Buying a condo in Miami is an exciting event, but it can catch many first time buyers or out-of-towners by surprise because of how different the process is.
For example, many New Yorkers used to submitting multiple, completely non-binding offers are shocked by how contractually binding offers submitted in South Florida can be.
However, with a little bit of studying the process which we’ve described in detail below, we’re confident that you’ll find buying a condo in Miami to be refreshingly straightforward and even advantageous from a negotiating perspective.
Table of Contents:
Do your initial Miami home search by yourself
Get pre-qualified for a mortgage so you’ll know your budget
Find a buyer’s agent who’ll give you a commission rebate
View as many listings as you can across neighborhoods
Get pre-approved for a mortgage to show you’re serious
Have your agent submit a compelling offer
Negotiate an accepted offer with the seller
Schedule a professional home inspection
Review building documents and due diligence
Wire the rest of your contract deposit
Get a loan commitment letter from your bank
Title commitment and examination
Get a home insurance policy
Review closing costs and seller property disclosure
Conduct final walk-through before closing
Document preparation and the closing
You should always start your home search by yourself, especially if you’re moving to a new city like the many people that have left New York in droves for Miami. Depending on how quickly you need to move, and how much time you have to search for a place, it may even make more sense to rent for a year first so you’ll have more time to find and buy a place. This may especially make sense if you’re not entirely sold yet on the pros and cons of living in Miami.
If you’re like most people, you’ve probably visited Miami before and stayed somewhere in Miami Beach. However, Miami is a large city with almost 3 million people (as of 2019 for Miami-Dade County) and many diverse neighborhoods worth exploring.
Unlike New York City where everyone wants to live in just a few neighborhoods like the West Village or Meatpacking District, Miami offers a diverse range of neighborhoods from bustling Brickell, quiet North Beach to leafy Coconut Grove.
The easiest way to get to know the city and discover what neighborhoods you can imagine living in is to explore it on your own first.
You could do this by making reservations at the many great restaurants that Miami’s booming culinary scene has to offer, and simply walking around the various neighborhoods after your meal. Or you could stop by open houses on your own in various neighborhoods, and then drive around afterwards to get a feel of the place.
Why do we recommend searching on your own first?
Because it’s nice not to waste your buyer agent’s time if you’re not even sure yet which Miami neighborhood you want to live in, or even whether you want a condo or a single-family house. Even though buyer agents are incentivized to help you find a place and close, they do work on commission, and they won’t get paid a penny if they end up spending all of their time with a client who wasn’t serious.
Just like in NYC, buyers’ agents in Miami typically do not have exclusivity agreements in place with their buyer clients. As a result, there’s no real assurance that they will get compensated anything, and the buyer could decide to stop working with the agent without consequence at any time.
Pro Tip: Even the most patient of buyer’s agents will lose faith in their client over time if the buyer client keeps viewing listings without making an offer, or worse, makes offers that they always back out of. Do you really want to spend your finite supply of goodwill with your agent so early on? Or would it not make more sense to loop in your buyer’s agent once you’re serious about buying a place, know what you’re looking for and have a sense of where you want to live in Miami?
The next step is to speak with a mortgage banker or two to get a mortgage pre-qualification letter, which you can get after a 15 minute phone call during which you’ll share some high level financial information about yourself. At this stage, there’s no document verification and the banker is simply giving you an idea of how much you could borrow assuming what you say checks out.
Why should you get pre-qualified for a mortgage?
You should get pre-qualified for a mortgage before going too far in your initial search so you’ll have a better idea of how much you can afford, and how much banks will lend to you. Unless you’re an all cash buyer, this information will be critical in determining your price range and budget when searching for condos to buy in Miami.
As a secondary benefit, having an official mortgage pre-qualification letter from a reputable lender gives more assurance to real estate agents and sellers that you are a credible, potential buyer.
Will mortgage pre-qualification hurt my credit score?
Generally speaking, no. Most lenders will just ask for an estimate of your credit score (i.e. often times just a range vs your exact credit score), though some might make a soft credit inquiry which won’t affect your credit score because soft inquiries aren’t attached to a specific application for credit.
Be careful however if your lender intends to make a hard inquiry which can affect your credit. There is no need to run a hard inquiry at this point, especially when you are simply looking for an estimate of how much you can borrow and don’t intend to necessarily proceed on a mortgage with that specific lender.
In fact, having a rogue lender run a hard credit check at this stage can be quite detrimental to your credit score as it’ll be treated as a separate inquiry.
This is bad because your credit generally won’t get penalized if you get hit with multiple inquiries of the same request type within a 14 to 45 day period (e.g. you’re buying a home and have several banks run your credit while shopping for the best mortgage); however, if a rogue lender hits you with a hard inquiry very early on for a pre-qualification, and then you have to run your credit several months later when you’re actually ready to buy, then it’ll look like you’ve made multiple requests for credit vs just one.
Pro Tip: If you just want an idea of how much you can borrow without having to speak with a banker, then check out our handy Mortgage Affordability Calculator. Alternatively, if you’re dead serious about buying a place, it doesn’t hurt to get started with the mortgage pre-approval process which takes time, so you might as well get started early. Plus, a mortgage pre-approval is viewed even more credibly than a mortgage pre-qualification by sellers and agents.
