The Definitive Guide to Purchasing a Naples Home
So…You're ready to purchase your own Piece of Paradise…
I remember the moment I decided to move to Southwest Florida. My excitement couldn't be contained.
Over 30 years later and my passion for this incredible corner of the map is stronger than ever before.
And now that you're coming to join the fun, I wanted to put together a comprehensive guide walking you through everything you'll need to know before, during and after you put that offer in.
These are the things I wish I knew when I first moved here, and the things that as a Realtor over the last 30 years I've helped countless families navigate as they've bought their own Naples home.
So grab your morning coffee, maybe even a note pad, and most of all, don't hesitate to get in touch if you have any questions at all.
Buying Your Naples Home
Once I decided to trade in the frigid Chicago winters for the warm sunny beaches of Naples, my mind was immediately flooded with questions…
Was I really about to upend my life to move across the country?
What area of Naples would I want to live in?
How could I be sure I was making the right move (pun intended)?
Luckily, throughout the moving process and soon afterward, I gained clarity on these questions. So let's start from the beginning.
Where Do I Start?
With any property purchase there are a number of things to consider.
Knowing what to focus on will help you cut through the noise and make sound decisions for you and your family.
Let's start with the elephant in the room.
How Much Can I Afford?
This is the very first thing you'll want to get clarity on because it will prevent you from wasting time looking at homes that either aren't affordable or are much cheaper than what you actually could afford if it makes sense.
There are a number of ways to tackle this question, but I recommend taking a comprehensive approach involving:
- Your Mortgage Banker
- Your Financial Advisor
- Your gut
Your Mortgage Banker
If you plan to use financing to purchase you home, sitting down with your Mortgage Banker will give you a clear understanding of what you'll be able to get in terms of loan proceeds to assist with the purchase.
As you probably know, banks became much more stringent in their loan approval requirements after the financial crisis.
They now seem to want every record of your entire existence and want to interview your 3rd grade math teacher just to give you the approved stamp. It can be even tougher if you're self employed, as many Naples homeowners are.
Knowing this, it's helpful to keep your expectations in check when it comes time to sit down with your Mortgage Banker. Having said that, you may end up walking out pleasantly surprised, finding you can afford more than you thought possible.
Before you go popping the bubbly, though, let's take a look at the next two steps in that comprehensive approach I mentioned.
Your Financial Advisor
Just because your Mortgage Banker says you can afford a particular price range, doesn't necessarily mean it's the best decision for you and your family. Your Financial Advisor will be able to help you put that pre-approval into the context of your broader financial picture.
For example, if you have a goal to start a new business or give a large charitable donation in a few years time, maybe it makes sense to keep the housing budget a little more modest. Talk with your Financial Advisor to see how this home purchase fits into your overall financial plan.
Once you've gotten opinions and data from your Mortgage Banker and Financial Advisor, it's time to listen to your gut.
Only you know your situation inside and out, and only you will care enough to think through every aspect of the situation. Ask yourself what your main priorities are in life and see how this home purchase fits into that picture.
At the end of the day, we all tend to have a pretty smart voice inside our head (or gut) that usually knows what's best. So when you're making as big of a decision as how much to spend on a Naples home, it's usually wise to trust that voice.
Determine What Kind Of Lifestyle You Want
As the great Stephen Covey said, start with the end in mind.
When we apply that timeless principle to the process of buying a home in Naples, it means we'll first need to figure out what exactly we want out of our Southwest Florida lifestyle.
Because Naples is such a diverse city featuring many different living experiences, this will often be completely different from one homeowner to the next.
For example, some people will want their Florida abode to be as simple as possible.
They want to come into town for a few months, enjoy the warm weather and breathtaking beauty of the beach, then pack up and head North without much thought or worry. That type of person, depending on their other needs, might be well suited to live in a high rise condo, which offer residents simplicity in their ownership experience.
Another person might want to bring their extended family down each winter, so they may be better suited for a single family home, which tend to offer the most space.
