually handles it, because treatment under section 1031 won’t be possible if the proceeds are paid to the seller even for an instant. In practice, however, the rules for a 1031 exchange can be quite complex and it is easy for a seller to run afoul with them. It’s always advisable to have competent legal counsel involved in the transaction.