If you’re reading this, it’s likely because you need a refresher on the process or are considering starting your journey to buy a house or condo in Miami in 2024.
I’ve put together this step-by-step buyer guide so you can save it and refer back to it anytime. The steps are organized in the order they should be followed, from determining your budget to becoming a proud owner. This guide is based on my years of experience as a local Miami Realtor® and Investor.
Here’s the checklist to buy a house or condo in Miami in 2024:
- Determine Your Financing: Cash or Mortgage?
- Establish Your Budget: Monthly and Annual Costs (HOA fees, Utility bills, Quote HO6 Insurance, Consider Property Taxes)
- Get Pre-Approved for a Mortgage: Find Out How Much You Can Actually Spend
- Work with a Licensed Miami Real Estate Broker or Sales Agent
- Understand the Market: What Has Sold In The Last 6 Months?
- Select a Title Company and Understand Their Fees
- Search for Properties Within Your Budget
- Tour Potential Properties
- Double-Check Property Costs
- Choose Your Favorite Property (or Shortlist a Few)
- Get a Full Preview of Closing Costs
- Send an Offer and Negotiate the Price
- Perform Due Diligence and Property Inspections
- Apply for Your Mortgage
- Submit the Sales Application to the Homeowners Association (If Applicable)
- Apply for an Alternative Mortgage (If Denied)
- Close the Deal and Become an Owner
Disclaimer: This guide is provided to help you navigate the home buying journey and is based on my experience as a licensed real estate professional. Please note that other brokers or licensed professionals may have their own processes and methods. While the information in this guide is deemed reliable, it is not guaranteed, and there are many ways to approach the buying process. This guide is intended as a helpful resource, not the definitive way to buy a home.
1. Determine Your Financing: Cash or Mortgage?
The first step in buying a home or condo in Miami is deciding how you will finance the purchase. Will you be paying in cash or securing a mortgage? Cash purchases are quicker and eliminate the need for a lender, but if you’re opting for a mortgage, you’ll need to get pre-approved (more on that later).
Knowing your financing method upfront helps streamline the entire process.
2. Establish Your Budget: Monthly and Annual Costs
Next, figure out how much you can comfortably afford. This includes not just the purchase price but also ongoing expenses like:
- HOA Fees: You can see these fees listed under each online listing. These usually depend on the size of your apartment and the association where the property is located. They are also referred to as “Maintenance Fees” or “Association Fees”.
- Utility Bills: Consider the costs for electricity, water, and gas, which can vary depending on the size of the property. Keep in mind that some HOA fees may already include water, and if you plan to have an electric stove, you may not need gas at all.
- Property Insurance: Get a quote for property insurance, which covers the interior of your home. ASk for HO6 policies for condos, or HO3 policies for single-family homes. We recommend getting quotes from multiple insurance companies, such as State Farm, Allstate, Liberty Mutual, USAA, Geico, Progressive, Chubb, Farmers Insurance, and Nationwide. Pro tip: If you already have car insurance or another type of insurance, start by getting quotes from those companies, as they may offer special package deals and savings.
- Property Taxes: Property taxes in Miami are approximately 2% of the property’s assessed value. If you want to know more about the property taxes you will end up paying at the end of the year, we recommend contacting the Miami Property Appraiser Office. As they mention on their website: “When buying real estate property, do not assume property taxes will remain the same. Any change in ownership may reset the assessed value of the property to full market value, which could result in higher property taxes. Please use our Tax Estimator to approximate your new property taxes.”
3. Get Pre-Approved for a Mortgage: Find Out How Much You Can Actually Spend
Skip this step if you are a cash buyer.
If you’re using a mortgage, getting pre-approved by your bank or mortgage broker should be the first step before you even start looking at properties online.
Skipping this step can lead to wasting time and energy on properties that aren’t a good fit financially.
Consult with your bank or mortgage broker, provide the required documentation, and ask them how much you can realistically afford to borrow and what your monthly payments will be. The documents they typically require include:
- Proof of Income: Recent pay stubs, tax returns, and W-2s or 1099s from the past two years.
- Proof of Assets: Bank statements and statements from investment accounts to show you have funds for the down payment and closing costs.
- Credit History: Your credit report and score to assess your creditworthiness.
Many buyers are surprised to learn:
- They can afford more than they initially thought.
- They actually cannot afford as much as they expected.
- They do not have the required documentation to get pre-approved.
- They may need a 30% down payment instead of the 4% they anticipated.
Remember that your lender will need to review and approve the property you choose to buy. Properties with ongoing issues, special assessments, or high maintenance costs may prompt the lender to require a larger down payment, compared to condos with no special assessments and strong financial stability.
Finally: if you’re using a mortgage, a pre-approval letter will likely need to accompany your offer to show sellers that you’re a serious buyer with the financial backing to make a purchase.
4. Work with a Licensed Miami Real Estate Broker or Sales Agent
Now that you’ve determined how much you can afford to spend on your property, you may want to consider working with a licensed real estate broker to streamline the entire buying process.
