Buyers - Frequently Asked questions

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As of August 2024, new rules from the National Association of Realtors (NAR) changed how buyer’s agent compensation works. Here’s what you need to know. 

Before touring any homes, you’ll be asked to sign a Buyer Representation Agreement, which outlines the services your agent will provide and how they will be compensated. Buyer’s agent compensation is now fully negotiable and is no longer automatically offered by sellers through the MLS (Multiple Listing Service). 

In many cases, sellers may still choose to offer buyer’s agent compensation as part of the transaction, but it is no longer a requirement. Your agent will help you navigate compensation as part of the offer process, and everything will be clearly outlined upfront. 

For rentals, tenants are typically charged a fee, often equivalent to one month’s rent. Which may be split between cooperating brokers. Some landlords and larger buildings offer to cover broker fees entirely as an incentive. 

The most important takeaway: discuss compensation openly with your agent at the start of your search so there are no surprises. 

Inspection – Inspection costs vary based on the area, size of the home, and the services the inspector is providing. For a standard home inspection for a condo in the city or a single-family just outside of it, a buyer should budget $400-600. Of course, other inspections require additional fees, so if you’re thinking about a lead inspection you should budget $400-500 at a minimum, an additional pest inspection will be additional, and so on. Lender Costs/Fees (Appraisal, Credit Report, etc) – These fees are often lumped into your closing costs that are paid at the end of the transaction, but sometimes are charged up front. 

Expect to pay about $390 for an appraisal. Attorney/Legal Fees – Real estate attorneys traditionally charge a flat fee and do not charge by the hour. A real estate attorney that is able to work on behalf of your lender will often waive the personal representation fees on your behalf, as they will be compensated by the lender and/or title company. Expect to pay about $1,000- 1 ,200 for attorney fees, with some additional recording fees up to $500. Downpayment – The largest chunk of money that you will pay, your downpayment is broken up into two deposits and a final payment. You’ll need to bind your offer with a deposit, typically $1000-5000, but sometimes higher depending on purchase price and the situation. 

The same is true for binding the purchase and sale agreement, where the buyer will traditionally place the remainder of half the total downpayment amount into escrow as the second deposit. The remainder of the downpayment will be brought to closing as cleared funds, either via a wire into the attorney’s account or via a bank check. Any small adjustments at closing can be made via personal check. We traditionally speak of down payments as percentages (5% down, 10% down, 20% down, 30% down, etc). 

 This is an interesting question because there are actually some loan programs out there that require 0% down! There are a number of first-time buyer programs that require between 3-5% as well. That being said, many homes end up with multiple offers and financing is a big consideration as to the strength of an offer, so oftentimes if a buyer has the ability to do so, a 10-30% downpayment will help strengthen an offer. In addition, putting more than 20% down is often advantageous as it helps borrowers avoid private mortgage insurance which can be quite costly. 

Assessment/Appraisal Difference We get asked all the time about the different values assigned to a property, and why they often seem to be so substantially far apart! Here’s a quick rundown: Market Value: Simply put, this is what a buyer is willing to pay for a property. A real estate professional will use their knowledge of the market as well as a comparable market analysis to give a range of value for a specific property; however, there is both an art and a science to this process so each real estate professional may have a different opinion of value. 

Appraised Value: An appraisal takes place if there is financing being obtained on a home (or some other situation arises, such as for estate/probate purposes). Basically, a lender wants to be sure that the home is worth what the buyer is paying (and what they are lending), as they will be holding a mortgage on the home as collateral for their loan. Appraisers traditionally will create a radius around a property and select 5-6 comparable properties that have sold, and add or subtract value based on the finishes, overall condition, and basic specs of a property. If financing, it is important that the property appraises. If it does not, the lender may deny the loan. 

Assessed Value:  An assessment is done for property tax purposes. Your county property appraiser’s office places a value on each property in the county each year in order to calculate property taxes. The assessed value is often lower than market value, particularly in Florida, where the Homestead Exemption and the Save Our Homes cap can limit annual increases to a property’s assessed value. It is important not to confuse assessed value with what a home is actually worth on the open market.  

Only licensed escrow agents can hold deposits for real estate transactions. When you give your offer or purchase and sale check to the agent working for the seller it will be deposited in the company’s non-interest bearing escrow account. Some companies do not act as escrow agents, so the attorney working for the seller will occasionally hold escrow for the transaction. Your deposits are usually protected by contingencies, such as an inspection and/or financing contingency. These contingency periods expire on specific dates, but should there be any issues with either prior to the contingency date put forth in your offer, the deposit would be released. The deposits are applied towards the money that the buyer is paying for the purchase, specifically the downpayment. Just prior to closing (a minimum of three days), the buyer and seller will each have a chance to review a closing disclosure, which breaks down all of the finances of the transaction. 

