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What Everybody Ought to Know About Purchasing Miami Beach Real Estate

February 2, 2011 By

Purchasing Miami Beach real estate is relatively easy if you are working with experienced professionals.

This professional team first starts with your lender and your real estate agent.  Although I have to say in this mostly cash market, I often just start working with my cash clients and a letter from the bank.

In this blog post I am going to address one of the most challenging issues in today’s market.

How are you going to pay for the property?

When I start working with new buyers who don’t know us they often say things like:

“No one asked us these questions before.”
“My previous agent never asked me for a pre approval letter.”
“Why do I need a proof of cash statement?”

Well my friends, “It’s a brand new market.”

It’s true it is a new market and the way we are doing business is different than before (or at least it should be if you are working with buyers in today’s market.)

I just want to say this.  If you need financing and are just running around and looking at properties,  do you that most of the properties you are looking at are probably not eligible for financing?  Are you looking for these kind of details prior to looking at the properties, meaning distinguishing between cash only and eligible for financing?   If you are a serious buyer, does it make sense to be looking at properties that you cannot buy?

So, let me break down the two main types of properties here in the Miami- Miami Beach area.

Condos

The most important thing to know in today’s market is if you are going to be purchasing a CONDO and you need financing, you are going to have limited options.  Buyers don’t want to hear this but it’s true.  Now, if you call the 1-800 lender company online in Wazoo County, they are going to tell you that you qualify for heaven and earth but the truth is, in our market you do not.

Use a local lender one who knows what’s going on.

They may tell you some things that you don’t want to hear (unlike the 1-800 lenders) but they will often advise you of your best and most realistic options.   Last year one of my buyers insisted on using a lender from his hometown.  Unfortunately the lender and his team were completely clueless about our market.  They issued letters of approval, a commitment letter and at the last minute they took it back because they were not familiar with insurance coverages in Miami Beach condo buildings and the underwriter would not approve the loan.  My buyer almost lost his large deposit because his lending team made a big mistake and he had to find cash to close on the property.  It was not a good situation.

**My disclosure.  I am sure that there are some great lenders out there who are not from our area, if that is you, sorry to be so harsh.  It has just been my experience over the past few years that those who are not familiar with our area promise a lot and in the in the end, do not deliver.  I have to protect my buyers so I am a little annoyed with those who don’t.

Between you and me, it’s totally frustrating, it’s currently my biggest annoyance of our business but it is what it is so we have to deal with it.   Some of my colleagues have chosen to only work with cash buyers because of the situation.  We don’t go this far but we definitely set expectations in advance with our buyers who need financing so that we are all on the same page.

Looking up properties online….

So, this means if you go online and look up 100 CONDOS based on your price point, that unfortunately is not going to work if you need financing because you are not searching based on if they are approved for financing or not.  Also it’s important to know that some sellers are only accepting cash offers.  They don’t want the hassle of working with the lending so they say “cash only” on the listing details.  OR they already know in advance that the property will not qualify for financing, so they say “cash only”.

Some people ask me what is the difference and why does it matter?  Meaning one way or the other the seller will get cash a closing.  The difference is with a pure liquid cash buyer, there are no financing contingencies that can stall a deal or kill a deal after the property has been under contract for 45 days plus.   Lending underwriters have certain criteria and most sellers or their agents know in advance if the building will qualify or not…… if it doesn’t they of course add in our MLS details,  “cash only”.  This means pure liquid cash to buy the property.

When our condo buyers need financing, we first ask them to speak to their lender, next we speak to the lender and they tell us what type of properties we should be looking  for the buyer.  Typically the best bet is to use the most recent Fannie Mae list of approved buildings online and start from there.  Now, if there is a building that you are totally in love with, you can discuss this with your lender.  He may have your order (at your expense) a condo questionnaire from the building to see if the building  meets the requirements and has just not yet been added to the list.

So the most important take away is………If you need financing and you are purchasing a condo…….  just know most of the building in our area at this time do not qualify for financing.  It’s a tedious process for those who need lending, it can be done but you have to work with an agent and lender who know the ins and outs.

Single Family Homes

Single family homes are different than condos because the lending underwriting does not depend on a condo questionnaire of questions asking the association to meet certain requirements in regards to:   (renting, foreclosures, maintenance payments, insurance premiums, etc.)  Completely different story.  Although Single Family homes do have their issues, it’s a little easier process than condos.

Often the best place to start looking to get a good idea of buildings that may qualify for financing is to start with the Fannie Mae website you can find that full list here.

This is a list of buildings currently on the list based on the neighborhoods where we specialize.

Brickel

Downtown Miam

Miami Beach

South Beach

 

I am human and sometimes make errors, the list above was recently updated this month January 2011.  To double check behind me for complete accuracy and to see if the building you like is on the list go to the Fannie Mae Website.

Copyright © By Jamey Prezzi 2011* All Rights Reserved* Purchasing Miami Beach Real Estate

You may also like:

  1. Interested in Purchasing a Miami Beach Condo? Got Cash?
  2. When Purchasing Miami Beach Real Estate There are No Stupid Questions
  3. Miami Beach Real Estate Buyer Question of the Day: Financing or Cash
  4. Financing Miami Beach Real Estate
  5. When Looking at Miami Beach Listings What Does “Cash Only” Mean?

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About Jamey

I am Jamey Prezzi, a luxury Realtor ® in Miami & Miami Beach. I am also the owner and main blogger of Miami City Diggs. I founded the blog and write on it often because a lot of people call me to help them with buying, selling or renting in the city & have a lot of questions about how to do it. So I hope this blog better answers those questions. If you want to work with us, feel free to give me a call at: 305-793-8965 or use the email link in the contact section.