The following article was first shown on our first vacation home web sites more than 10 years ago . . .

. . . but despite it’s age, the words we said then are surprisingly relevant now:

It’s just buying a house, isn’t it?


What a surprise – the USA does things differently!

The USA and UK are often said to be “divided by a common language” – for example, “elevator” versus “lift”, “vacation” versus “holiday”, “Realtor” versus “Estate Agent” and even “Model Home” versus “Show Home”. And we know that they drive on the wrong side of the road, just like the Europeans.

Well, here’s something that should come as no surprise – the house buying process is also different in the USA. UK Buyers of Florida property are well advised to familiarize themselves with the differences before they embark on the journey to buy that dream house in the sun.

1. The UK
In the UK, a standard approach for a prospective home buyer is to find out information about properties for sale by searching through newspapers and visiting or phoning Estate Agents in the area of their choice. And now, the Internet is playing an increasing role as Estate Agents and even owners add details to web pages and directories. poolsolMainly, though, Estate Agents market properties and most frequently are the people who show potential Buyers around homes for sale. Their fees are paid by the Seller and they represent the Seller’s interests.

The Buyer is usually on his own and co-ordinates advice from solicitors, surveyors and other experts he chooses to bring into the process. Legally binding contracts only emerge after days, weeks or even longer periods of time have been spent in examining everything about the proposed purchase.

2. The USA/Florida
In the USA, Realtors take a more collaborative approach. In each major city and region, Realtors enter the properties they have for sale (“listings”) onto a common database (the Multiple Listing System or “MLS”). Since it is a common database, each Realtor has access to all of the properties entered onto it by all of the other Realtors and can show potential Buyers around any of the house. The Listing Realtor is required to share the fee (“commission”) received from the Seller with any Realtor who introduces a Buyer, whether this introduction is from the MLS or from any other means.

The effect is that a wider pool of buyers is reached more rapidly and a sale is achieved more quickly. As in the UK, the Buyer pays no fees, but a major difference is that a legally binding contract is expected at a much earlier stage than in the UK if a purchase is to proceed.

3. Buyer’s Agents
Alongside this US approach, the concept of Buyer’s Agent is prevalent. In Florida, a Buyer’s Agent is a licensed and regulated (by Florida state) professional who provides input and expertise on all aspects of the purchase (including contractual, pricing and virtually all other aspects of the purchase).

Typically the Buyer’s Agent is the Realtor who introduces the Buyer to the property in the first place, whether this is a new home or a re-sale. For a new home, his/her commission is paid by the Builder. In a re-sale, it’s from a share of the commission charged by the Listing Realtor to the Seller. The Buyer thus receives local advice and expertise at no cost – the new home Builder will not reduce his price and the Listing Realtor will not reduce his commission even if there is no Buyer’s Agent to be paid.

For an overseas (e.g. UK) Buyer, the local expertise and guidance of a Buyer’s Agent is especially valuable – and arguably essential, given the earlier stage at which contracts become binding. Otherwise, for example, how does someone new to the culture, business practices and legal requirements know the risks they may be taking and the rights to which they might have recourse in a potentially expensive and complicated transaction?

4. A Common Mistake
One of the most frequent mistakes made by UK Buyers is to proceed with a US property purchase as if things operated as they do in the UK i.e. they find a home for sale by searching a newspaper, driving by a For Sale sign or by searching the Internet, then go on to make contact with the Listing Realtor.

What is often not understood is that, in the USA, the Listing Realtor is, by law, required to consider the Seller’s interests alone and he is prevented from disclosing certain factors affecting the price paid for the property (for example, if the Seller has financial reasons to sell and may accept a lower price). Anything detrimental to the Seller and advantageous to the Buyer cannot ever be disclosed by the Listing Realtor.

Some Listing Realtors will argue that a Buyer’s Agent is not required because the differences between the US and UK systems are unimportant, and why shouldn’t he argue this way? Without a Buyer’s Agent, the Listing Realtor retains all of the commission. And he’s far less likely to be asked the difficult questions he or his client would prefer to avoid.

5. New Homes
Let’s consider the UK visitor, thinking of investing in a new home, and imagine that he has decided to use the services of a local Realtor as his Buyer’s Agent. On a free day, he calls in on a new home development that he’s not visited before. This time, he’s unaccompanied by his Buyer’s Agent, but he’s had some guidance so he’s ok, isn’t he? Maybe not – there are still some pitfalls to beware of.

