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Buying a Key West and Lower Fl Keys Home

How exciting that you've made the decision to go ahead - just making that decision is important. Let's go through some of the important steps you'll need to take for buying your new Key West-Florida Keys home.

*Disclaimer*The information below is based on my experience. In all cases regarding permits, or anything that could affect the value of the home--You SHOULD check with Monroe County officials directly.

Qualifying for a Loan
A-One of the first things you should do is to talk with a lender who will Pre-Qualify you based on your income, debt ratio, and money available for a down payment. This is a very easy thing to do, just a short phone call. This will accomplish two things

    1- We'll know exactly the price range to shoot for.
    2-We'll be in a much better position to make an offer and get it accepted if you're already pre-qualified.
    *If you're not already down here, contact me for names of Lenders and loan officers.

IMPORTANT--Why should I use a local lender?
The Banks here know the areas (various Keys and neighborhoods) and are used to all the scenarios you run into in a destination resort home market. This includes vacation homes, using homes as a rental, retired with no income, etc. Generally it is easier to get a local bank to get the deal done and with a lot less hassle.

The down payment or how much do I need?
This can range from as little as 5% down to whatever you want or can afford to do. (in some cases there are no down loans-however you will sti;; have closing costs) Remember-The less money down the harder they will look at your credit scores. For instance:

  • If you have good credit, a good job, but no money saved for a down, you CAN get financed, with only two payments in the bank.

  • I have had investors come in with as little as 5% to 10% down on homes they used as rentals.

  • As a general rule, 20% down is the magic number, whereby you won't have to pay mortgage insurance or PMI.

A step by step explanation of how an offer on a property is done!

  • We write a contract or offer that states the price you want to pay, the amount down, the terms (financing or cash) the closing date and contingencies or addendum's (see later)

  • At the time of writing the contract, you will put up a small deposit which goes in an escrow account. This is earnest money to show a good faith offer. Generally this is about $500.00

  • After the contract is written and signed, I present it to the listing agent and there is a specific date for the seller to give us an answer. We don't leave it open ended.

  • All counteroffers can be handled via phone or verbally.

To know

  • Most homes under $700,000 sell at about 3 to 6% under asking price. Some things to consider are the age of the listing and the condition of the home.
    The good homes (well maintained-move in ready) generally go quick and everybody knows what the good homes are down here. That's why its so important to have your financing squared around, so if we do find a sleeper we can move on it quickly.

  • Basically since most homes here are second homes they generally are not as well maintained as a primary home. The homes that are generally the best condition are either owner occupied or homes that are vacation rentals. I can tell you that if there is ever anything wrong with a vacation rental-the renters call immediately to get it fixed.

  • Consider the offer as a negotiating point-Again, I ca thing I do that will help your decision, is to pull up a current comparison on homes that have sold in the area and are for sale.

When we have a bilateral or effective contract what does that mean and then what next?

  • A bilateral contract means everyone agrees on the terms of the contract÷The price-closing date-money down etc and they have all signed off on it.. At this point the clock starts ticking on the addendum or contingencies.

What are some typical Contract Contingencies?

These can range from a wide variety of things, such as:

  • The buyer who lives out of the area but when we do find the right home or business, wants to present an offer--this would be written as---sale is contingent on the personal inspection of the buyer(generally done 10 days from bilateral agreement)

  • I have to sell my home first.

This is written simply as that. The sellers will generally require a copy of a listing agreement. Plus it is fairly standard policy for the home you want to continue to be marketed with what we call a kick out clause. That is if a buyer comes along with an offer and can close before you can you are generally given 48 to 72 hours to come up with the down and get the home closed. Before this happens, if you live in Florida you may be able to get a bridge loan or an equity loan would be another possible way to go.

  • Grouped in with contingencies are as is addendum's. Homes in the Keys are sold as is with right of inspections. There are generally three types of inspections done

The Inspections When?

Generally are done within 10 days of the contract going bilateral.

  1. What kinds

  • General-Electrical, plumbing, structure, windows, doors, appliances.($225-$300 average)

  • Termites-The home is inspected for any past damage and/or existence of living termites. We do have termites down here and the standard solution is to tent the house.($200 up÷some inspectors perform both the general and the termite inspection)

  • Septic. This inspection will determine that the septic is in good working order and that the drainfield is not backed up. The septic is pumped and then the tank is filled with water to check that it empties properly. (Average$300)

  • Aerobic system. These are the newer waste treatment systems. Generally a local company will have a maintenance contract. They will come out and inspect it to see that everything is functioning properly.(Average$100 for company to check)

What if there are problems?

  • This becomes a negotiating point. Whether they are extensive or not, we can ask that they be repaired or the money credited back at closing (if you can do the repairs) This can also depend on the price you get the home for. If you get a particularly good deal, some sellers will not take care of anything÷as is really means as is!

