Updated for 2016
Have you ever seen those cheesy signs on the side of the road all over Orlando that say “Buy a Home, No Money Down” or “Zero Closing Costs” and they just look like a scam? They usually are and are just a marketing ploy to try and get your contact information so they can later spam you with their services. What I’m about to share with you is real information that you can actually apply to your home purchase and if you follow this technique you can and actually will leave the closing table paying little or nothing out of your pocket.
1. This only works on a new purchase not when selling your property. Sorry sellers but we have other tips for you on saving money when selling your Florida vacation home.
2. This will not work on every home. This works best on either new construction or non-short sale properties.
3. This will not work if you are not using a Realtor. You’ll see why. . .
That being said, here is a very simple plan for you to follow:
New Construction: Ask your Realtor to provide you with a list of communities paying more than a 3% broker commission. Some pay as much as 10% of the purchase price in commission to your Realtor. Developers are desperate to unload their inventory right now so take advantage of it.
Resale: Repeat the same as above but make sure the properties are not short sales and they will be taken from the MLS.
New Construction: Choose a community that is offering the best incentives to you to help cover your closing costs. Most developers will pay up to half your closing costs and also pay your Realtor a hefty commission.
Resale: There are many homes listed within the MLS that are offering seller contributions. Have your Realtor compile a list of these particular homes that offer both a contribution as well as a commission to your agent in excess of 3%.
New Construction: Now that you’ve chosen the community with the best incentive for you both you and your Realtor it’s time to talk to your Realtor about covering a portion of your closing costs with a portion of their excess commission. (please note that I am not suggesting you ask your agent to work for free as this is insulting to most Realtors or anyone for that matter. This is just a simple contribution that is in excess of what they would normally get paid) Ask for a contribution of 1.5% from your Realtor. Between the Realtor and the developer this should amount to 3% contributions to cover all of your closing costs.
Resale: The same as above however, commissions on resales are much lower so your agent may not be able to contribute as much without working for free and nobody is willing to do this, nor should you expect them to. Most agents love to help their clients with closing costs when a fair opportunity arises for both parties. Every agent is different when it comes to what they consider a “fair” commission so understand that they may not be able to offer this on every home but they should give you options of which ones they can.
One thing I would like to point out is that in some states it is illegal for Realtors to contribute towards a buyer or sellers closing costs. This is not the case in Florida however it is up to the discretion of the Realtor as to what they are willing to contribute if any at all.
We hope to earn the opportunity of helping you achieve your investment property goals this year. To set up a free, no obligation investment property consultation with us please use our scheduling tool or contact us directly at 866-422-6191 and if you have enjoyed this article please consider subscribing to our blog and stay updated on future information.