What do some of the real estate terms, like CDD, mean?

Property Taxes:

Although there is no state income tax in Florida, there is a property tax. The taxes on any of theses homes will vary with the size, type, and location of the property. If you figure about 1.5% on the sale price, you will be in the ballpark.

Community Development District Taxes or CDD fees:

Not all communities are a CDD community. This is something you should ask about up-front, as it could affect your tax payments. CDD fees are a form of tax and may or may not appear separately on your tax bill. They are paid to the development or community. You are paying for the bonds that were issued by the developer, to pay for the infrastructure of newer communities. The amounts vary greatly from community to community, and usually have a 10 to 15 year payoff period. Some CDD fees can be paid off up front at closing, incorporating the CDD fee with the mortgage.

Home Owners Association or HOA:

Home owners pay a fee to a home owners' association, which maintains the shared spaces and may provide such services as lawn care, landscaping, and security. The home owners' association sets rules and regulations for the community, some even pertaining to the aesthetic appearance of the houses.

What is a Short Sale?

With the increase in foreclosures lately you may have heard the term “short sale” and wondered what it means. A short sale is when the lender will accept less than the full amount due on a mortgage when a property is sold. Usually, the lender will accept the short sale to avoid the time and expense of a foreclosure.

Buyers pursue short sales to get a good deal, but you might want to think twice about making an offer on a pre-foreclosure, short sale home. It's not as simple as you may believe, and very few can close in 60 days or less. Most take 6 months or more, depending on the bank, or mortgage company holding the loan, and how many foreclosures and short sales they are dealing with. That means your deposit, which could be $10,000 or more, is sitting in an escrow account without earning interest.

Don’t forget, the seller's lender is accepting a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it. Always remember, banks are in business to make money.

Be aware. The seller might owe more than the home is worth, or there may be a second mortgage, so the amount the bank will accept might bring the price in line with market value, not below it. Depending on the lender, they may conduct multiple appraisals of the property, so they are well aware of the true market value of the property. Rather than lose money they may auction the property in the hope of getting more for it.

If there are two loans, the first mortgage lender's position is protected. For example, if a seller owes $160,000 to the first lender and $40,000 to the second lender, and you offer $160,000 it will wipe out the second lender. The first lender will have to obtain permission from the second lender to sell the property. If the second lender wants money, the price will increase accordingly. If the second lender says no, the deal is dead, and you will have to start looking again.

If the mortgage has been bundled with other mortgages and sold on the open market, you will have to deal with the investor who purchased the bundle of mortgages. If it is not to their advantage to sell at a loss, then Just as with the second lender the deal is dead, and you will have to start looking again.

Multiple Offers:

Be aware that there may be multiple offers on the property. All offers are “sealed”; that is one bidder does not know what the other’s offer is. The lender will look at all offers, and accept the one that is most beneficial to them. In this scenario you only get one shot, if yours is the low bid you will not obtain the property.

Once the seller has accepted your offer:

Your real estate agent or the selling agent must send it to the lender for approval. You do not have a deal until both of the lenders accept the offer. This could take up to 6 months so be prepared to wait. Your agent should also send the lender a copy of your earnest money deposit. Do not be astonished if the lender asks you to increase it.

In addition, the lender will want to see that you have your own loan available and you are preapproved. Send a preapproval letter to the lender. If you are paying cash you will need to provide a statement from the bank saying that you have sufficient funds.

Make your offer contingent upon the lender's acceptance.

Give the lender a time frame in which to respond, after which, you will be free to cancel. If the lender is under no pressure to make a decision, the paperwork will sit on an underling's desk forever. Some lenders submit short sales to committee, this can significantly increase the time it takes for the offer to be approved.

Reserve the Right to Conduct Inspections.

Generally, the lender will not pay for customary items that a seller would pay. These include home protection plans for the buyer, buyer credits of any kind and pest/termite inspections. A buyer will be asked to purchase the property "as is," which means no repairs.

It is extremely important that a buyer obtain a home inspection and pay for other types of inspections such as pest, roof, sewers, septic tanks, chimney or fireplace inspections. Do not waive your right to obtain these inspections, and make your offer contingent on approving them.