By James Sarles
It is a fact that property prices in Freeport have gone down over the last 2 years but this downward trend seems to have stabilized. If you look statistically at the actual transactions of what property sells for, not what the property is listed for you will see that there has been a correction in the market even if the property list prices have not reflected it yet. I can assure you that buyers who are making aggressive offers are getting noticed and there are many sellers that are tired of waiting for their property to sell and willing to negotiate on the price to reflect realistic current market value.
The good news is that if you are a buyer then 2010 is a great time to buy , but the trick is in the successful contract negotiations. There are motivated sellers in this buyers market but selling price for a home or investment property is only one factor in determining whether the buyer and seller reach an agreement. The sales contract (Purchase/Sale Agreement) has many facets that must be considered, understood and accepted by all. An experienced broker is a solid advantage to both buyer and seller, because they have been through countless transactions and understand the principles of successful negotiations. At James Sarles Realty we have seen deals fall apart over very minor, petty issues and we have saved deals where parties have walked away from the closing table. We don’t look at deal as done until the checks clear, you have keys in your hand and you move into the house.
The issue of price or consideration in your deal is only one aspect of the finances. The contract should specify who pays for stamp tax, legal fees, and real estate fees. A typical gross offer or list price that you may see advertised implies that stamp tax which ranges from 2% to 10% depending on price is customarily split between buyer and seller, each party pays for their own attorney fees which is approximately 2.5% each side and the seller pays for the real estate fees of 6% to 10%. BREA ( Bahamas Real Estate Association standards for “The Out Islands” are 8% for developed property and 10% for land though many brokers charge 6% to reflect Nassau and US standards. HOWEVER, any of these costs can be negotiated with either party paying any of the fees as the closing costs are NOT mandated by law. It’s real estate and it’s negotiable as long as it is clearly stated. Sometimes the purchaser makes a net offer which means that the seller receives whatever is offered and the purchaser agrees to pay ALL closing costs including ALL legal fees for both parties, ALL real estate fees, and ALL Government Stamp Tax. In a net deal the percentages of the legal fees, the real estate fees and the government stamp tax are based on the Net price. This is frowned upon by Bahamas Real Estate Association but it does go on.
An important clause that is left out of many contracts is who pays for conversion fees. If a foreigner is purchasing property from a Bahamian or if a Bahamian is purchasing from a foreigner there is a conversion charge from US dollars to Bahamian dollars (.995) or Bahamian Dollars to US (1.0125) as Bahamians can’t accept or hold US dollars based on Exchange Control Regulations. There is no hard and fast rule of who should pay for these charges. They can be paid by either party or split but MAKE SURE IT IS CLEAR WHO WILL PAY WHEN YOUR ARE NEGOTIATING THE DEAL!
If you have been thinking about getting in the market in 2010 this may be your opportunity to buy that property at a good price with sellers who are motivated which could be a win win for all parties.
Good Luck with your negotiations. Until next week.