The journey to buying a home can be exciting, but it’s also complex, and navigating each step alone can be challenging. This guide aims to help you decide whether you’re ready to tackle the process on your own or if you’d prefer some professional assistance.
At our company, we guide you through every step of the way. We support you in your home search by sending you listings that match your preferences, setting up notifications so you’re the first to know when new properties hit the market, and connecting you with other professionals, such as title companies, attorneys, and property inspectors. We also maintain all parties coordinated and in synergy to orchestrate a successful and smooth transaction.
Please note that, as of the new practice changes from the NAR settlement on August 17th, 2024, all buyers are required to sign a written agreement before touring a home.
5. Understand the Market: What Has Sold In The Last 6 Months?
Before you start your property search, it’s important to understand the current market conditions. Research what similar properties in your desired area have sold for in the last 6 months.
This will give you a realistic idea of pricing and help you make informed decisions when you’re ready to make an offer.
6. Select a Title Company and Understand Their Fees
Choosing a reputable title company is a key part of the process. They’ll handle the closing and ensure that the property title is clear. Ask about their fees upfront to avoid surprises. Typical fees may include title search fees, title insurance premiums, and settlement fees, which can add up to several thousand dollars.
7. Search for Properties Within Your Budget
With your budget in mind, start searching for properties that meet your needs. Your real estate broker will help you identify the best options based on your criteria, including location, size, and amenities.
8. Tour Potential Properties
Visit the properties you’re interested in to get a feel for them. Pay attention to the property condition and layout. Touring properties will help you narrow down your choices and ensure that you’re making an informed decision.
9. Double-Check Property Costs
Before making an offer, review all associated costs, including HOA fees, property taxes, and potential repair costs. Ensure the property fits within your financial plan and doesn’t have any hidden costs that could strain your budget.
10. Choose Your Favorite Property (or Shortlist a Few)
Once you’ve seen a few properties, it’s time to decide. Choose the one that best meets your needs or narrow it down to a shortlist if you’re undecided. This step helps you focus on the properties that truly meet your criteria.
11. Request an Estimated Closing Costs Breakdown
Ask your title company to provide an Estimated Closing Statement or Preliminary Settlement Statement based on the property you want to buy. This document will show you how much you need to bring to the closing table. It typically includes loan origination fees, title insurance, recording fees, and any prepaid items such as property taxes and insurance. Understanding these costs in advance helps you plan your finances and avoid any surprises at closing.
12. Send an Offer and Negotiate the Price
With the help of your broker, submit an offer on your chosen property. Be prepared to negotiate with the seller to reach an agreement that works for both parties. This may involve counteroffers and discussions about price, closing date, and contingencies.
13. Perform Due Diligence and Property Inspections
Once your offer is accepted, it’s time to perform due diligence. Hire licensed property inspectors to check the property’s condition. If any issues arise, you can negotiate repairs or back out of the contract during the inspection period. Common inspections include general home inspections, termite inspections, and sometimes specialized inspections like mold, roof, or lead-based paint inspections.
14. Apply for Your Mortgage
Now that your offer is accepted, you’ll need to formally apply for your mortgage. Submit all required documentation to your lender, including income verification, tax returns, and the purchase agreement, to move forward with the loan process.
15. Submit the Sales Application to the Homeowners Association (If Applicable)
If you’re buying a condo, you’ll need to submit a sales application to the homeowners association (HOA). They’ll review your application and may require an interview before approving the sale. The approval process can take several weeks, so it’s important to factor this into your timeline.
16. Apply for an Alternative Mortgage (If Denied)
If your mortgage application is denied, don’t panic. Explore alternative mortgage options or work with your broker to adjust your offer or financing terms. Sometimes a different lender or loan program can make the difference in getting approved.
17. Close the Deal and Become an Owner
Finally, once all conditions are met, you’ll close the deal. This involves signing the final documents, transferring funds, and receiving the keys to your new home. Congratulations, you’re now a homeowner in Miami!
Considerations
This process should be comprehensive enough to get you from start through the finish line. Keep in mind that each property is different and has its own challenges. Some transactions run smoother than others, so understanding each step and knowing what the process looks like will prepare you for any bumps on the road.
Need help buying your next condo or house in Miami?
At Discolo Real Estate, we understand that buying a home is one of the most significant and complex transactions you’ll ever undertake. Our value lies in reducing the stress of this high-stakes process by demystifying the home buying journey, and guiding you every step of the way.
With our extensive experience, we navigate difficult negotiations, craft the best offers, and help you avoid common pitfalls—all to save you time and money and ensure a successful closing. As REALTORS®, we are committed to upholding the Code of Ethics, which means having open and honest conversations with you throughout the process.
As locals who are deeply familiar with the Miami market, we take a hands-on approach to every transaction, ensuring you receive personalized service and expert guidance. We’re here to help make the home buying process as smooth and successful as possible.
