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Buying property in Florida Unfortunately it is that very desire when not tempered by prudence that can open up an obstacle course of traps. It would be all too easy for even a pessimist such as Victor Meldrew to be seduced by the alluring glossy brochures. An information pack popping through the post containing destination and property videos which viewed in the depths of a cold British winter or spring can encourage you to book your flights there and then.
Perhaps the big question is, following newspaper articles highlighting high pressure inspection flights, where the sales people all but confiscate your passport and recent television coverage of European property disasters manifested by government departments confiscating property in Spain, long lost relatives claiming land in France and buildings demolished for being built in the wrong area in Italy is Florida as safe as houses and if so to give the childhood metaphor a straw - wood or brick house!
Certainly there are rules in Florida concerning compulsory purchase, which are well laid out and less well known ones relating to unpaid taxes, mortgages etc in Florida when a lien can be put on your house. There have even been instances of speculative purchase of what turns out to be swampland but on the whole these are rare occurrences and dangers lie far more in aspects of the everyday property transaction. A tight legal system and contracts laid out by The Florida Real estate commission have to date avoided the reported European scenarios.
In reality the biggest danger to some Brits looking for a house in Florida comes down to a case of frazzled brain syndrome under the Florida sun. All to often the most cautious of individuals will forget they are making an investment in a foreign land and with a breathtaking lack of caution, preparation and common sense be swayed by the magic charm of Florida and a silver-tongued salesman into making an inappropriate buying decision.
Whilst undertaking research for this article for one of the Overseas Property Magazines and with a sense of curiosity I returned to the UK to relive the start of that Florida journey I made several years ago and made by many Brits planning to buy property over here. I discovered with the benefit of several years real estate experience in America a ride that proved every bit as thrilling and sometimes terrifying as anything thunder mountain can offer. To contact the author for more information on what to avoid when buying property in Florida click here
First stop in my itinerary was to visit, several of the Florida stands at the many property exhibitions held all over Britain and whilst much of the information and advice available left much to be desired there were certainly some interesting points. I was obviously expecting a sale orientated approach but one tempered by good factual knowledge - after all visitors to these exhibitions were looking for exhibitors to be the experts.
My request was for information on the Sarasota, Naples areas of the Gulf Coast - the brief for a property within a thirty minute drive of the beaches, shops and golf courses. The property had to be in an area suitable for short - term rental in case that option was ever required and have good investment potential.
There are certainly very few developments in Sarasota / Bradenton or Naples suitably zoned for rental and it's often difficult to find such properties but it’s this scarcity that makes them an excellent investment - in certain areas 35 weeks annual rental and good property price rises .
At a major exhibition we were told during a polished seminar conducted by one of the Florida exhibitors, that due to zoning restrictions, it was not possible to purchase this type of property on the Gulf Coast - maybe they worked closely with a selected group of Orlando developers, whatever the motivation the information was completely wrong.
At another exhibition - the exhibitor covered a number of countries and areas including Florida. We were incorrectly told that we could purchase a short - term rental property on a specific development which in reality has one of the most onerous restrictions possible and is only viable as an unfurnished long term rental proposition. This could explain the ads that I had seen in a number of British rental magazines, advertising holiday rents in areas I knew to be illegal and leaving the owners vulnerable to a citation as soon as the authorities discover the use the property is being put to. To compound the error of this advice the same inappropriate development is detailed in a very impressive glossy brochure and website.
At another stand, that actually specialised in the area we were investigating we were directed towards a single specific development. In fairness the development in question is in itself OK - however it was more than thirty minutes away from the beaches and does not allow short - term rentals. It became evident that the salesman did not subscribe or have access to the areas multiple listing system (MLS) which in Florida details all properties on the local market - an absolute must if you are to be given the widest range of properties.
At a number of exhibitions particularly on some of the Orlando stands which also advertised the Gulf Coast, there seemed to be more than a little confusion over the potential of the holiday rental market outside Orlando. Without doubt Orlando / Kissimmee is by far the largest area of holiday rental properties (phenomenal competition if you are a rental property owner which is one reason why many British buyers have lost money). Some exhibitors clearly had limited knowledge of areas outside Orlando. We were advised by a number of exhibitors that year round rentals were only available in Orlando. In fact both The Gulf and The Atlantic Coasts have the advantage of a year round season with Brits taking holidays throughout Easter to the autumn and Americans from the inclement northern states (referred to locally as snowbirds) descending en masse from November through to Easter. Given that there are far fewer rental properties available on certain areas of the Gulf and Atlantic coasts it is also interesting to compare rental rates.
The concept of guaranteed rentals as described in various brochures was also interesting, one wonders how guarantees work, in the event of adverse publicity in a particular location, or a fall off in visitor numbers - another reason by the way one should never depend on a single rental market i.e. Brits but require a diverse range of markets. Assuming that the guarantee has been built into the property price (thus increasing the price you are paying for the house) what happens if for whatever reason the guarantee fails? - Will you go to law in Florida, how will you meet the costs? If you win who recovers your settlement? We have many calls each year for our trouble-shooting services relating to guaranteed rentals that are not as they seem.
After one exhibition I received a most interesting email newsletter concerning the recent hurricanes that had hit Florida during the summer. The articles basic premise was that hurricanes were a Gulf Coast problem; Orlando was safe and was an evacuation zone. I found this fascinating as I was in Sarasota during the hurricane season and would have certainly noticed the storm! I certainly remember the great storm of 1987 when Sevenoaks became Oneoak and Michael Fish became a household name. Although it is true that Orlando is an accepted evacuation area the storms actually passed through Central Florida causing localised damage, but did not hit Sarasota or Tampa on the Gulf Coast.
