How to Buy a House in Miami - Ultimate Guide
By Alex Mikoulianitch on December 29, 2024
Becoming a homeowner in Miami comes with a set of perks almost no other city can give.
Work mingles with play in The Magic City, and a beach vacation is outside your doorstep. You have year-round access to a few of the best beaches in the world, some of the finest dining and nightlife in the country, and a monumental Downtown that blends city life with oceanfront serenity.
There’s a lot to get excited about, so let’s take the first steps toward making your homeownership dreams in South Florida a reality.
The team from Prevu Real Estate has shared an extensive guide on everything you need to know when buying a house in Miami, from the early stages of budgeting and neighborhood hunting to the subtle details of working with a buyer’s agent and saving money on your purchase.
First steps of buying a house in Miami
- Choose your neighborhood
- Plan your budget
- Interview buyer’s agents
Choose your neighborhood
Regardless of your financial situation, figuring out where in Miami you want to shop for a house is a great way to start planning your budget. You have to grasp what prices look like in each area before getting an idea of the down payment you’ll need and what mortgage payment you can afford.
In a city as enticing as Miami, you might get lost in all the tempting listings that dot the beachfront paradises of Miami Beach and Biscayne Bay. To narrow your search and settle on a price point, highlight your essential needs first.
Are you ready to face the traffic of Downtown Miami during rush hour, or would you instead move to the secluded Key Biscayne and avoid the hustle and bustle altogether? Do you prefer the action-packed South Beach or the quieter beaches of Bal Harbour?
Though there are a lot of great neighborhoods in Miami to choose from, you will have to zero in on your priorities. How important is a quick commute to work? Do you want to own a boat and have access to it every day? Will you want a pool and the maintenance cost that comes with it?
Choosing the right neighborhood may take some time, so give yourself the freedom to explore Miami and everything it offers. Soon enough, you’ll know what neighborhoods work for you, the average home price in those areas, and whether you can afford to live there. Then, you can start planning your budget.
Plan your budget
A home buyer’s budget usually revolves around one essential item: the down payment.
Though it is the highlight of your budget, it can easily overshadow the extra costs involved in buying a home that many buyers might overlook.
Closing costs, escrow fees, and property taxes can all add up quickly. When faced with the total cost of these items, saving for a down payment can feel like thankless work. To avoid surprises, set up your budget to include those potential costs.
It may be daunting to save for expenses you may not end up paying, but having a safety net can give you the confidence to make a home purchase and avoid any heartbreak, especially if you find the perfect beachfront home that covers all your needs.
There are also tools that buyers can use to increase purchasing power and ease the burden of extra costs without having to save extra. One of those tools involves working with a broker that offers a commission rebate.
Interview buyer’s agents
Before we get into commission rebates and how they can save you thousands of dollars, it’s crucial to understand the benefits of working with a buyer’s agent.
Most homeowners see homebuying as a clearcut path of saving, searching for listings, and reaching out to the listing agent - who represents the seller, not the buyer - about a property they like. Of course, it’s not that simple.
There are many moving pieces in a Miami real estate transaction. For example, how do you know if the listing price is fair? Do you feel comfortable negotiating a better price? How do you find a similar property if the one you like falls through?
If any of those questions give you pause, you should consider working with a buyer’s agent.
It won’t cost you anything to start interviewing real estate agents. In fact, you can choose to start your homebuying journey by doing just that. Beginning your home search with an expert broker can make narrowing down neighborhoods much easier.
If you decide to interview buyer agents, there are a few criteria you should consider. Ask about their expertise and the kind of deals they closed. You want to be sure they have concrete knowledge of the locale and have worked with prices in your range.
For example, if you’re set on purchasing a home in Coconut Grove because you’ve always wanted a waterfront lifestyle, your agent should know the ins and outs of owning a house by the water, the maintenance costs, and what features to look out for.
You should also ask about the service they provide. Are they easy to communicate with when you have questions or doubts? Do they offer online tools to make your search easier? And, most importantly, do they offer a commission rebate?
Prepare for the buying process
- Plan to save with a commission rebate
- Get a mortgage pre-approval
- Utilize online tools to streamline your search
Plan to save with a commission rebate
Buying a house is the most expensive purchase of a lifetime for most people. This means finding ways to save significant money when buying a home can make a world of difference.
Commission rebates are one of the easiest ways to do so.
Commission rebates, or homebuyer rebates, are modern real estate tools that buyers use to save thousands of dollars when buying a home in Miami. Modern brokerages like Prevu invest in salaried agents, allowing the brokers to return a portion of their commission to the buyer upon closing.
