DSCVR Florida Real Estate News & Market Trends

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DSCVR Florida Real Estate News:

Sept. 26, 2019

Buying, Selling or Mortgaging a Florida Home Using a Power of Attorney (POA)

There are circumstances when residential real property transactions include the use of a Power of Attorney (or “POA”). In Florida, as in many States, an individual, corporation, or trust may authorize a third party to act in their place to convey (sell), buy, or mortgage residential real property without having to be present or even informed of the transactions. A POA may also be used to enter into a contract to buy, sell, or mortgage real property

Use of a Power of Attorney adds additional complexity and is often the source of fraud, theft, misrepresentation, and breach of fiduciary duty. POAs are also frequently misused unintentionally due to the principle’s or agent’s lack of familiarity with how they work. All parties concerned in the transaction should take extra care to avoid a fraudulent or ineffective transaction and the resulting potential liability. Consumers and real estate professionals alike should take precautions that will significantly reduce or eliminate these risks.

There is a common misbelief that third parties such as banks, government agencies, hospitals, or title agencies must accept POAs. Third parties are not required to accept every POA and may refuse to take them for a variety of reasons, including their policies. Many, like banks, do not accept a POA if it is more than six to twelve months old. Others like, medical facilities and government agencies, may require the use of a specific POA form provided by their legal counsel. Others refuse to accept POAs executed outside the State of Florida. Therefore, it is advisable to contact all parties involved in a transaction to determine the proper form.

First, one needs to be familiar with what a POA is, the different types of POAs, their requirements, and their uses and limitations. All of these can vary from state to state and country to country. This article is limited to POAs authorized explicitly for use in Florida.

 

A power of attorney is a legal document through which one party grants certain powers to another party to represent or act on their behalf. The party with the granted authority become an attorney-in-fact. The grantor and attorney-in-fact are referred to as the principal and agent, respectively.

 

Just because a document is a valid POA doesn't mean that it is effective in particular real property transactions. Therefore, it’s essential to know the types of POAs and their requirements under the law.

Types of Powers of attorney: 

  • General Power of Attorney – A POA that grants a broad range of powers. Each power granted must be specified like the power to buy or sell a motor vehicle, to access bank accounts and sign checks, or buy, sell, or mortgage real property. Specific powers aren't automatically included, nor are they required to be excluded explicitly although they often are.

 

  • Special or Limited Power of Attorney – This type of POA limits the agent to a single transaction or certain types of transactions for a limited period. The limitations prevent misuse outside of the principal’s intent. In the past, this type of POA was often used to affect the purchase or sale of a specific residential property when the principal is unavailable. However, they are used less frequently and are being replaced by mail away closings, electronic notaries, and soon by blockchain transactions. 

 

  • Durable Power of Attorney – A durable POA may be either general or limited in purpose. The difference is that it isn’t invalidated by the principal becoming incapacitated. The POA must contain specific wording that makes it clear that it survives the incapacity of the principal. Even then, there are some circumstances where the POA is ineffective due to the principal's incapacity. 

 

  • Springing Power of Attorney – A springing POA may be general or limited in purpose, but it doesn’t become effective until after the principal is determined to be incapacitated. This form of POA was prevalent in estate planning in the past. It helped avoid misuse because it's invalid until the principal is determined to be incapacitated and thus unable to conduct his or her affairs. However, springing powers of attorney are no longer valid in Florida unless they were executed before October 1, 2011, making them very rare. The production of a springing POA by a party to a real estate transaction should be met with extra caution.

 

  • Incapacity is defined under Florida law to be: “The inability of an individual to take those actions necessary to obtain, administer, and dispose of real and personal property, intangible property, business property, or benefits and income.”

     Under Florida law, an agent is a fiduciary of the principal. For the agent to qualify as an attorney-in-fact in Florida, they must be at least 18 years old or a financial institution with “trust powers” and an office in Florida. Agents must keep records. Under Florida law agents under a POA must keep separate records of all receipts, contracts, disbursement, and transactions made on behalf of the principle.


     Florida requires the POA to be signed by the principal and two witnesses to the principal’s signing, and a notary must acknowledge the principal’s signing. Since the notary is not acknowledging the witnesses’ signatures, the notary may act as both witness and notary. Also, if the principal present but physically unable to sign, then he or she can make their “mark,” or the notary may sign their name for them.

     When executing documents, agents do not sign their name. The agent must sign the principal’s name first. This shows that the agent isn’t acting on their own behalf. The agent then writes “by” and signs their own name followed by the words “agent,” “attorney-in-fact,” “power of attorney,” or simply “POA.” Before signing at a real estate closing the agent should always ask the closing or escrow agent which wording to use. A correct signature should read "Jane Principal by John Agent, POA."

     Additional facts about POAs: 

  • Florida law does not require the presentation of the original POA. Electronic copies, photocopies, and facsimiles are legally acceptable, but not preferred.

 

  • POAs do not expire unless there is an expiration date in the document.

 

  • Valid, out of State POAs are acceptable but do not have to be accepted.

 

  • Multiple agents named in a POA may act independently unless otherwise restricted by language in the document.

 

  • Compensation: Certain qualified agents such as attorneys at law, the principal’s spouse or heirs, and financial institutions with trust powers, among others, may receive compensation for their services. Non-qualified agents may only receive reimbursement for expenses.

     Real estate professionals may not provide advice as to the POA's validity or affect, but should advise their customers or clients to have the POA reviewed by a licensed Florida attorney familiar with both real estate transactions and POAs. Always make such recommendations in writing and retain a copy in the transaction record.

     While used less frequently today in residential real estate transactions, powers of attorney still have their place under certain circumstances. POAs are often improperly drafted, misunderstood, or intentionally used for fraudulent purposes. Consumers and real estate professionals need to take extra precautions when using a POA for contracting or closing the sale, purchase, or financing of real estate sale. The best practice is to request a complete copy of the power of attorney early in the transaction or before entering into a contract and present it to and experienced Florida attorney for review. If a contract is executed before an attorney review, then the contract should be subject to attorney approval. Failure you do so could result in a fraudulent or ineffective transaction. Furthermore, it could create a cause of action for negligence or malpractice against a Florida real estate licensee or licensed title agent and may place their license in jeopardy.

