Driving a hard bargain

Brits have rushed to buy homes on golf resorts in Florida, but the sale process is not all plain sailing. Tom Rowland reports
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The Independent Online

Lesley and Steve Godfrey have become something of an expert on the Florida real estate business while searching for a house over the past six months. In fact, the Devon couple have been trying to buy a number of houses, so far without success - although they have high hopes for their latest find.

Lesley and Steve Godfrey have become something of an expert on the Florida real estate business while searching for a house over the past six months. In fact, the Devon couple have been trying to buy a number of houses, so far without success - although they have high hopes for their latest find.

During that time, asking prices have skyrocketed for the kind of airy, suburban dream home on a golf course that they are after for family holidays on Florida's west coast - rising from around $220,000 (£120,000) to $300,000 (£164,000).

The couple have been trying to buy on the Rotonda, near Englewood, not far from Venice, Florida. It is perhaps appropriate to describe current prices in the area as going into orbit, because the Rotonda is a circular development, eight miles in circumference and criss-crossed with canals, which is reputedly one of the few man-made artefacts visible from outer space.

"Initially we tried to buy the house of an acquaintance privately," explains Steve. Having agreed a price, however, the seller decided that the house was under-priced as the market was rising so fast. So the couple started looking elsewhere, and soon found a brand new house. But the builder refused to negotiate on the price and insisted on a $20,000 deposit on the spot. Because of delays in getting a mortgage, by the time they were ready to complete the house had gone to somebody else.

Then the Godfreys acquired an estate agent. American "realtors" - perhaps unlike their UK counterparts - have a habit of becoming your new best friend. This could, of course, be because commissions are significantly higher in Florida - 6 per cent compared with an average of 1.5 per cent in the UK. And, by introducing a buyer, the realtor is entitled to 50 per cent of the fee - adding up to £5,000 on a $300,000 house - so any serious buyer represents a significant income stream to a realtor.

In the case of the Godfreys, finding an agent seemed to work. The agent found an ideal house, set on one of the Rotonda's lakes, close to a golf course. "The realtor was so confident that the sale had completed that he was celebrating in a bar," says Steve. Then the Swiss seller asked them to sign a declaration that they would be living in the house for at least six months each year. As they were not planning to do so, and in any case did not have a visa to stay that long, the sale could not go ahead. "The seller was worried about the US Internal Revenue Service holding on to 10 per cent of the sale price if he sold to a buyer who is not resident in the US," explains Steve.

The ways of the IRS baffle most US citizens, let alone outsiders. Why the US tax service would be concerned about the residence qualifications of a house buyer when it is the seller who gets all of the cash is something of a mystery. But worry it does, so the Godfreys lost the house. "We had a really good working relationship with our realtor," says Steve. "The problem is that you are to a large extent working blind, because you are not on the spot."

In their case the agent was happy to take hundreds of photographs and e-mail them to Steve, to check out locations and point out any obvious drawbacks. "You are still putting a lot of trust and faith in somebody you don't know that well," says Steve. "The only alternative is to spend $1,000 for a trip where you fly over for a weekend and look for yourself."

To ensure there would be no structural problems, the Devon couple decided they did not want a property built before 2000, and stuck to their $300,000 maximum price ceiling. And although prices had already soared past the $220,000 average in March, the Godfreys have finally found an airy, 2,000 sq ft home that was constructed in 2000.

With a triple garage, caged swimming pool - necessary because of Florida's occasionally overfriendly amphibious wildlife - and the bonus of a vacant lot to one side that they could buy and develop themselves at a later date, they Godfreys now have their fingers crossed that nothing will go wrong with this sale before they can take possession.

Spot the difference: what to consider when buying in the US

* With sales commissions at 6 per cent, there is more incentive for US sellers to go it alone. The Godfreys' agent drove around looking for private sale boards, then did a deal with the vendor, charging them only 2 per cent.

* Many houses are offered on an "exclusive right to sell listing". Unlike in England and Wales, even if the seller finds a buyer without the help of the listing agent, a full commission is payable.

* "Net listing" is illegal in many states, but not in Florida. This is where the seller wants to net a specified price, so any amount the listing agent can get a buyer to pay above that price is the agent's sales commission. The problem from an overseas buyer's point of view is that there is a strong incentive for the selling agent to fail to pass on any offer that does not give them a large commission. If you're not on the spot, it's difficult to contact sellers directly.

* The local "Multiple Listing Service" (MLS) is the most powerful sales tool available in Florida. All house sales that are handled by realtors are listed on this open listing system, available to all at www.realtor.com. The Godfreys found that once houses went on to MLS, their chances of getting an acceptable offer in first were reduced. The house they are now buying was not put on the MLS system.

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