  • In some cases we will have to get estimates. This whole process again is a matter of negotiation.

The appraisal

A-Who-The Bank orders the appraisal.

B-When-It is generally ordered after the inspections and everything seems to be in good order to proceed.

c-Where does it go to:

The bank needs it to justify the loan amount. The Insurance company also needs it in order to establish the insurance value.


  1. Assumable-Some insurance policies down here are assumable (wind and flood) as the rates are set and don't vary. It is generally easier to continue with the same policy. The key thing here is an elevation certificate. If the insurance is not assumable, you will need an elevation certificate. This can either be gotten from the previous insurer or it is done during the new survey.

  2. V and E zones. Most canal homes are in A zones. Open water in most cases is considered a V zone. What this means is that A zone flood insurance is about a third of the cost as V zone.

  3. Homeowners insurance will vary in cost based on value and contents. I will find out for you the current insurance company and check to see if it is assumable, and find out about the elevation certificate.

The survey

A-Who-The Title company orders the survey

B-When-This is generally the last item that is ordered-after a loan commitment has been established.

C-How much-generally about $400

The closing company

  • Then closing company does the title search and gathers all the documents necessary to finalize the deal.

Closing costs. Closing costs are negotiable, but generally the buyer-

  • Pays for the buyers title insurance(necessary for a mortgage)

  • Pays a year in advance for the Insurance.

  • Pays all costs or bank charges.

  • Pays prorated taxes for the balance of the year.

The closing amount generally comes in at about 2% or less of the deal.

The day of closing

  • Bring or mail in the balance of your down in a cashiers check. Generally about 2-3 days prior to closing, the title company will inform you of the amount.

  • All documents will be signed and The Keys to the home will be issued.

  • When the sale is closed, you will need to go to the water and electric companies to get the accounts changed over. If you are not going to be at closing this can be arranged ahead of time÷then when the closing takes place-the title company will fax a copy of the deed and the transfer will be made.

On all these issues, (Insurance-addendums or contingencies-inspections-closings, etc) my job is to guide you through it all. If you're not going to be here, I can see that everything is accomplished.

Things I should know about my home that are unique to the Keys

Remodeling and Permits

  • Permits are either gotten by the owner or the contractor. The county will require drawings, a copy of a survey and deed,, and a copy of your septic permit(if you're going to be adding livable square footage to the home)

  • You can as an owner get the permits, and then sub the job out. You would have to check with current regulations as to how many workers you can bring in without paying workmen's comp.

Set Backs

  • 20 feet from the canal and 10 ft on one side and 5 ft on the other. The main one is the 20ft from the canal, if you're considering adding a pool or deck. This area gets complicated and it is best that you check with the county on anything specific÷these are general guidelines only!

Septic systems

  • In Monroe county, they will either be septic, aerobic or cesspits or central sewer. In order to expand living space the county will want to know how large your septic system is. For example most 2/2s have a 750 gallon tank. If you wanted to add a third bedroom you would generally have to replace your septic and expand your drainfield in order to get a permit.($12000 up). The county uses bedrooms as a general guide as to how many people will be living in the home and thus using the septic. Septic inspections will tell you how large the tank is or you can go to the county and find a copy of the original permit. In my own home for instance I have a 1050 gallon septic which means I could have 3 bedrooms or almost 2200 sq ft of living area.

Lower enclosures

  • This is a very complicated issue. Homes built after 1975 were required to be stilt homes and the enclosures below could only be for storage. A lot of people got permits for storage areas and then proceeded to put in kitchens, bath, tile floors etc. FEMA is trying to get these enclosures brought back to conformance by having you remove the interior walls, kitchens, baths. Up to now they have not been effective at doing this they are trying to pass a law that when your home is up for insurance renewal, they will do an inspection. If the lower part does not conform they will tell you what has to be done and give you a years grace to do it. Now the complicated part.

  • Homes up to 1981 were in some cases permitted to have baths and usable living space below.

  • Homes before 75, in a lot of instances had permits for lower baths, kitchens and are ok.

  • The best thing you can do is to research the permits. I will help you with this as who to talk to and where.

  • Currently FEMA has gotten a law passed that lets them inspect homes built in the last 4 years---they feel anyone who built a home recently should know that they are not allowed.

  • Any homes that were built before the last 4 years and/or after 1975 will at some point be inspected if FEMA has its way. It could take years but you need to know that they may be inspected.

  • Monroe county has said that if your home and the lower enclosure has been on the tax roll for over 4 years they will not require you to remove it---however FEMA can simply see that you get no flood insurance and the bank will pull the loan.