 

Posted in Real Estate Law
Sept. 17, 2019

Title Insurance and Title Agencies versus Attorney’s Opinion of Title in Florida Residential Real Estate Transactions

by Oscar T. Blasingame, Esq.

In past decades most residential real estate transaction closings were handled solely by an attorney who provided, as part of the closing, an Attorney’s Opinion of Title. The advent of title insurance changed the way real estate closings work. While attorneys may become agents of various title insurance underwriters, a new title insurance industry, separate from attorneys, was formed in many states including Florida.

For an attorney’s opinion of title, the attorney examines the recorded documents included in the chain of title and issues a “Statement of Opinion.” The Statement of Opinion outlines the details of the attorney’s search, records examined, and what encumbrances exist against the title. The attorney’s opinion of title is not insurance against undisclosed defects, nor does it ensure marketable title. This method remains a common practice in several states; however, in Florida, the issuance of title insurance has become the norm in most residential real estate transactions. Florida does not require title insurance for real estate transactions. There are instances, such as a transfer by court order in a probate proceeding, when the party taking title receives neither a Statement of Opinion nor a title insurance policy. 

In Florida, title insurance has almost wholly displaced an attorney’s title opinion as a means of assuring good title. Title insurance provides the buyer more protection. It offers better financial backing to the insured than an attorney or law firm. Also, title insurance covers a broader range of possible title problems than an Opinion Statement. Some of these include the existence of forged documents, transfer by incompetent parties, and fraud, among others. The attorney’s opinion is based only on a review of the abstract of the chain of title where such defects are not evident. As a result, the Statement of Opinion cannot guarantee that such problems will not arise in the future.

Title insurance led to the creation of the title insurance industry. In Florida, a title company must have at least one licensed Florida Title Agent. To become a licensed title agent, one must complete either a 40-Hour Title Agent Course or have worked for a least one year out of the previous four years providing “responsible title duties.” Also, they must pass the state exam. Florida attorneys who are members in good standing of the Florida Bar are exempt from licensing. Attorneys who offer title insurance are often members of The Fund a division of Old Republic Title. The Fund provides title insurance underwriting to attorneys and attorney owned title agencies.

Title insurance companies do more than prepare seller and lender title insurance policies. They also prepare the closing documents, hold escrowed funds, perform the closing, and distribute the funds after closing. Florida Department of Financial Services set title insurance rates so that they are consistent from one title agency to another. The fees for additional closing and title related services are not regulated and can vary significantly from agency to agency. Real estate agents often recommend a title agency to their seller clients. Sellers should, however, compare those with other title agencies, research their reputation online.

Title agencies may provide title insurance and perform closings; however, they do not provide legal advice, opinions, or other attorney services. Likewise, licensed real estate brokers and real estate agents may not offer their customers or clients with a legal interpretation of documents or advise or give opinions about the buyer’s or seller’s legal rights and responsibilities under a contract and to do so is a third-degree felony under Florida law. In other words, the advantages of title insurance over an attorney’s statement of opinion is not a replacement for an attorney’s legal advice and representation in a real estate transaction. 

Beyond reviewing the title abstract Attorneys also advise their clients on the obligations of third parties such as brokers, real estate agents, and title agents, the implication of various agreements such as broker listing agreements, contracts, and disclosures. Attorneys also advise clients regarding the terms and formation of contracts and whether contract documents are properly completed and are legally sufficient. They explain the conveyance process, review and explain title abstracts and title commitments, closing, and settlement documents. Attorneys recognize potential problems and explain the consequences of default, the possible future liabilities of the client, other parties to the contract, and third parties such as brokers, agents, inspectors, and title companies. An attorney’s role in a real estate transaction begins before signing a contract, continues through the entire process and, if necessary, beyond default or closing if disputes arise. 

In closing, title insurance is beneficial for buyers, sellers, and lenders. Title insurance provides greater financial security and protects against a broader range of possible problems than an attorney’s Statement of Opinion. A good title insurance company streamlines the transaction process. However, Title insurance, title agencies, real estate brokers, and real estate agents, no matter how experienced, do not replace the need to have competent legal representation at all stages of the transaction.

Posted in Real Estate Law
Aug. 19, 2019

The Florida “As IS” Residential Real Estate Contract

By Oscar T. Blasingame, Esq.

A real estate contract, whether for a home or commercial property, is also known as a purchase and sale agreement. It’s a legally binding agreement between the buyer and seller. The purpose of the contract is to clearly express the terms and conditions of the sale for the parties. Most state, including Florida require that the transfer of rights in real property to be in writing and signed by all parties. This requirement is known as the “statute of frauds.”

In Florida, there are three main types of real estate contracts used by real estate professionals: The Florida Realtors (FR) Contract for Residential Sale and Purchase (CRSP-15), The Florida Realtor /Florida Bar Association (FR/BAR) Contract for Residential Sale and Purchase, and the FR/BAR “As-Is” Contract for Sale and Purchase. 

FAR/BAR contracts are standardized contracts that simplify the home buying process by making the contract easy to read and review by those familiar with the standard provisions. There are standard clauses with blanks for specific points and contingencies, and the person preparing the contract may simply fill in the blanks. There are standardized riders and addenda available to cover some common situations; if there are non-standard clauses needed for a transaction, an addendum with custom clauses can be attached. 

The FR/BAR contracts are the most commonly used, and there is an advantage to using the standard FR/BAR or the FR/BAR “As Is”, depending on whether you’re the buyer or the seller.

 

The FR/BAR Contract 


The FR/BAR contract contains provisions regarding the purchase price, closing date, and other associated information including important financial and inspection contingencies. The satisfaction of these contingencies is what ultimately dictates if the sales transaction is completed.

Due to the Property Inspection and Required Condition clauses, this is the most advantageous contract for you, as a buyer, to use when presenting an offer. However, the seller has the right to decline any offers presented on this contract and require the use of the “as-is” contract, if they choose.

 

A Walkthrough of the Key Points 

Personal Property included in the Purchase Price: Personal property is an asset that is not permanently fixed to one location. It is standard in the contract for appliances, ceiling fans, intercoms, light fixtures, storm shutters, garage door openers, and window treatments to be included in the purchase price. If any other personal property items are desired with the sale, they must be written in the blank provided on the contract. 

