In chapter 5 of my “Guide to Florida Real Estate Transactions” (the series started in April, in case you missed the first chapters) I outline the main steps from inquiry to contract.
Because of the large number of available properties–even in this market in late summer 2021–on first client contact any experienced agent will not send out those nice brochures, or even run out and tour a sampling of homes. Rather, he will set up a client profile. This allows to offer a buyer only properties within his specific criteria and financial framework. Showing properties outside a buyer’s financial capabilities makes no sense and equals real estate tourism, with the agent being the unpaid tour guide and a frustrated buyer at the end of the day who saw during the tour what he’d love to have but can’t afford. – Bad approach!
So if you are the buyer, your agent will assemble a list of properties suitable for viewing based on your criteria. Having toured a few–or many–homes and hopefully found one to your liking, your agent will present a written offer to the seller’s agent. The amount of this opening offer will be determined by your agent and you, based on a market analysis done by your agent. Please note: verbal offers or inquiries are generally considered unprofessional and disregarded.
When your opening offer has been presented to the seller, he can accept, reject it or counter it within a time-frame you have specified. Your offer becomes only a contract when both parties agree and sign. Then a first deposit will be due, and as well as following ones it will be paid into an escrow account of your broker (agents are not allowed to open escrows), your lawyer or a title insurance company–but never to the seller directly. Only at closing–exchanging property title and keys against money–will all deposits be handed over to the seller together with the remaining balance of the purchase price.
If the property does not close, all deposits will be returned to the buyer if he didn’t default. However, if the buyer defaults on the contract or changes his mind midway he looses his deposits; the seller may also sue for damages. In a resale (a “used” home), the buyer has those same rights against the seller in case of a seller’s default, in addition to requesting specific performance. In new construction, the cards are distributed differently: the purchase agreements for new homes eliminate major buyer’s rights, favor the builder and thus demand special attention with a very fine comb before signing.
Real estate contracts have to be in writing and may contain any type of clause negotiated freely between the parties as long as they are legal. All time periods contained in the contract, such as the inspection or financing periods, commence with the last necessary signature of seller or buyer. Time is of the essence, and missing a vital date may constitute a breach of contract. It is good practice for an agent to prepare a time-line containing all important dates of the transaction.
Comments? Questions? Please contact me anytime; I'd be delighted to assist you.
©1996-2021 Tobias Kaiser. Use or reproduction only with written permission.
Tobias Kaiser is an independent real estate consultant and licensed Realtor in Florida since 1990. He specializes in modern architecture and net leased investments.