Finally, one critical point to remember, before starting your property search in Florida. When leafing through glossy brochures - web sites - video tours etc remember you need to compare properties in Florida with like for like, not those you are familiar with in Britain - generally Florida properties cost less, far less.
If you are considering a new house what you see may not be what you get. The American equivalent of Laurence Lleweyln Bowen may have been commissioned to create Hollywood style showcased perfection in the show house but to achieve the same in some cases can add up to 30% on the cost of the base model. Some new developments need looking at in their entirety: certain developments for example back onto Interstate highways (motorways).
One of the first considerations that need to be taken into account when buying are to determine your specific requirements, do you need to rent the property?, is it primarily an investment, is it mainly for your own use, do you intend playing golf, what are the association costs, do you wish to be in an area with some cultural orientation. All to often Brits are bowled over by a property without considering that all important factor, location, location, location and believe me I have seen some locations where the only local eatery is the 7 to 11 - however good their hot dogs!
Some British buyers overlook factors, which they do not recognise as relevant to their requirements, for example schools if they do not have school age children. However one needs to consider that if one wishes to resell the property in the future the majority of potential buyers will be American who will be interested in the school district. Another point often overlooked is buying on a development that is overwhelmingly rental properties may also restrict resale interest; Americans are not keen to move onto a development where their neighbours change every two weeks.
Turning to the American Real Estate market, if you decide to begin your search in Florida - it is imperative to find an appropriate Real Estate Agent (Realtor) who is willing to guide you through locations as well as property. This seemingly simple task in the Florida context can be make or break in terms of ease of passage to the perfect Florida lifestyle. One critical thing, don’t attempt to act as your own agent - you do not pay for an agents services and its all to easy to fall foul of the system when you undertake a house search without professional help - I repeat Florida is not Britain.
An in depth knowledge of a British buyers specific needs and requirements is paramount. You probably have limited knowledge of the US house purchase system, the majority of American sales agents have no experience of the British house buying system, and here lies loads of opportunity for misunderstanding and mistakes. Another point to be wary of is the knowledge base of individual sales agents, some specialise in a very limited area or even just a few developments, some specialise in listing (selling) properties as opposed to Buyers.
Another common but incorrect assumption made by the unwary Brit is that if they walk into a Real Estate Office in Florida they are there and then going to find the ideal agent to suit their specific needs. Apart from the requirements mentioned above it needs to be recognized that in the many Real estate sales offices the prospective buyers are going to meet the agent undertaking 'floor time'. This term can be viewed as a lottery process, as it is probable you will find a newly qualified agent without in-depth knowledge of the needs of British clients. You may be their first overseas client; do they know the rental implications of various areas? - for many Americans buyers this is not a relevant point, do they know the most appropriate developments?
Don't be deceived by the fact there is no charge when you buy property in Florida for using an agent's services. The system works on the basis that the commission paid by the sellers' agent or new development is split with your (the buyer's) agent at no cost to you. However commissions vary significantly between areas i.e. on certain Orlando developments it can be 15% in Sarasota and Naples 6%.
Another key difference between Britain and Florida is that a house survey in the UK is not the same as a house inspection in Florida. House inspectors in Florida are not qualified in the same way as Members of the Royal Institute of Chartered Surveyors are in Britain. There can be limitations to the costs you claim back, if for example they find out your air conditioning unit in the attic is rotten with rust and needs replacement. There are also unfortunately rare instances where sales people have recommended an inspector who gives a fairly superficial inspection thereby ensuring the sales goes through.
In Florida the contingencies (clauses) entered into a contract can be all important. As a British buyer a particular area of concern can be contingencies dealing with mortgages (the right type can be essential). If you are using the property for rental you will require an investment mortgage, if this is not specified in the contract you may well end up having to buy the property and will not be able to rent it. American lenders have been known to be unaware of this distinction and I am aware of clients being asked to perjure themselves to obtain a mortgage. Zoning restrictions is another important area to be aware of as the restrictions applicable to installing a pool.
Yes Florida is a comparatively safe destination in which to buy property - probably in terms of safety more on par with Britain than some of the traditional European areas presently suffering some adverse publicity. Florida is also a lovely place to work, enjoy a second home in or to retire too in the winter months but it is absolutely essential not to be seduced by those lavish brochures, claims, videos etc prior to buying property in the sunshine state. The most important rule is to obtain the right advice at the very offset and benefit from it. To contact the Author for further details or information on recommended real estate specialists in Sarasota,Naples,Orlando and throughout Florida please click here.
If you are considering buying in Florida and would like a full briefing on all the areas to be aware of, click here.
Andrew Bartlett an acknowledged expert on property trends and relocation in Florida, writes articles and answers readers’ questions for several British publications including Florida Magazine, Escape Magazine, Place in the Sun, Homes Worldwide, Sunday Times, America, and The Red guide to buying Property in America and is regularly consulted by journalists and broadcasters. His consumer web guides have received numerous accolades. www.MyFloridaUpdate.com www.AndrewBartlettFlorida.co.uk Andrew was a Senior British Government Official for 20 years before relocating to Florida several years ago, where he was headhunted to set up specialist British property and relocation teams for America’s largest estate agents Coldwell Banker and Remax. He then established a uniquely impartial and independent relocation and property-briefing company working between |
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