Initial Deposit: A deposit given by the buyer to the seller to show the buyer’s good faith and to bind a purchase offer. The money is held in an escrow account until closing. The deposit can either accompany the offer, or be made within a certain amount of days after the effective date of the contract (typically 3 days). 

Additional Deposit: To make an offer more attractive to the seller, there is an option to provide an additional deposit within a certain number of days after the effective date. Typically, if an additional deposit is offered, it is made after the inspection is performed and the inspection period is over. 

Time for Acceptance of Offer and Counteroffers: This is the “deadline” given by the buyer to the seller to respond to the offer by either acceptance or counteroffer. If the seller doesn’t respond by the date indicated, the offer is no longer valid. If a deposit accompanied the offer, it is to be returned to the buyer. 

Closing Date: The date the title will be transferred and the money exchanges hands. Most financing offers typically offer a closing date between 30 and 60 days after the effective date. 

Occupancy and Possession: This clause guarantees that at closing, the seller will deliver possession of the property to the buyer and the buyer will receive the property free of any tenants and personal items. 

Financing: This contingency is one of the most important clauses in the contract. The clause states that the contract is contingent upon the buyer obtaining a written loan commitment for the specified loan type within a specified number of days after the effective date (usually 45 days). If the buyer is not able to secure financing and the written loan commitment is not received by the specified time, the buyer has the right to cancel the contract in writing at least 7 days prior to the closing date and receive a refund of the deposit. Additionally, if the loan commitment is received and the contract doesn’t close due to the following reasons, the buyer is released and the deposit will be returned to the buyer: seller’s default, conditions of the loan have not been met, the appraisal is not sufficient to meet the loan terms, and financial failure of the lender. 

Closing Costs: Outlines the 
closing costs that are to be paid by the buyer and the seller.

Title Evidence and Insurance: The buyer must receive a title insurance commitment before the closing date, usually at least 15 days before. If the seller selects the Closing Agent, the seller is responsible for paying for the buyer’s title insurance policy. If the buyer selects the Closing Agent, the buyer is responsible for paying for their title insurance policy. 

Property Maintenance: Seller is required to maintain the property in the condition existing as of the effective date of the contract. 

Property Inspection and Repair: This contingency is another extremely important clause of the contract. It states that the buyer has a certain number of days after the effective date (usually 15, but less is written in to make offers more attractive) to conduct all inspections and to deliver the written inspection report to the seller. The buyer has the right to request the seller to make any repairs necessary (within the General Repair Limit specified in the contract) to bring the property up to the required condition. If the necessary repairs exceed the General Repair Limit, the seller can pay the excess to the buyer at closing, the buyer can elect to select which repairs are to be made within the General Repair Limit and waive the remaining repairs, or the contract may be terminated and the buyer will receive a refund of their deposit.

Required Condition: the ceiling, roof, exterior and interior walls, doors, windows, and foundation must be free of leaks and damage. The pool, pool equipment, major appliances, heating, cooling, mechanical, electrical, security, sprinkler, septic and plumbing systems, seawalls, and dockage must be in working condition. Torn screens, fogged windows, and missing or damages roof shingles or tiles must be repaired or replaced by the seller prior to closing. 

Default: If the buyer doesn’t perform their obligations under the contract, the seller has the right to retain the deposit. If the seller doesn’t perform their obligations under the contract, the buyer will receive a return of their deposit and may seek damages from the seller by dispute resolution. 

Title: The seller is required to provide evidence of good and marketable title (title that is free and clear of all objectionable liens or other title defects). If title defects are found, the seller has 30 days (“the Cure Period”) to take reasonable diligent efforts to remove defects. If the seller is unable to cure the title defects, the buyer has the right to terminate the contract and receive a refund of the deposit. 

Time: Calendar days are used in the contract to compute time periods. If any time periods specified in the contract (except for Time for Acceptance of Offer and Effective Date) occur on a weekend or national legal holiday, the period will extend to 5:00PM on the next business day.

 

The FR/BAR “as is” Contract

The “as-is” contract contains the same clauses as the standard FR/BAR contract, with one major difference. The contract gives the buyer a specified inspection period (the default is 15 days but it may be longer or shorter, depending on the offer) to get all property inspections (known as “Due Diligence”). During that time, the buyer has the sole discretion to determine if the property is acceptable to them. If the property is not acceptable to the buyer, they can ask the seller to lower the purchase price, request certain repairs to be completed prior to closing and at the seller’s expense, or to issue a credit at closing to cover the cost of their desired repairs. If the seller refuses, the buyer has the option to withdraw from the deal without losing the deposit. The buyer is not required to provide the written inspection report to the seller, however, nothing prevents them from sharing either. If, the buyer requests repairs to be made, then they need to share the inspection report(s) or the sections of them that cover the need for the requested repairs.

One issue with this contract is that the name includes the term “As Is.” In this care it means that the seller has no obligation to pay for any repairs. The confusion lies in the fact that, under Florida law, sellers of residential real property must disclose any known material defect that may affect the value of the property. The “As Is” nature of this contract does not alleviate a seller from making these mandated disclosures to prospective buyers.

 

Some material defects that require disclosure include the existence of any potential or actual claims, complaints, or legal proceedings that affect the property, any boundary disputes, any environmental hazards, any damage or infestations from termites or other pests, any problems with essential components such as HVAC, roof, plumbing, electrical, any condominium or homeowner’s association rules that require compliance, and water intrusion whether in the past or present, etc. The best practice for sellers and real estate professionals is, when in doubt disclose. There has been a significant increase in failure to disclose litigation in recent years and many Florida real estate attorneys are adding these types of cases to their marketing.

 

In addition to disclosing defects, the sale of a home built before 1978 must include a federally mandated, lead based paint (LBP) hazard disclosure.  This disclosure should be provided by the seller to potential buyers prior to the buyers submitting an offer to purchase the property and is in any case a mandatory part of any the contract (paragraph 10(f)). While it’s a good idea to provide all seller property disclosures up front, the LBP disclosure is an integral part of the contract and no contract for the sale of a residential property built before 1978 is full and enforceable in its absence. Additional seller disclosures may be made during negotiations or even after the contract is execute, if they are made prior to the end of the inspection period.