Prevu offers the largest rebate in Florida, and buyers that work with Prevu can receive a commission rebate of up to 1% of the home sale price.
Let’s say you are ready to buy a single-family home in Coral Gables. If, for example, you buy it with Prevu for $1,100,000, you can receive a rebate check for up to $11,000.
Those expensive closing costs we mentioned can look less frightening when you know you can expect a sizable rebate. And the extra purchasing power of knowing you stand to save might make that backyard pool a reality.
Get a mortgage pre-approval
Before you start exploring open houses in your top Miami neighborhoods, consider getting a mortgage pre-approval.
If you make an offer with a mortgage pre-approval, you immediately stand out to the seller. That’s because they can enjoy the peace of mind that the deal won’t fall through because you couldn’t secure financing.
Securing a good mortgage loan is just as important as saving up for a down payment. It’s a good idea to start thinking of ways to improve your credit score and debt-to-income ratio (DTI) as soon as you commit to becoming a homeowner in Miami.
Having a sparkling financial record can significantly impact the interest rate you secure, and may even enable you to make a smaller down payment. The better your score and DTI, the better your chance of having a manageable monthly payment and putting down less than 20%.
Utilize online tools to streamline your search
We mentioned earlier that when you interview buyer agents, it’s essential to ask if they offer online tools to make the homebuying process more manageable.
These aren’t just alerts and occasional emails with suggested listings. A modern online platform can help transform how buyers experience their home purchase in Miami.
For example, Prevu’s digital buying platform is designed to empower the buyer from the get-go. It allows you to input multiple search criteria to zero in on the specific type of property you want to find. You can explore those listings anytime without waiting for a broker to send you "whatever they have available."
The platform is also designed to facilitate communication between buyers and their agents. You can browse listings as long as you’d like, and the option is always there to speak with a dedicated Prevu agent about the property. Once you begin your partnership with a Prevu agent, the platform allows you to reach out anytime with any questions.
If you find that exact Spanish Revival-style home in Coconut Grove you were looking for, the next step should be to see it. Prevu gives you control over scheduling property tours with the click of a button instead of relying on back-to-back emails with a traditional agent before you can finally see a house.
Online tools aren’t just there to make things more comfortable but also play a pivotal role in helping you move faster with your home purchase. In most real estate transactions, time is of the essence, and a slight delay can result in you missing out on your dream home.
From offer to closing - the final stretch
- Prepare to make an offer
- Do your due diligence
- The final walkthrough
Prepare to make an offer
Working with an agent makes this part of your homebuying journey much smoother because crafting a well-prepared offer can require skill and knowledge of local home prices.
Your broker will be able to plan an effective strategy to ensure the offer can help you get the price you want or open the door to negotiations and get you as close to that price as possible.
You’ll also want to ensure all your necessary paperwork is in order, so there’s no delay in case a specific document is needed. This is where specific online tools come in handy, as well. For instance, Prevu’s online platform offers buyers a secure and easy way to upload any documents, instantly accessible for collaboration with your agent.
Once you are satisfied with the offer and the seller accepts, it will be time to do your due diligence.
Do your due diligence
It can’t be overstated just how important this step is. Don't skip on due diligence even if you walk into a seemingly perfect house.
It’s not uncommon for a house to look impeccable on the outside but have significant flaws on the inside. That is why the first order of business is always a general home inspection. Unless you have someone you trust, your agent will be able to recommend expert inspectors in the area that they have previously worked with.
The general inspection is meant to comb through all the essential parts of the home, but you may have to hire specialists if specific parts of the house need fixing or looking at.
Arguably the most important of these are the roof, plumbing, and HVAC systems. Repairing or replacing any of these items is a serious expense. They should be your main focus as you inspect your potential home, so don’t be afraid to ask the inspector to pay close attention to those areas.
Last steps and the final walkthrough
When the inspections are complete and everything is in order, you’ll be at the final stages of your journey.
If you are satisfied with the home's condition, you can notify your lender that you’re ready to move forward, and they will send a professional to appraise the house. This is to ensure that the value of the home justifies the price.
Though not required in Florida, unless you lender requires such, it can be a good idea to explore homeowner insurance options. Some lenders may require it before releasing funds, but regardless of lender requirements, it’s always a good investment to ensure your future property is insured.
If everything checks out from your lender, you will be cleared to close and ready to do the final walkthrough.
These usually occur the day before or the morning of closing. It’s your final chance to comb through every nook and cranny of the house, double-check that any agreed-upon repairs were completed by the seller, and to make sure you are satisfied with everything.
Once you close, you will officially become a Miami homeowner. And, if you worked with Prevu, you can kick back and expect your rebate check to arrive within a few days.