Keep in mind, you don't have to get this nailed down just yet. Despite the number of options Naples offers, it's easy enough to see multiple different property types in one outing with your Realtor.
So at this point, you simply want to narrow it down so you can be more effective once you're on the ground house hunting.
Find The Right Realtor
Perhaps nothing will impact the efficiency, enjoyability and cost effectiveness of your home buying process as much as ensuring you find the right Realtor.
Along every step of the journey, your Realtor will (or at least should) be offering invaluable advice, helping you see what's around the next corner and making sure you avoid common pitfalls.
Before we discuss how to find the right agent, let's first take a look at how your Realtor will help guide you through the buying process.
Services Your Realtor Provides
Your Realtor will do a variety of specific things throughout your buying process. This will include:
- Using their knowledge to help you navigate local market conditions
- Advocating for your interests throughout the closing process
- Negotiating the best possible terms and price for your new home
- Helping you find the best partners, such as attorneys, title agencies, inspectors, etc.
- Providing advice on what repairs or improvements you should seek from the seller
- Guiding you through all of the mind-numbing paperwork
- Attending the closing to ensure any last-minute questions or issues get appropriately addressed
Considering all of that, it's no wonder why 87% of buyers bought their home through a Realtor in 2018.
How To Find The Best Realtor
Unfortunately, not all Realtors are created equally.
And when it comes to making one of life's biggest purchases, you can't afford to be making decisions based on bad information, lackluster customer service and poor attention to detail.
Knowing that, let's take a look at some tips for ensuring you find the right person for the job. Full disclosure – this is the “Shameless Plug” part of the blog post 😉
- Look for a long track record: Only after spending a significant amount of time as a Realtor do you begin to understand the nuances of the profession and how to effectively serve your clients. Luckily, after having moved to Southwest Florida in 1989 and getting my real estate license in 1990, I've produced a nearly 30 year track record filled with successful closings and happy buyers.
- Look for the local expert: Does your Realtor really understand Naples? If not, you need to find another Realtor. Specializing in a particular city allows a Realtor to understand its particular nuances and trends. Fortunately after having lived and sold real estate here for nearly 30 years, I think it's safe to say I know a thing or two about Naples.
- Look for testimonials: Can your Realtor provide a list of happy customers they've worked with recently? If not, that's a clear red flag you should be looking elsewhere. Luckily, you can read all of our reviews conveniently right here.
- Ask for credentials: Does your Realtor have any certifications or credentials beyond their real estate license that would make them more valuable to your home purchase? Humble brag incoming: I hold an MBA from the University of Michigan's Ross School of Business, something that has helped me understand market trends, effectively negotiate on behalf of my clients, and ensure deals actually get across the finish line.
- Ask about fees: Understanding how your Realtor gets paid is critical – it can mean tens of thousands of dollars in savings or excess cost. We're proud to offer highly competitive, straightforward pricing on our services – get in touch today to learn more.
Alright, now that we got our shameless plug in, let's continue 😉
Start Your Search
Once you've selected your Realtor, the first thing you'll want to do is make sure you're both on the same page.
Making your priorities clear will allow your Realtor to find the homes that best suit your needs and prevent you from wasting time looking at properties that don't meet you and your family's needs.
What Are Your Must Haves?
Let's establish some basic guidelines you can give to your Realtor to help guide your search.
We're not trying to think of every last detail – just enough to start narrowing down the field. Ask yourself the following questions:
- How long do I envision staying in this home? This question will guide some of your later answers, so start here. If you plan to retire in this home, you may require different things out of it like an elevator, for example.
- How many bedrooms and bathrooms will I need? Do you plan to have family visiting often? If so, you might need to look at single family homes instead of condos.
- What minimum square footage do I need? Do you value having extra space in your home or are you fine with something more simple?
- Do I need the home to be move-in ready or am I okay with a fixer-upper? If you have some experience renovating homes and are willing to wait to move in, you might feel you can get a better deal and put your own stamp on your home by buying a fixer-upper.