 Usually – wrong. A listing agent is better defined as “the agent working for the seller”. When the listing contract is signed the commission being paid by the seller to the listing firm is legally bound; therefore, generally speaking, the only entity that would benefit from working with the listing agent directly would be the agent working for the seller’s pocket. In addition, when the listing contract is signed it also creates a fiduciary responsibility between the agent working for the seller and the seller. What this means is that anything the agent working for the seller learns about you, they are required to disclose to the seller (unless you and the seller sign a dual agency agreement which basically makes the listing agent a messenger between the two parties). Simply put, if you work with the listing agent directly, you have no representation or advocate in your corner. 

 This is a common question given the market that we work in. With rising prices all over the area, it can be daunting to think about making such a large investment. There are a couple of variables to consider here: 1. Interest Rates: As interest rates continue to rise, buying power decreases. The negative correlation of rising rates outweighs the impact of a market slowdown. When you look at the overall cost of interest rates rising, for every .5 rate increase, it represents an additional 5.5% that you'll be paying each month. To put this into perspective - for a 30-year loan on a $500,000 purchase with 20% down, you're looking at an additional $43,000 in mortgage payments over the term of the loan for each .5 rise. 2. Do you have something to sell?: If you are planning to leverage equity from a current home, or need to sell before you will buy, keep in mind that should the market cool down, so does your investment. Talk to a mortgage professional sooner rather than later to discuss various scenarios for your next purchase. 

It’s not necessarily a matter of “more” liability, it’s a matter of how it’s shared. With a single-family home, your homeowner’s insurance will be more expensive than a condo policy, and general maintenance and repairs are solely the owner's responsibility, so there could be more work/additional cost associated with a single family home. A condominium spreads the liability and burden of maintenance and repair costs across all of the owners, and your condo insurance policy is generally less expensive as the association’s master insurance covers a lot of the larger ticket items (roof, etc). It’s important to work with your agent and lender to understand the implications of each when deciding which is a better fit both financially and from a maintenance standpoint longterm. 

Flood insurance is a significant factor in South Florida real estate and is entirely separate from your standard homeowner's insurance policy. Many properties, particularly those near the coast, canals, or low-lying areas, fall within a FEMA-designated flood zone, which means flood insurance may be required by your lender. 

Even if a property is not in a designated high-risk flood zone, it's important to understand that standard homeowner's insurance typically does not cover flood damage, whether from a major storm or an everyday incident like a burst water heater or pipe. Coverage is worth considering given South Florida's rainfall and hurricane exposure. Premiums vary based on the property's elevation, flood zone designation, and coverage level. 

Your agent and lender can help you understand the flood zone status of any property you're considering before you make an offer, and we always recommend factoring insurance costs into your overall budget early in the process. 

If you purchase a home in Florida and establish it as your primary residence, you may qualify for the Homestead Exemption - one of the best perks of buying in this state. The exemption can reduce your home’s assessed value by up to $50,000 for property tax purposes, resulting in meaningful annual savings. 

Florida’s Homestead law also includes the “Save Our Homes” cap, which limits annual increases to your property’s assessed value to 3% or the rate of inflation, whichever is lower. As South Florida property values continue to appreciate, this cap can save homeowners a significant amount over time. 

To claim your exemption, you must apply with your county property appraiser’s office by March 1st of the tax year following your purchase. Your agent can point you in the right direction — just ask! 

Note: Homestead Exemption applies only to primary residences. Investment properties, second homes, or non-owner-occupied properties are subject to different tax rules and do not qualify for these benefits. 

This is a common question given the market that we work in. With rising prices all over the area, it can be daunting to think about making such a large investment. There are a couple of variables to consider here: 1. Interest Rates: As interest rates continue to rise, buying power decreases. The negative correlation of rising rates outweighs the impact of a market slowdown. When you look at the overall cost of interest rates rising, for every .5 rate increase, it represents an additional 5.5% that you'll be paying each month. To put this into perspective - for a 30-year loan on a $500,000 purchase with 20% down, you're looking at an additional $43,000 in mortgage payments over the term of the loan for each .5 rise. 2. Do you have something to sell?: If you are planning to leverage equity from a current home, or need to sell before you will buy, keep in mind that should the market cool down, so does your investment. Talk to a mortgage professional sooner rather than later to discuss various scenarios for your next purchase.