Once you’ve figured out how much you can afford, what type of property you’d like to buy and where generally you’d like to buy, it’s time to find a buyer’s agent who will rebate you a portion of his or her commission to you post-closing.
Why should you get a commission rebate?
Because the typical real estate commission in Miami is 6% of the sale price, which is split equally between the buyer’s agent and the seller’s agent if the buyer has an agent. If the buyer is unrepresented, the seller’s agent typically receives all 6% of the commission.
On a million dollar Miami condo, your buyer agent stands to earn $30,000 in commission when you’ve done much of the initial searching yourself. Simply put, the amount of commission earned on a per hour basis simply doesn’t make sense for larger transactions, so why not sign up for a Hauseit® Buyer Closing Credit and get some of it for yourself?
What’s wrong with asking an agent friend for a rebate?
You could of course ask a real estate agent friend to give you some of the commission back, but most big brokerages will not allow discounting of any type. Then you’ll be stuck with the unsavory situation of your friend cutting you a check directly post closing, instead of the brokerage writing you a check which is what should happen.
When the brokerage writes you a commission rebate check, it’s not counted as income but rather as a reduction in your cost basis.
In other words, commission rebates are not taxable and you will not be issued a 1099. However, if your agent friend writes you a check directly against the brokerage’s wishes, then it’s much more grey in how that money will be treated for tax purposes.
Will it count as a gift? That may pose an issue for larger rebate checks over the annual gift tax exemption amount, meaning your agent friend may have to pay a gift tax on anything over the exemption amount.
Pro Tip: Don’t make your friendship awkward by asking your friend to part ways with potentially much needed income. Being a real estate agent may be his or her only job, and asking to take food off their table is kind of gauche. It’s much better to sign up with Hauseit® for a commission rebate with one of our experienced agents who have already agreed to do so.
At this stage, it’s important to view as many listings as possible across different neighborhoods. Remember, your goal at this point of the process of buying a condo in Miami is not to figure out generally where you want to live or if you want a house vs a condo, but to view as many comparable listings as possible so you have a sense of the market and relative value.
The importance of this cannot be overstated when trying to compare options and decide whether specific condos are priced right. Sure, you can rely on your agent to provide you with pricing and comparables analysis, but since you are the ultimate decision maker, it’s important to be able to judge value on your own.
Seeing many properties will even help you judge and compare square footage numbers as advertised between different listings.
For example, even though agents should be using square footage numbers from public tax rolls (Miami-Dade Property Appraiser), you will often see conflicting numbers on the MLS and public search websites such as Zillow. As a result, it’s always safer to gauge for yourself whether the square footage number advertised seems approximately right or not, and the only way to do that is to have seen many comparably sized properties.
Lastly, seeing as many listings as possible across your price point helps you learn what features you value, and how to value them. For example, how much is a direct ocean view worth to you? Or a gym? Or dozens of fitness classes per day like you’ll see at the Carillon Miami Wellness Resort?
As you would expect, comparables analysis is more of an art than a science. There is no exact formula for valuing certain amenities and features, and you’ll simply have to view a good amount of properties to gauge relative value for yourself.
If you need a mortgage in order to buy a condo in Miami, then it’s time to get a pre-approval letter from a reputable bank. We recommend getting at least two pre-approvals in case something unexpected comes up with one of the lenders and they aren’t able to fund at closing.
When should you start the mortgage pre-approval process?
It’s time to start sending in your financial documents to your mortgage banker and kicking off the mortgage pre-approval process once you’re fairly confident that you’ll be making an offer within the next few months, and that you are most likely going to buy something.
As we discussed in the previous section on getting pre-qualified for a mortgage, there’s no point in going any further with the loan process unless you are fairly confident that you will be buying vs renting.
Remember that your lender will need to run a hard inquiry on your credit as part of the loan pre-approval process.
Why is having a mortgage pre-approval letter important?
A mortgage pre-approval letter demonstrates to real estate agents and sellers that you are serious enough about buying that you’ve been partially underwritten and conditionally approved for a mortgage by a third party financial institution.
Having a mortgage pre-approval letter also demonstrates credibility and an ability to close because you’ve submitted financial information which has been vetted by your lender.
This makes real estate agents’ jobs easier because the mortgage banker has done the hard work of verifying whether you have the wherewithal to actually make a purchase of a certain size.
Serious offers are submitted in Miami via an “As Is” Residential Contract for Sale and Purchase that has been signed by the buyer. If the seller counter-signs the agreement, then the contract becomes binding. This process is in stark contrast to the norm in NYC real estate where buyer’s agents email completely non-binding offers to listing agents.
Can I back out from my offer?
Yes, you can rescind your offer at any time before it has been counter-signed by the seller. Furthermore, the contract states that “if not signed by Buyer and Seller, and an executed copy delivered to all parties on or before [date], this offer shall be deemed withdrawn and the Deposit, if any, shall be returned to Buyer. Unless otherwise stated, time of acceptance of any counter-offers shall be within 2 days after the day the counter-offer is delivered.” Your agent will typically suggest providing a one or two day grace period before your offer is automatically withdrawn.