- What other features do I consider a requirement? Do you need a movie theater or a gym in your home? If there's anything more particular you'll want out of your new residence, ensure you let your Realtor know so they can include that in their search parameters.
Once you've done this, your Realtor can draw up a list of homes and a plan of attack to make sure your home search is as efficient and productive as possible.
Often times when buyers are looking to purchase a home in Naples, they're coming from up North. In these cases we'll typically arrange a couple day period in which we might look at 20 different properties so that the buyer can make their trip down here count.
Bring In Additional Partners
While you're house hunting, you'll also want to start spending some time finding other partners who will help you throughout the buying process.
Finding these people ahead of time will give you one less thing to worry about as you're navigating your closing.
Your Realtor should be able to offer up a handful of recommendations, so that's typically a great place to start. You'll likely need each of the following:
- An attorney
- An inspector (sometimes multiple, more specialized inspectors if you want to be more thorough)
- An insurance broker
- The aforementioned mortgage banker and financial advisor.
You'll likely want to interview a couple of providers for each of these positions, as it can make a significant difference both in the cost and quality of their services.
Select A Home And Submit An Offer
Alright, time for the rubber to meet the road.
You've found the right realtor, identified what you want out of your dream home, toured a number of different properties and you finally found it – the perfect Naples Home.
Now there's only one thing left to do – submit your offer.
Understand Market Conditions
To make a smart offer, you'll need to understand the market conditions you're operating within.
For example, if it's a strong buyer's market and there are plenty of homes for sale, you can often get away with an offer below asking price. Sellers in that type of market have less negotiating power, as they're not sure when the next offer may come around
On the other hand, if it's a strong seller's market and there aren't very many homes for sale, you may find yourself in a situation where many buyers are vying for the same home. In these cases you'll often times have to offer full asking price or even more to ensure you get the home. If possible, it can also help to keep your offer free from any financing contingencies and keep your closing timeframe as short as possible.
Consult With Your Realtor
Your Realtor should have a firm grip on the prevailing market conditions and should be able to guide you to what offering price will make the most sense.
That's because if they're truly the local expert, they will have been consistently conducting deals in that market over the months leading up to your purchase.
That insight will give them a pulse on the state of the market. They'll have seen which deals fell through because the offer wasn't strong enough, and they'll also see which buyers had overpaid when the seller likely would have accepted less.
So it's important to take their counsel to heart here, as this can be the one of the most important decisions you make throughout the buying process.
Now that you've got a clear understanding of what it should take to seal the deal, provide your Realtor the specifics of your offer.
From there, they'll send your offer, along with your loan pre-approval if you're using financing, over to the seller's Realtor. Now it's simply a waiting game.
At this point the seller will either accept, counter or decline your offer. Let's look at each scenario.
- If they accept, great! You're off to the races and will begin the closing process.
- If they counter, you'll need to consult with any other family members making the decision with you along with your Realtor to again get an understanding of how much negotiating power you truly have at this stage.
- If they decline you can always submit another higher offer, but it may make sense to simply move onto the next home (particularly if they declined your offer in favor of another offer).
Begin The Closing Process
Congrats! You've had your offer accepted and now there are only a few hurdles between you and your new Naples home!
This is the part where you'll want to begin leaning on the partners you gathered earlier. Each one will bring a unique skillset to the table and will be invaluable as you conduct your home closing.
Make Your Escrow Deposit
Once your offer is accepted you'll likely need to put down a deposit for the seller to take the home off the market.
While technically this is a negotiable point, in Naples it almost always follows a standardized format that has two separate deposits prior to the closing date.
First you'll make a $10,000 earnest money deposit immediately after the offer is accepted. This is a show of good faith that proves to the seller that you're serious about buying the property. After this point, if you were to back out of the closing without cause, you would lose the $10,000 to the seller.
Once you've gotten through attorney review, the earnest money deposit is followed by a second installment that brings the total escrow deposits to 10% of the purchase price. This again shows the seller that you're acting in good faith.