  • If you pay cash for a home and/or have no bank loan-you don't need to carry flood insurance and this is one way to get past the issue.

  • yes, you can carry a seperate windstorm policy now that is not tied to you having flood insurance.

  • ******all of this can change, the insurance companies here can bring you up to date on any changes.


  • Rentals go very quickly in the Keys÷we simply don't have enough housing. If you're looking for a place in the interim to closing your home or finding another one, (2-4 months) I generally can find you something. Down here anything over 6 months is considered a long term rental. Rates go from $1200 per month for a home and up. As to buying a home and renting it out see further down. For more information please go to

Renting your home out as a seasonal or long term.

  • Long term rentals are easy÷if you want to buy something for retirement later and then rent it out-this is easily done. Typically unfurnished. We can handle all of that for you for 15%. That is credit check-qualifying, collecting the money and taking care of situations. We are very proactive in this area and I assure you the home is handled professionally.

  • Seasonal rentals. Currently we can only rent monthly or 28 days, meaning the owner can only rent the home out 12 times per year. This means about 5 months of income-Jan-Feb-Mar and July-August. There are some June monthly's. AS to the rest of the time, I deal a lot with navy transfers÷they generally need something for 2-3 months while they sell their home and buy another. So if it is the off season, I try to fill your home up this way. Another way to fill in the gaps is to Companies that come down here to build. Most of the major projects are done by outside firms. Their management people will generally want a nicer situation so they will rent homes out a good rates.

  • As to what is the best rental situation , which areas, the way water and boating accessibility affects rental amounts, the fees etc, I will help you through.

Putting in seawalls

  • If the home you're looking at does not have a seawall, the first step is a company in Marathon that will inspect the property as to feasibility and then draw up the plans and submit them for permits ($750.00) Seawall permits are given by the corps of engineers and generally take about 90 days. Very important issue is mangroves÷if the property has them in most instances you can build a wood dock but not a concrete one÷in some cases there is a mitigation process to go through that will allow some removal of native vegetation (mitigation means you pay $)

Absentee ownership÷what are the costs?

  • Pest control÷needed on rentals. A pest service will take care of ant and other problems. Once a month they will come to the property-if tenants are in and complain of ants(after a hard rain) the pest control person at no extra charge will come out and take care of the problem, On a contract basis this runs $25.00 per month. On an as needed basis it's $50.00 to have them come out.

  • Landscaping-There are services that will come out each month and cut back-prune everything and keep it manageable and looking good. This runs about $50.00 per month. If the property is large and has a lot of grass (uncommon) it runs about $100.00 per month.

  • Handyman-We have people that we use that take care of the small emergencies. We also have good relationships with plumbing, air conditioning, electrical and contractors.

Everyday living in the Keys

  • Cost of Living

  • Water bills on average run about $25.00 per month for a 2/2.

  • Electric bills average about $80.00 in our winter to $150.00 in summer for a 2/2.

  • Food-Stores down here, Winn Dixie, Publix are good markets with good selections. Just recently an Albertsons opened up in Key West (great produce dept)
    I've found store prices here are comparable to Miami and other areas of the country.

  • Gasoline-more expensive than up in Miami area by about 10cents per gallon.

  • Shopping-Major malls are in Miami (about a 3 hour drive)

Restaurants. There are plenty of restaurants on the individual Islands. The main dining out for all types of ethnic foods is of course Key West. Because of the competition for the customers, the selection is good and almost all the restaurants are better than average .


  • Music-Key West has its own symphony and there is a good selection of venues and bands from Jazz to Blues, Reggae, Latin and Rock.

  • Arts. There are lots of galleries in Key West and there are world class artists that show there and also live here. The Island is in the arts. There is a Theater group here and also Writers group. Key West is a haven for Artistic people, from world class musicians to playwrights, screenwriters, actors and artists.


  • There is fishing year round both in the Ocean or the backcountry. From sailfish to dolphin to snapper, grouper, barracuda etc.

  • There are lots of charter boat and regular Boat rentals available.

There is diving year round. Looe Key, one of the best reefs in the world is just 5 miles off shore. The water temperatures here go from about 75 (winter)to 95 in the summer.

Exploring-Lots of history here. Pirates, Indians(metal detector and diving). Great areas to kayak in and explore the waters in and around all the many smaller Islands. In the backcountry there are Islands with sandy beaches within a few miles.

Airlines-Key West airport has American, Delta, Continental and others. Basically you can catch a flight from here to Miami-Ft Lauderdale and then onto anywhere in the world.

Miami-Home of South Beach, Corals Gables, Coconut Grove, Key Biscayne. Because it's close, Miami and Ft Lauderdale make good weekend trips. Even Orlando is only about a 7 hour drive. There's a reason movie stars and celebrities play in Miami.