 

The second, possiblly mandatory disclosure is for properties subject to deed restrictions by a Homeowners Association (HOA) or a Condominium Association (COA). The FR/BAR “As Is” contract requires either of these disclosures to be made available to potential buyers prior to them making an offer (paragraph 10(f)). The HOA or COA disclosure must be completed by the seller and sign, the reviewed by the buyer and signed. It is then submitted with the contract as part of the offer. Like the BP disclosure, if the property is subject to an HOA or COA the contract is not complete and enforceable without this document executed by all parties.

 

Conclusion

 

The FR/BAR “As Is” Residential Contract for Sale and Purchase of Florida residential real estate is an excellent tool for home sellers, attorneys, and real estate professionals. Superior in its terms to other Florida fill in the black residential sale contract, it is widely used and accepted by attorneys, Brokers, real estate professionals, and the general public. Care should be taken when completing the contract. All parties should read the contract thoroughly paying special attention to Federal and State mandatory disclosure laws. When questions arise, contact a Florida real estate attorney for guidance. While Florida real estate sales associate and broker licensees may fill in the blanks and present the contract as part of an offer, they may not discuss or explain a buyer’s or seller’s legal rights under the contract.

Important Copyright Note: The Fr/Bar “As Is” contract is copyrighted by the Florida Realtorsâ and Florida Bar Association. Use of these contracts is restricted to members of those organizations and their respective agents and employees. Use by any other party is prohibited and enforced by the copyright holders. If you are not a member of either association, then you need to hire someone who is in order to use this contract.

About the Author: Oscar is a practicing, Florida attorney, Real Estate Broker, and Florida Supreme Court Certified Mediator. He began working in real estate as a Realtor in 1994 and later went on to become a real estate attorney in 2002. He is currently the managing broker and CEO of DSCVR Realty in St. Petersburg, Florida. From 2002-2005 Oscar was the sales director for Ballast Point homes LLC. During his tenure with Ballast Point Homes, he managed a sales team that produced over 55 million dollars in condominium and townhome sales. With over twenty-five years of experience, Oscar represents buyers, sellers, business owners, other Realtors, and Brokers with professional, personalized service. In addition to residential sales, as an attorney, Oscar practices real estate and small business law and prepares and negotiates many commercial and residential contracts and leases. He prefers to focus on residential and income property sales in St. Petersburg and the beaches. A native of St. Petersburg, Florida and a second-generation Gator, he received a B.A. from the University of Florida and a J.D. from Stetson University’s College of Law. 

 

 

April 6, 2019

10 Real Estate Negotiating Mistakes

Home buying and home selling success is often determined by two things: 1) determination and 2) willingness to negotiate. After all, the ideal home rarely pops up during your first search and the right deal rarely presents itself without you asking for what you want.

If you already have the determination to buy in the immediate future, then you may need to brush up on your negotiating skills. Fortunately, by doing so, you’ll learn key strategies for working with sellers and can then determine how far you can push back without taking things too far.


Where should you begin? One of the most important things you can do is learn about the market conditions andunderstand what’s involved when buying a house. This will give you an edge when it comes to negotiating, especially if you are in a buyer’s market (where there are more homes for sale than buyers).

You can use the facts about the area to determine what a fair price truly is and get an idea of whether your counter-offer is reasonable. However, if you’re buying a seller’s market (where there are more buyers than homes for sale), there will be less room for negotiation and you’ll therefore have to change your strategy.

With so many variables in play in each buying/selling scenario, it’s impossible to determine how any negotiation will go beforehand. Therefore, it’s so important to learn key negotiation strategies ahead of time to prepare yourself. By doing so, you’ll put you are able to smoothly navigate any real estate transaction in the future, no matter what type of buyer or seller you’re up against. To further prepare you, look at the biggest mistakes to avoid listed below.

#1 Using an Ultimatum

Although it can be tempting to give someone an ultimatum in a real estate transaction, it’s important to realize that there’s always a third option: to stop the negotiation. Being so aggressive certainly can result in an accepted contract, although it could come with the caveat of the other party becoming defensive and it could be a reason why the deal may fall through.

As a result, they could make closing difficult or even threaten with legal actions in the future. For these reasons, it is best to avoid this tactic all together.

#2 Being Too Greedy

Nobody wants to leave a deal knowing they left something on the table, but in real estate, this can become a major downfall. If you’re always trying to get more without a willingness to give, then you’re likely to push people away. Ultimately this can lead to missing out on some great deals just because your pride took over.

#3 Being Afraid to Lose

While nobody likes to lose, it’s important that you don’t let your determination to win take over the negotiation. If you always have the need to “win” over the other party, then you’re only going to end up disappointed and missing out.

Keep in mind that both you and the other person are working towards the same goal, so ultimately both of you are going to “win” in the end. If you lead with this mindset, then you’re more likely to have positive experiences and more opportunities in the future.

#4 Making Your Needs the Priority

It’s certainly important to get a few things you want in a negotiation, but this shouldn’t be your focus. If you want to have a smoother transaction, then it’s recommended to get to know the other party.

What do they care about? What do they want? By learning more about their needs, you’ll be more likely to find common ground that can lead to a deal that’s satisfying for both of you.

#5 Focusing on Price Alone

It’s no secret that both parties in a real estate transaction are interested in money as their main objective. However, making this your only focus can mean missing out on other ways to get a good deal.

Have you thought about services or products you could trade to make up for a less than ideal price?

For example, if you were purchasing a home that the seller wouldn’t budge on price for, perhaps you could ask for furnishings such as a washer, dryer or fridge to make up for it. You could also ask for better terms, as there are many options for things you can negotiate with.

#6 Control

Taking control of the situation is sure to make you feel stronger, but have you considered how this will affect the other party? It’s likely that they’ll feel weak and therefore may back out of the deal.

By allowing yourself to look humble while they appear to be in control, you will be giving them confidence that they’re making the best decision possible. As a result, you’re more likely to get a fair deal.

#7 Losing to Your Emotions

When the other party in the negotiation sees that you’re emotionally attached and need a deal to go through, you’ll be putting yourself at a major disadvantage. They may use this to gain an edge over you in the transaction.

To avoid this, make sure to check your emotions from the start. You should care, although this shouldn’t be what controls the situation. An excellent way to put things in perspective is to write down alternatives in case the deal doesn’t work out. With that you’ll be able to fall back on other options and won’t allow emotions to be your deciding force.