Can I back out of an accepted offer?
Fortunately yes. Buyers typically have 10-15 days (negotiable) from the date the contract is fully executed to back out for any reason. This period is called the inspection period or due diligence period where the buyer pays for a home inspection and reviews key building documents (i.e. condo declaration, bylaws, association rules, most recent year’s building financials and a FAQ document):
Property Inspections and Right to Cancel: Buyer shall have  (if left blank, then 15) days after Effective Date (“Inspection Period”) within which to have such inspections of the Property performed as Buyer shall desire during the Inspection Period. If Buyer determines, in Buyer’s sole discretion, that the Property is not acceptable to Buyer, Buyer may terminate this Contract by delivering written notice of such election to Seller prior to expiration of Inspection Period. If Buyer timely terminates this Contract, the Deposit shall be returned to Buyer, thereupon, Buyer and Seller shall be released of all further obligations under this Contract.”
When is the ideal time to back out of an accepted offer?
If you’ve had a change of heart, then the best time to back out of an accepted offer is within three calendar days of the contract being fully executed. Why? Because buyers typically will have 3 days within contract execution to send in their initial contract deposit of $5,000:
Initial deposit to be held in escrow in the amount of (checks subject to collection): $[5,000]. The initial deposit made payable and delivered to “Escrow Agent” named below (check one): __ (i) accompanies offer or __ (ii) is to be made within  (if left blank, then 3) days after Effective Date. If neither box is checked, then option (ii) shall be deemed selected.
The initial deposit amount and when it becomes due are negotiable, but $5,000 within 3 days of contract execution is fairly typical in South Florida.
With that said, we’re starting to see more transactions where there is only one lump sum contract deposit that is wired vs two separate contract deposits (i.e. an initial one, followed by an additional one in say 10 days). Remember, all of this is negotiable, including the timing and amount of the contract deposit.
Additionally, the condominium rider (Comprehensive Rider to the Residential Contract for Sale and Purchase) that is typically included with the contract gives additional protections for a buyer wanting to back out:
This agreement is voidable by Buyer by delivering written notice of the Buyer’s intention to cancel within 3 days, excluding Saturdays, Sundays, and legal holidays, after the date of the execution of this agreement by the Buyer and receipt by Buyer of a current copy of the Declaration of Condominium, Articles of Incorporation, Bylaws and Rules of the Association, and a copy of the most recent year-end financial information and frequently asked questions and answers document if so requested in writing. Any purported waiver of these voidability rights shall be of no effect.
Pro Tip: There is an alternative to the above selection if the buyer acknowledges that he or she has been provided with a copy of the above documents more than three business days prior to contract execution. However, that situation is quite rare as it’s uncommon for listing agents to furnish all of the above due diligence documents before someone has even made an offer.
Unless your offer is at the seller’s full asking price, all cash and with no contingencies, you’ll most likely have a period of back and forth counter-offers before your offer is accepted, if it is at all.
Fortunately for buyers and sellers in Florida, the scope of negotiations is fairly standardized by the options allowed in the standard contract approved by the Florida Realtors and The Florida BAR.
Do I need a real estate lawyer to buy property in Florida?
No. Unlike New York where having a lawyer is required because the contracts are very negotiable and customized, it’s not necessary nor typical for either the buyer or the seller to retain their own legal representation in Florida.
Realtors will typically prepare the standard contract and send that in as an offer since no customization is typically warranted. Only in very rare instances where either party requests custom changes to the standard contract would a lawyer need to get involved.
However, it’s not advisable to demand custom changes to a standard contract that everyone else uses as is. Not only will the seller then have to hire their own attorney to review your custom edits, but it signals that you are a potentially troublesome, difficult to deal with or even litigious counter-party.
The standard options to choose from within the standard contract and associated standard contract rider are sufficient for the vast majority of situations.
What are the most commonly negotiated items?
As you can imagine, the purchase price is the most commonly negotiated point during counter-offer negotiations. Except in the most heated of markets, buyers will typically come in below the listing price since their offer will be legally binding if accepted.
In contrast to the NYC real estate market which is much more of a Wild West, buyers typically will typically want to have a period of counter-offers to give them more time to digest whether they want to proceed with a given property.
Other commonly negotiated points include the following:
Contract deposit: Though negotiable, it’s customary for the remainder of the contract deposit, typically 10% of the contract price, to be wired to escrow within 10 days of contract execution.
Special assessments: It’s typical for the seller to pay any installments due prior to closing, and for the buyer to pay any installments due after closing. Buyer agents often try to negotiate and have the seller pay the special assessment in full prior or at closing.
Closing date: The closing date is often negotiated depending on the buyer and seller’s unique preferences. Note that Florida’s standard contract does not have “on or about” language regarding the closing date, meaning it’s inadvisable to miss the closing date without mutual agreement.
Financing contingency: Florida’s standard contract has a financing contingency section with options for loan type, maximum interest rate, term as well as loan amount.