3 Contingency Risks in Siesta Key

Three Contingency Risks in Siesta Key

What Actually Breaks Deals in Florida

Insurance Binding Failures

The problem arises when buyers cannot secure insurance due to the property’s location or condition, especially on barrier islands like Siesta Key. The Office of Insurance Regulation plays a critical role here, as they regulate insurance practices in Florida. I once had a client whose deal was jeopardized three days before closing because their insurance binder was denied due to new underwriting guidelines. This led to a scramble to find alternative coverage, risking the buyer’s deposit and delaying the closing.

Purchasing a home can be a time-consuming and stressful venture: visiting prospective homes; identifying the pros and cons of each property; deciding which properties are right for you; final visit at these properties; making an offer (and counteroffer); dealing with the Sellers realtor; reviewing the Agreement For Sale; finding an attorney; finding a home inspection company; and acquiring home and flood insurance. Then the difficult task starts, working with a bank and filling out all the paperwork (Ugh!). Mike and Eric were very helpful throughout the process and kept us informed of our requirements and responsibilities for each deadline.

– bshea20047, Zillow Review

Association Approval Delays

Condo and homeowner associations in Siesta Key can significantly delay or even block a transaction if they do not approve the buyer. Florida Statute 718 governs these associations, and their approval processes can be stringent and time-consuming. In one case, a buyer‘s application was stuck in the association’s review process, causing a two-week delay and nearly leading to contract termination. This delay can result in additional costs and potential loss of the property if the seller decides to back out.

Appraisal Gaps

Appraisal gaps occur when the appraised value of a property is lower than the purchase price, which can be common in competitive markets like Siesta Key. Lender underwriting systems rely on these appraisals to determine loan amounts. I’ve seen deals fall apart when an appraisal came in $50,000 below the agreed price, forcing the buyer to either cover the gap with cash or walk away. This can lead to lost deposits and wasted time if not addressed early.

Where It Usually Blows Up

These issues typically surface during the final stages of the transaction, such as the underwriting process or just before closing. This timing is brutal because buyers and sellers have already invested significant time and resources, and any disruption can lead to financial losses or missed opportunities. When these problems arise late, buyers may lose their deposits, face unexpected costs, or even see the entire deal collapse, leaving them back at square one.

What I Tell Clients Before They Risk Money

1. Insurance Check: Verify insurance availability early, especially for barrier island properties.
2. Association Approval: Submit all required documents to the condo or HOA well in advance.
3. Appraisal Preparedness: Be ready to negotiate or cover gaps if the appraisal falls short.
4. Contingency Planning: Always have a backup plan for financing and insurance.
5. Contract Review: Ensure your contract includes contingencies to protect your deposit.

Questions Clients Actually Ask

What happens if I can’t get insurance?

If you can’t secure insurance, the deal might not close, as lenders require it to finalize the mortgage. This can lead to losing your deposit and having to start the property search all over again.

How do association approvals affect my purchase?

Association approvals are crucial because they can delay or prevent your purchase. Without their approval, you might face contract termination and lose any deposits made.

We bought two units from Mike and Eric and sold one over the last four years. One thing that made life much easier for us was how they understood our feelings and situation regarding pricing. They knew where the other party was coming from, which made the process faster without all the back and forth. Once the contract was signed, their staff was great; I literally had to do nothing other than decide what color pen to sign with. Eric wasn’t just out to make a sale; he was tremendously helpful to us. Every week, he checks our apartment without asking for money, and when we had a storm, he even moved our car to safety. It wasn’t just about the sale; he became a friend and helped us out after the sale, just because we don’t live here.

– Mindy and Joe, Customer Review

What should I do if the appraisal is too low?

If the appraisal is too low, you may need to negotiate with the seller to lower the price or bring extra cash to cover the difference. Failing to address this can result in losing the property and your deposit.

What To Do Right Now

Schedule a detailed review of your potential property’s insurance and association requirements to avoid last-minute surprises.

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