#8 Thinking You're Completely Prepared

Confidence is great, but over confidence can hinder your ability to effectively negotiate. Don’t assume that you’ll be able to counter an offer without first doing some research to back up your reasoning for the price.

To better prepare yourself, you’ll need to write down points, practice what you’ll say, and even bring notes with you. By taking the time to do this, you’ll have better reasoning and will be able to minimize errors.

#9 Overreacting

When you first receive an offer, it’s important to read through it and deeply consider all the pros and cons. Even if you don’t particularly care for it, don’t overreact as your first response.

Clear your mind, let your emotions subside, and then move on to determining a counter that makes sense for you.

#10 Worrying about Your Image

It’s beneficial to think about the other party in a real estate transaction, but you shouldn’t let worry about offending them get in the way of you making your offer. No matter what you are prepared to give them, bring your confidence and the research to back yourself up.

Even if you plan on submitting a low offer, then let them know that you have done your homework and based on the facts at hand, your offer represents a fair market value. With that, the other person may be more likely to work with you and might even accept your offer quickly.

Final Thoughts

Negotiating the purchase or sale of a home is difficult. Emotions run high, contracts are complex, financing difficult to understand. The best way to protect yourself is to be represented by a professional. Real estate professionals are experienced negotiators. They can to separate their emotions from the transaction and see the big picture rather than just focusing on price alone. If you decide to go it alone, remember these ten real estate negotiating mistakes.

About the author

Oscar is a practicing, Florida attorney, Realtor, and Florida Supreme Court Certified Mediator. He is also the managing Broker and President of DSCVR Realty. Oscar began working in real estate as a Realtor in 1994 and later went on to become a real estate attorney in 2002. From 2002-2005 Oscar was the sales director for Ballast Point homes LLC. During his tenure with Ballast Point Homes, he managed a sales team that produced over 55 million dollars in condominium and townhome sales. With over twenty years of experience, Oscar represents buyers, sellers, business owners, other Realtors, and Brokers with professional, personalized service. In addition to residential sales, as an attorney, Oscar has written and negotiated many commercial and residential contracts and leases. He currently represents several local businesses including two restaurant chains. A native of St. Petersburg, Florida, he received a B.A. from the University of Florida and a J.D. from Stetson University’s College of Law.  Oscar is US Army veteran and former Judge Advocate.  He is a certified VA attorney representative and an active member of VARep, an organization of real estate professionals dedicated to representing and education veterans. Oscar focuses his passion for real estate on providing exceptional client services. Visit his personal real estate website SellingStPetersburg.com.

Posted in Home Selling
March 29, 2019

3 Reasons to Have a Pre-sale Home Inspection

Picture this: You find the perfect buyer for your home. The offer is clean, the buyer is making few demands and the transaction begins humming along. Then, the home inspection results come in. To your chagrin, negotiations begin anew and that formerly speedy progress toward closing comes to a screeching halt.

This isn’t a scenario; it is the reality of thousands of real estate transactions across the country and, yes, right here in our backyard. It doesn’t have to be like this, however. Have the home inspected before you put it on the market, even if you have no intention of fixing the problems the inspector finds. Here are a few reasons why you should consider a pre-sale home inspection.

1. A pre-sale inspection prevents delays

The pre-home inspection gives you an idea of what needs to be repaired before putting the home on the market. Getting these fixes out of the way now will prevent delays later on.

If you can’t afford to make the needed repairs, the home inspection results can be used as a list of “items the seller will not be fixing.” As long as they aren’t required by the lender, the buyer can then either accept the home as-is, walk away or negotiate with you for a lower price. It’s much better to have the walk-away happen before you remove the home from the market under the assumption that you have a deal.

Let’s face it: the buyer is most likely going to order a home inspection. The problems you’ll learn about during a pre-sale inspection are the same ones that will pop up weeks after you’ve accepted an offer and taken the home off the market. Without a pre-sale home sale inspection, you can only guess what might end up on the buyer’s inspection report.

Hand in hand with this gamble is the closing date and the sales price. Bickering over repairs or price will hold up the transaction and you may end up making concessions that will lower the offering price, just to get the transaction back on track. If your purchase of another home depends on the successful conclusion of the sale of this one, on time, you may be in big trouble.

2. A pre-sale home inspection keeps the buyer honest

Somewhere along the line during the purchase process, many buyers begin to get cold feet. “It’s ok,” their agents tell them, “you can cancel the contract by refusing to remove the inspection contingency.” They’re led to believe that the home inspection is their get-out-of-the-deal-free card and some buyers will use it as such.

Of course your pre-inspection report won’t replace the one that the buyer will most likely order, but it will help weed out those buyers who are most likely to get cold feet, before an offer is accepted.

3. A pre-inspection is a marketing tool

Remember when you bought your home? The seller was most likely a complete stranger and most of us are a bit wary of buying anything from strangers, let alone something as large and expensive as a house. Now, imagine that the seller had a recent home inspection report. Especially if it shows items in need of repair, the report shows good faith on the part of the seller. You are, in essence throwing all your cards on the table, with nothing to hide.

Now, does the buyer get as much from your competition? Of course not; few sellers will take on the expense (although it isn’t prohibitive) of a home inspection. Yours becomes a way for you to stand apart from the competition.

The disclosure conundrum isn’t really a conundrum

Once you receive the results of the inspection, any “warts” uncovered will need to be disclosed to any potential buyers. But, remember, these blemishes will most likely also appear on the buyer’s inspection report. Isn’t it better that you’ve informed them of the problems ahead of time, rather than they find out later on and hold up the transaction?

Considerations

As an experienced real estate marketer, I understand that in the sales cycle, the best time to get rid of possible objections is upfront, when the buyers are “hot,” so to speak – when they are at their most enthusiastic.

As the transaction progresses (especially right after the offer is accepted), buyers tend to question their decision to buy. The reality of a 30-year commitment sets in and they become stubbornly adhered to ensuring they aren’t getting cheated.

This is right about the time the home inspector releases his or her results. For you, it’s the absolute wrong time for the buyer to learn that the sprinkler system needs repair or that the HVAC system is in its waning years.

When considering whether or not to order a pre-sale home inspection, keep in mind that it won’t mitigate your responsibility to fix or replace lender-mandated items and you may still end up taking less for the home than you’d hoped, if you can’t afford to repair what needs fixing. What you will do, on the other hand, is get rid of the main reason residential real estate sales fail.