Order Your Home Inspection(s)
The second thing you'll want to do after your offer is accepted is to order your inspection (or inspections if you're conducting a variety of different inspection types).
Often times inspections can uncover problems with the home that ultimately delay the closing process. If you're able to order the inspection right away, it will give you more time to work out any potential issues, possibly keeping the closing on schedule.
After ordering your inspection, give some thought to the types of issues you're willing to ignore versus those you'll want the seller to fix before closing.
The extent to which you can request repairs will largely depend on the market you're in. If you're in a buyer's market, you'll have more negotiating power than if you're in a seller's market, so consult with your realtor to see how much leverage you truly have.
Order Your Title Search & Title Insurance
When buying a home it's important to make sure that the seller owns the home free from any liens or encumbrances. Enter, your title company.
The search your title company conducts will verify just that. They'll do a comprehensive dive into public records, ensuring there aren't any unwanted surprises.
The other thing they'll help you with is Title Insurance. This will protect you and your lender if any claim of ownership was ever made against the property.
If there are currently any claims, they'll need to be resolved prior to closing on the property.
With the price tags that typically come along with buying a home in Naples, it only makes sense to have an attorney review the paperwork to make sure your interests are protected.
Specifically, your attorney will review the complex paperwork, answer any questions you may have, help negotiate any special terms you need, and can even close on the home for you so you don't have to attend the closing.
Knowing this, ensuring you have a competent and thorough attorney on your side will pay huge dividends. We can recommend a few options if you need a Florida attorney.
Complete the Appraisal
If you're getting financing on the home, one of the first things your mortgage provider will do after you submit your offer is request an appraisal.
They want to ensure that they home they're about to lend against is actually worth what you're paying for it. Because they'll tend to be a little on the conservative side, this can sometimes present issues.
If the home doesn't “appraise out” you could be forced to either come up with a larger down payment or lower your offering price. To help mitigate this risk, be prepared to defend the offering price – have some comparable sales to present, ask the seller's Realtor to provide any other offers they received on the home, or ask your lender to simply redo the appraisal.
Purchase Homeowner's Insurance
Now it's time to protect the investment you're making.
Homeowner's insurance in Naples can be a little tricky because we're so close to the water, so you'll want to make sure you go with a quality provider.
We recommend getting a few quotes because it's easy enough to do and it can mean a great deal of savings each year.
Schedule Your Walkthrough
You're almost there!
Now you'll want to revisit the property to make sure the sellers didn't throw a big going away party and leave the place a mess 😉
On a serious note, this is your last chance to make sure everything looks good before proceeding to closing. Your Realtor will coordinate this with the Seller's realtor and it will typically be within days of the upcoming closing.
This will be much quicker than the formal home inspection you did earlier – here you're essentially just checking that nothing changed between then and now.
Head to the Closing Table
The big day has finally come! Now let's make sure everything goes according to plan.
As we mentioned earlier, your attorney has the ability to close on your behalf, so it's possible you won't even be at the closing table.
If you are planning to attend, be sure to bring two forms of ID for you and any other buyers – many of the signatures are notarized and the notary will require ID.
The paperwork will be coming at you fast and will be filled with mind-numbing legalese. Not to worry though! Your Realtor, attorney and closing agent will all be there to guide you every step of the way.
Keep in mind that when you went through the attorney review process, your lawyer already looked over all of these documents, so don't feel like you have to read through everything right there on the spot.
Now Pop the Champagne
Congratulations! You're officially part of an exclusive group of people who understand the incredible lifestyle that Southwest Florida, and in particular, Naples, affords its residents.
You can now look forward to world class sunsets, beachfront dining, daily walks along the white sand beach, and joining the incredible social circle of Naples homeowners.
We're looking forward to having you!
If you're ready to make this dream your reality, we'd love to help you along your journey.
Get in touch with us today to trade in the frigid North for the sunny, tropical paradise of Naples!