Builders are obviously very keen to attract people to their Model / Show Homes and they spend large sums of money to get them there – advertising, brochures, property shows and so on. The Sales Agent in the Model Home is employed by the builder (or in some cases, the developer, which to all intents and purposes for this example is the same). The Agent has usually received sales training and is often highly experienced in sales psychology – how to “push” the sale along and overcome every possible objection, with the goal of obtaining an agreement to purchase regardless of the wider implications for the Buyer.

However, despite any statements to the contrary, Agents are not independent and they do not (and legally cannot) act exclusively on a Buyer’s behalf. They cannot, for example, be expected to highlight:

  • Both the merits and de-merits of the extras they enthusiastically persuade a Buyer to add on to the basic home – e.g. tiling, upgraded carpets, more expensive bathroom fittings. Do these really add value to the home in the terms of rentals or resale, or is it just that they generate a disproportionately high commission for the Agent? Would these extras be of no help, or even detrimental, in circumstances where re-sale to a US buyer was later contemplated
  • The particular advantages of one plot versus another, both for rental purposes and in the event of a resale – for example, the order in which plots will be developed and the extent to which building work will continue around a given plot for months to come
  • The reason for certain plots being discounted or promoted – is it because of further, more attractive phases coming on stream soon, de-valuing the current plots even below the discounted price?

But the Buyer can still fall back on his appointed Buyer’s Agent later, can’t he?

Maybe not – the Buyer who registers when he walks into the Builder’s office alone or gives out his personal details may have lost his right to Agent representation.  That’s how the system works.  There is a Buyer’s Agent commission built into the selling price each builder calculates, but few reputable builders will reduce the price where an Agent is not involved.

And consider this: can a Buyer trust a Builder who is prepared to give an “under the counter” price reduction? If the Builder will break agreements he has made with others in the industry (other builders and Realtors), what regard will he have for one lone UK buyer when it comes to honoring contracts and warranties? Food for thought!

6. So What?
We believe there are several conclusions to be drawn from all of this:

  • Buying US property has unique issues and characteristics and it is significantly different than the UK – and Florida in particular can be a minefield for the unwary. Recognize this and plan accordingly
  • Be cautious – make sure you’ve done your homework and thought through your next steps before moving ahead
  • Get the right advice – use a Buyer’s Agent and work with him to ensure you are fully armed

We admit it: we’re biased – we make our living as Buyer’s Agents, but a major part of our commitment to the work is because we believe we add immense value to out-of-state and particularly overseas vacation home buyers.

If you don’t like our style or approach, that’s fine – but please make sure you do get professional advice from at least someone who can help you with what, for most people, is one of the most expensive investments of their lives.

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Very excited by our new purchase and cannot thank you enough. You were such a help through very unfamiliar territory. Would be more than happy to act as a reference any time.
G.K., Kent, UK

You helped us from start to finish and beyond . . . from finding and choosing the plot through to furnishing the house and helping to set up the utilities once we had closed on the home – a “one-stop shop”. You made it all so smooth and trouble free for us. We were so far away in the U.K. . . . I don’t know how anyone does this without your help.
B.R., Derby, UK

Chris helped me to build my real estate holding from 0 to 5 homes worth almost $1 million dollars in just over 3 years, including 3 Disney Orlando Vacation homes. All were sold for a profit, which I give credit to Chris, who knows the Florida Real Estate market so well.
Anne S. Orlando

It looks so easy from the Internet sites. And some other Realtors play down exactly what is involved. What Colin showed us and what he did meant that we were kept informed at every stage. He made sure that we knew what we needed at each stage, from buying through to setting up the home and managing it the most effectively. We want to thank him for everything.
V.B., Exeter, UK

We just want to say how much we value the work that Colin did for us. His advice helped us to avoid what could have been some big mistakes and he showed us how to find the place we were looking for – or rather, the home that best fitted our plans both now and in the future. It’s amazing, looking back, how much Colin’s challenge to our preconceptions changed our thinking. I’m delighted both that we were referred to him and that he continues to give us support when we require it.
R.H., Oxford, UK