Posted in Home Selling
March 20, 2019

Home Buying Tips For Florida Veterans

Veterans Day this year is November 11 (observed on the 12th) but to us, November is Veterans Month. And what better time to remind those who have served our country and their surviving spouses that the best mortgage on the market just may be the one that was created for them?

When comparing mortgages, especially when you’re short on cash, it just doesn’t get better than a loan that requires no down payment, the possibility of not having to pay closing costs and no private mortgage insurance requirement.

VA loan requirements are different from other loans, which many veterans find confusing. Because they don’t understand these requirements, even some real estate agents will try to steer military clients to other products.

Let’s take a look at three of the most frequently asked questions we receive about the VA loan.

What credit score does the VA require?

Since the VA doesn’t grant loans (it guarantees the repayment of a portion of the loan) it has no minimum credit score requirement. They leave that up to the lenders.

The good news is that because of the government guarantee, lenders tend to be more lenient with their credit score requirements.

Aim for a credit score of no lower than 620 and, remember, you would need a 740 or higher for most conventional loans.

Lenders also look at your ability to repay the loan. This includes an confirmation of:

  • Stable income
  • A debt to income ratio of no more than 41 percent. Even if yours exceeds this percentage, you may still qualify if you can prove “compensating factors.”

How much will I need for closing costs for a VA loan?

The amount the borrower will pay for a VA-backed loan’s closing costs varies by lender, the type of home, where you are buying and other factors, but plan on paying between 1 percent and 5 percent of the loan amount.

By the way, the VA limits the borrower’s closing costs to a specific list of items.

Although the VA doesn’t allow borrowers to finance the closing costs of their mortgage, they are quite flexible on who can pay them on behalf of the veteran.

This means that the seller or anyone else can pay all or part of your closing costs, quite possibly allowing you to buy a home with no money out of your pocket.

Speak with your lender about the various ways of dealing with VA loan closing costs.

Do I have to live in the home that I purchase?

Yes, you do. In fact, the law requires the borrower to certify that the home will be owner-occupied as the primary residence. You’ll have 60 days from closing to take occupancy, although extenuating circumstances may allow occupancy to be extended to 12 months.

By the way, for service members on active duty, occupancy by a spouse or dependent child fulfills the occupancy requirement.

There are, of course, exceptions to this rule. A PCS may allow you to rent out the home. Or, the borrower can apply for  an Interest Rate Reduction Refinancing Loan, which only requires that you certify that you previously occupied the home.

Contact the Regional Loan Center with any questions about the occupancy requirement. You’ll find yours on the U.S. Department of Veterans Affairs website.

 The first step in the VA loan process is to obtain your Certificate of Eligibility and you can do that online or through your lender.

By serving our country, you earned this housing benefit. Take advantage of it.

The author, Oscar T. Blasingame, is a former Judge Advocate in the US Army and a VA certified attorney.

March 20, 2019

4 Facts About Lease Purchase and Lease Options Agreements You Should Know

Lease Options and Lease Purchase Agreements, commonly referred to as “Lease-to-Own” or “Rent-to-Own” agreements are mistakenly used interchangeably, but they are vastly different.  These agreements allow a potential buyer to occupy the seller’s property for a described period before completing the sale. The lease purchase/option arrangement can benefit the buyer and seller in meeting their goals and needs with respect to the transaction and their specific circumstances. In some instances, these agreements may even allow a buyer the opportunity to build a bit of equity in the home as well although it should be stressed that, in some instances, this can backfire and there are no guarantees as to future market value.

You need to understand the differences between a Lease Option Agreement (“Lease Option”) and a Lease Purchase Agreement (“Lease Purchase”).

1.) The Lease Purchase

A Lease Purchase and a Lease Option are very similar in that they both consist of two separate contracts. The two contracts that make up a Lease Purchase are:

a.) A Residential Lease that creates a tenant-buyer lease of the property for a specified term and amount; and

b.) The Contract for Sale and Purchase which obligates each party to the typical terms of a residential purchase agreement upon the expiration of the specified lease term.

Typically, this kind of agreement provides what are referred to as cross-default provisions to ensure that a breach of one of the agreements will result in an automatic breach of the other. As the tenant-buyer has contracted to purchase the property in the context of a Lease Purchase, oftentimes the lease will provide that the tenant-buyer is responsible for maintenance and repairs which are typically the duty of the landlord.

2.) The Lease Option

A Lease Option works similarly to a Lease Purchase in that it consists of two agreements and theoretically allows for the tenant to ultimately purchase the property. However, the tenant does not sign a contract for sale but instead enters into an option agreement (“Option Agreement”).

An Option Agreement provides the tenant-option holder the right to purchase the property at an agreed price during the lease term or other specified term, also called the “Option Period”, in exchange for a fee paid to the seller called the “Option Fee.”

This looks very like a deposit on a contract for sale which is why the Lease Option and Lease Purchase are so often confused. A Lease Option also provides for the cross-default provisions, and the Option Fee referenced above is typically non-refundable. Upon a tenant-option holder’s election to exercise their option to purchase the property, the Option Fee is usually credited to the purchase price, however, there may be an additional deposit required upon the parties’ execution of the contract for sale.

A key distinguishing factor of the Lease Option is that the agreement does not obligate the tenant to purchase the property, but does obligate the seller to sell the property when the tenant properly exercises the option to purchase.

3.) Landlord-Tenant Relationship

Both the Lease Purchase and Lease Option create landlord-tenant relationships. Therefore, if the tenant defaults, the landlord-seller would evict the tenant-buyer or tenant-option holder like a normal tenant. An issue that may arise in the context of an eviction of a tenant to a Lease Purchase or Lease Option is an equitable interest claim. Although not typically successful, a tenant may assert an ownership interest in the subject property, which is grounded in the idea that a Lease Purchase or Lease Option is essentially the equivalent of a sale, like an installment land contract (or contract for deed), whereby the seller retains title to the property as security until the balance is paid by the buyer. If an equitable interest argument prevails, the landlord-seller will be required to remove the tenant by way of foreclosure action, as opposed to a simpler eviction.

