Real Estate in the U.S.

[allwildgirl]

A few people on the forums (Debbie, Kim, Carla) have recently gone through purchasing a house (Kim, I'm sorry yours didn't work out) and the procedure seems very alien to me. Can someone please explain how your real estate works there?

I know in Australia, real estate is sold in a process that's like an auction. Basically everyone stands in front of the property and bids. And here in Canada, the usual process is to get yourself a real estate agent, look at a bazillion properties, find one you like, make a formal offer. If the selling party likes your offer, they accept, everybody signs, you decide on a closing date and then when that date comes, you pay your money, get the keys and move in. A real estate agreement is a binding contract and you can't just back out if you change your mind, or change closing dates without the agreement of both parties, without penalties.

Yours seems different to that.

 

[materialsgirl]

Our system is very similar to yours, Shelley. When a buyer makes an offer on a home, they are allowed to put "contingencies" in that offer, which allow them to back out of the deal if X, Y, and Z does not happen first (usually, the offer is contingent on the buyer selling their current home first). A seller does not have to accept an offer that contains contingencies, but if the market is poor, they may have no choice and could end up getting screwed if X, Y and Z don't happen and the buyer backs out. Something pretty extreme has to happen for a seller or buyer to back out at the very last minute - I couldn't say what those circumstances might be as I've never really been in either position (we've only built a house, which is much easier from the real estate and closing perspective).


I didn't read about what happened to Kim, so I don't know what her situation was, but it sounds like it must have been something very unusual.

 

[Maximus]

"Bidding" is private. Buyers make offers through their real estate agents, who will draw up an agreement of sale. Other buyers are not aware of the competition's identity. Contingencies are usually based on home inspections, a grueling process during which a certified (at least in NJ) goes through the house from top to bottom before closing. Also most mortage companies require a clean termite inspection. My first home inspection (in a 3000 sq. ft. house) took about 4 hours, my second (in an 800 sq. ft. house) took about 2 hours.

The mortgage company is an integral part of the process & require pretty much every piece of paper & transaction you've made throughout your entire life. Homeowner's insurance must be in place before closing.

 

[swimnfit]

Hi Shelley!

Real estate sales in the US are pretty much the same as you described for Canada. The rules and procedures can vary a bit from state to state however as each has it's own laws. Here in California it's just about as complicated as it can possibly get...TONS of paperwork and lots of legal stuff to cover eveyone's behind. Closing dates can vary greatly as it really depends so much on the buyer being able to secure financing and for the loan to be funded in a timely manner. More often than not, escrows will close a little later than expected.

Our purchase agreements have several built in clauses that allow either party to end the agreement if certain criteria are not met or are not their liking or standards. Usually these have to be cleared up within a week, or at most two weeks after the parties sign the agreement. Examples include: seller approval of the buyers financing; buyers approval of an inspection of the property by a professional inspector & termite inspection, to name some of the bigger items.

There is obviously alot more to it than that, but you get the idea. Sorry if it was too much info...

Nicole

 

[Agzo]

I just wanted to chime in because we have been trying to purchase a home for about a year now. Things are unbelievably crazy here in florida. Property values have jumped up amost 100% in one year. The are so many buyers and not as many sellers so the market is crazy. They are building alot of new homes but the waiting list is very long, they just can't seem to keep up with the demand. The demand for houses is so high in Avalon Park that they actually have a lottery for homes going. If a person wants to sell his or her home they name a price, then a name is name from the insanely long waiting list randomly. If the person drawn doesnt want the house for what ever the reason another name is drawn. Can you believe it has come down to this. I have been reading a lot about this problem and I think I lot of it comes from investors coming down after the hurricanes trying to snatch up properties. Anyways alot of the people buying are from up north and from europe. I'm just venting a little because it makes it really tough on first time home buyers like me...
~Angel

 

[Maximus]

Angel--I think a lot of people from the northeast are moving there as well b/c the property taxes are so unbelievably low. The people in my town who own homes worth upwards of $1 mil (and some even more) pay like $30k a year in property taxes. Can you imagine? It's like more than $2k a month! Their taxes are higher than my mortgage.

My understanding (& I could be wrong) is that in FL you don't pay property taxes on the first $20k or so of your property value, & even after that the rate is really low. So what you get are wealthy people who retire fairly young & can live really high on the hog down there.

 

[candi]

Maximus,

You're absolutely right. An average home here can be bought for approx $250K with property takes being approximately $3K per year. There is a homestead exemption. You don't pay taxes on the first $25K. Because of all the growth, it's really driving prices up for first time home buyers. We thought with the hurricanes last year, more people would be moving out of our state but that's just not the case. I guess people are willing to take the risk of bad weather.

Angel,

I understand what you mean. We bought a piece of property in Montverde (just northeast of Clermont) last October and paid a ridiculously high price for it because we saw a lot of potential (Bella Collina is going in about a mile from us. $2M homes on a Faldo golf course). We then found a builder and put a deposit on a home. Even though they have yet to start building, our property has gone up $20K and the base home price has gone up ~$50K. So, it was a good move but it's been 7 months and they haven't even started the house yet. DH is going nuts...I'm more patient because I hate the unpleasant task of packing and moving. The builders are just sooo busy with new construction. Now, I'm wondering how much we will get for our current home in Ocoee. At last appraisal...it's more than doubled in value.

My very good friend is a real estate agent and she says a multitude of baby boomers from the north are retiring and selling their homes and buying down here in Central Florida.

 

[allwildgirl]

Thanks for all the info. It seems like it works the same as it does here. Properties here are crazy right now too. Not as crazy as Florida, it would seem though! Last year, my SO and I bought a new house (well, new to us), and put ours on the market. It sold in a day and we ended up getting more for it than we asked. We had five offers to choose from. That was quite the whirlwind day, lemme tell ya!

 

[Agzo]

Maximus,
Yes that is very true, just kind of a bummer for the up and coming generations that are just trying start out. It's nice here too because there is no state taxes taken out of your paychecks either Florida is often call the home of the newly wed and nearly dead

Candi,
I wish we could have locked in a year ago. We have gotten the run around from everyone. We just keep getting put on lists. We always seem to hesitate talk it over and lose our chance.

Its awesome that you are getting a house built! You've basically already made $70K if you just turned around and sell it. That is amazing. I can't wait to get in so I have something. Good luck with the building...I've heard once they start it usually take 8-10 months to finish. Best wishes ~Angel

 

[candi]

Angel,

I never heard that description of our population, LOL.

Buying a home is a big deal and not to have time to talk things over is very stressful. IMHO, a brand new home would be better for first time home buyers. There are usually incentive interest rates offered and you don't have to do final sign off on that home until you are completely satisfied.