4.) What to consider before an agreement

To avoid a potential successful equitable interest claim, a seller should consider certain things when constructing the Lease Purchase or Lease Option:

a.) Structure of Lease Purchase or Lease Option should not resemble a contract for deed;

Limit the lease term to one year or less;

b.) Provide for a security deposit (sellers don’t take security deposits, landlords do);

Seller should continue to pay taxes and insurance on the property;

c.) Do not give large rent credits (this only creates more equity the tenant can claim);

d.) Refrain from using the words “credit”, “seller” and “buyer” in the lease agreement and/or option agreement portion of the Lease Option;

e.) Will the tenant-buyer/option holder be making improvements, and what will the value be of such improvements?; and

f.) What is the difference between the tenant-buyer/option holder’s option price and the fair market value of the property? The closer these amounts, the more equity one could claim.

If you have questions regarding Lease Purchase, Lease Option or any real estate transaction, please contact us.

Conclusion

Lease Option and Lease Purchase Agreements can be useful tools for both the buyers and sellers of real property whether residential or commercial. It is important to understand the differences between to two. The Lease Purchase binds the buyer to purchasing the property by the end of the term of the lease. The Lease Option grants the Buyer the right to purchase the property at the agreed upon terms for the period of the lease, but does not create an obligation to buy.

Lease Purchase and Lease Options are useful tools, but a complex process that needs to be handled by a professional. Both need to be drafted by an experienced real estate attorney representing one of the parties and usually working in cooperation with a Realtor. Failure to use an attorney could easily result in an unenforceable agreement and a legal nightmare. Whatever you do, do NOT rely on free form and advice you find online. Much of this information is incorrect, out of date, or not valid in the State you live in.

About the Author

Oscar is a practicing, Florida attorney, Realtor®, and Florida Supreme Court Certified Mediator. He began working in real estate as a Realtor® in 1994 and later went on to become a real estate attorney in 2002. From 2002-2005 Oscar was the sales director for Ballast Point homes LLC. During his tenure with Ballast Point Homes, he managed a sales team that produced over 55 million dollars in condominium and townhome sales. In addition to residential sales, as an attorney, Oscar has written and negotiated many commercial and residential contracts, leases and purchase options.  With over twenty years of experience, Oscar represents buyers, sellers, business owners, other Realtors, and Brokers with professional, personalized service.

Visit Oscar' personal website: SellingStPetersburg.com

Posted in Mortgage Financing
March 8, 2019

Do these 7 things before moving into your new St. Petersburg home

If there’s one thing we can guarantee during the home sale process it’s that you’ll walk away from the closing table with a sore wrist and a bad case of brain fog.

The volume of paperwork you’ll sign is mind-boggling. The time spent sitting in the chair will numb more than your rear end.

But there is still work to be done. This is the fun part of the process though. As soon as you have the keys to your new home, get busy getting it in move-in condition.

Actually, there are some things that should be done before closing on your new St. Petersburg home.

 St Petersburg Homes For SaleYour St. Petersburg Home

1. Transfer utilities to the your new address

Naturally, this is something you’ll want to do in advance of closing. We typically remind our clients to transfer utilities at least two weeks prior to closing on the new home.

And, by utilities, we mean electricity, water, gas and/or propane, sewer, trash collection, telephone land lines, security service (if the home has one), cable and internet.

Find out what day of the week the trash collectors come to the new neighborhood.

If you’ll be transferring other services to the new address, such as landscaping and pool cleaning, do those at the same time.

2. File your change of address with the post office

The post office needs to know where to deliver your mail and you have two ways of letting them know. You can either go to the post office and fill out a change-of-address card or use the U.S.P.S. online service.

Go online and navigate to moversguide.usps.com. Click on the blue “Get Started” button. Answer all the questions on the new page and use the “Next” buttons to navigate the rest of the process.

There is a $1 charge to change your address online, so you’ll need a credit or debit card.

 

3. Determine the quickest route to school and the best commute route to work

In all the excitement of moving into the new home, Monday will roll around before you know it.

Do you know what time to leave the home to get to school and work on time? Use the weeks before closing to familiarize yourself with the various routes you can take to each.

Make the trips during the morning commute time (not on a weekend), so that you can time your trips to the minute. This way, you can relax and know that nobody in the family will be late for school or work.

4. Change the locks on all doors leading to the exterior of the home

This task will need to wait until the home is actually yours, and you have the keys in your hand. Call a locksmith or, if you’re the DIY type, change the locks yourself.

Consider one of the new smart locks. They’re especially handy for large families and for those who have a tendency for losing keys.

Check out PC Magazine’s list of the best smart locks of 2019 at pcmag.com.

5. Need paint?

It’s a rare home that couldn’t use fresh paint on the walls and now is the best time to slap some on. If you wait, you’ll need to cover or move furniture out of each room and remove art work from the walls.

If you’ll also be replacing the flooring, you can be as messy as you want without a care as to where the paint is landing.

Speaking of new flooring, get that laid after painting and before moving in.

6. Give the home a deep clean

The previous owners of your new home were most likely told by their real estate agent that they were expected to leave the home in “broom swept” condition.

There is really no one definition of this term, but at the least, the floors should be swept and vacuumed and all personal belongings removed from the New St. Petersburg home.

No, it doesn’t always happen. But one thing you can most likely depend on is that the home won’t be deeply clean.

You’ll be so happy you took the time to do this, or hired someone to do it for you, when you move in and don’t have to lift a finger to be able to enjoy your new digs.

7. Have pets?

Parole the perimeter of the home to ensure the fencing doesn’t include gaps wide enough to allow your pet to get out. If your dog or cat will spend time in the garage, store chemicals (especially automobile anti-freeze) up high, out of their reach.

Finally, notify the microchip company of your new contact information so that if Fluffy does get loose and someone finds her, you can be notified quickly.

Your vet will help you find the company contact information for the particular chip implanted in your pet.

 

Welcome to your new St. Petersburg home!

Posted in Home Buying
March 8, 2019

4 Home Pricing Mistakes to Avoid

Selling a home is a difficult process, but it shouldn’t be impossible. ?In fact, it can be relatively easy if you avoid common mistakes. The most common mistake seller’s make is overpricing. The correct pricing of a home is an important factor in whether a home sells quickly or flounders on the market for a long time.


 
When a property is overpriced, it doesn’t matter if the seller hired the best real estate agent in their market who has an excellent marketing plan, the home will not sell. Accurate market value pricing is essential the marketing and sale of a home or any real estate. 

Placing a home on the market home at the correct price will almost guarantee that there will be plenty of showing and a buyer will make an offer in a reasonable amount of time for that market. Unfortunately, determining a home’s market value is not an easy process. If it was as simple as listing a home for it’s assessed value or for what Zillow’s “Zestimates” say a home is worth, there would be no need for real estate agents or appraisers.

Seller’s must avoid overpricing in order to avoid the damaging effect of a prolonged marketing period. Here are four common mistakes many sellers make when pricing a home for sale!

Pricing the Home High to Leave Room to Negotiate 

Many sellers believe that it is a common practice of a buyer to offer lower than the house is listed for. In most cases, this is the farthest from the truth. 
A seller who lists their home for $10,000 more than a real estate agent recommends because they believe this will leave them with $10,000 in negotiating room is making a huge mistake. Today home buyers are extremely knowledgeable and savvy. The internet has made it extremely easy for consumers (in general) to obtain information. If a home is overpriced, buyers will not look at it. So, the home owner who prices their home higher to leave room to negotiate won’t have anything to negotiate because potential buyers won’t waste their time looking at a home they know is overpriced. 

If a home is priced correctly, the buyer’s real estate agent should be providing their client with information so they can make an educated decision on what to offer a seller. It is still possible in this situation that a buyer will make an offer that is much less than what a home is listed for, however not as common. Listing a home for market value and not listing it to leave room for negotiating, will more times than not, get a seller more money in a shorter amount of time! 

Pricing the Home with the Real Estate Agent who Offers the Highest List Price 
 
In every local real estate market there are agents who “buy listings.” An agent who “buys a listing” will tell a seller their home is worth an unrealistic amount of money, just to obtain the listing. This is doing a huge disservice to any seller and the agent. A seller who interviews (interviewing is an important tip to help ensure the “right” real estate agent is selected to sell a home) three agents and selects an agent solely because the agent said their home was worth $50,000 more than the other two agents did, and doesn’t have facts to back it up, is making a huge pricing mistake.

Real estate agents are in the business to sell houses and offering a list price that is unrealistic is not going to accomplish this, thus wasting their prospective sellers time as well as their own! 

Pricing the Home without Having A Professional Real Estate Agent Perform a Comparative Market Analysis 

As mentioned above, pricing real estate is not an easy process. There are many factors that a real estate agent takes into account when pricing a home (not to mention years of experience). 

A great real estate agent will spend hours researching and “massaging” data prior to determining what they’d suggest a seller lists their home for. A top real estate agent will complete a comparative market analysis, also known as a CMA. There are many sellers who don’t know what a comparative market analysis is, most of the time this is because their real estate agent neglected to perform one, neglected to review their CMA with their client, or their agent never even offered to explain exactly what a CMA is and what is involved with it! 

A seller who does not have a comparative market analysis performed on their home is making a huge mistake as is the Realtor. If a CMA is completed correctly, a home should sell relatively close to the list price and in a relatively short amount of time. If a comparative market analysis is not completed on a home, there is also the possibility that there could be problems with the home under appraising. The purpose of a market analysis is not only to determine a realistic listing price and probable sale price of a home, but also to reduce the chance the home under appraises! 

Pricing the Home High because the Seller has Time 

Pricing a home high because the seller has time means the house will sit on the market. Homes that sit on the market for a long time develop a stigma. Buyers and agents start to ask questions, like, “what is wrong with the home?” It’s possible that there is nothing wrong with the home, other than being overpriced.



If it’s priced right, it will sell. Pricing mistakes in can be avoided, if sellers are aware them and the affects they have on selling a home. If priced correctly, there should be several showings within the first couple days on the market and also an offer in hand within a reasonable time for that market (every market is different an experienced agent will know the average time to contract for that locale). If that doesn’t happen, then there’s a reason the home is not selling, normally the price is too high. 



Selling your home in the greater St Petersburg, Florida area? Or, anywhere in the Tampa Bay Area? It is extremely important to make sure you price your home correctly.  We’d love to prepare a complimentary comparative market analysis specifically designed and tailored for your home. You will also receive a comprehensive marketing plan that is also designed specifically for each of our homes for sale. Contact us and get your today. 


Article by Oscar T. Blasingame, Esq.
Posted in Home Selling
March 8, 2019

Mortgage Rate Ad Lies #1: The Super Low Mortgage Interest Rate Ad Lie

If you’ve ever looked online for a home loan or refinance, then I’m sure you’ve seen ads like “Refinance Now at 3.75% or a brightly colored ad in the sidebar on a news website, proclaiming it can get you a 30 year fixed rate mortgage of 3.75%.


Sounds great so you check it because your bank or local mortgage broker just quoted you 4.9%.

You call the 1-800 number and someone in another State answers and starts their scripted sale pitch begins: "Thanks for calling Too Good To Be True Home Loans, my name is Jim. Looks like you saw our great interest rate offer..."

Jim starts attempting to ingratiate himself to you. Eventually, after trying to get substantive information out of Jim for 20 mins you realize that the 3.75% rate is not going to happen, even if you had the twice the income and an 850 FICO score. The only way you might get it is by spending tens of thousands to buy down the rate by paying points (not a good idea). Is that 3.75% loan available? Yes, but at a very high upfront cost.

It's highly likely that, in the end you will be quoted something close to what your local bank or mortgage broker quoted you. Also, who knows what fees they will charge you to refinance your initiate a new mortgage. 

More importantly, who are they? Basically, just a "company" you found on the internet with a bait and switch, highly misleading ad to sucker you in to call them. Go local and decided if you want to go with a traditional bank or a mortgage broker.

Regardless, whenever considering whether to refinance your home loan or taken out a new mortgage when buying a home, you need to crunch all the numbers and decide whether it's worth the effort and cost. A lot of people boast about their interest rate like a badge of honor, but how much did it cost them to get that low rate? How much are the closing costs, will you be paying points to buy down the rate, how many months or years will it take you to see the benefit of the lower monthly payments? And, don't forget, unless you go for a reduced payment period (10 or 15 years) you will be back to a 30 year mortgage again. 

A final word, call us and we will happily send you the name and contact info for lenders we’ve personally worked with excellent results for our clients.

Watch for our next installment on mortgage ad lies by subscribing to our blog below!

Posted in Mortgage Financing