Grand Bahama Home Buyers - Don't Make These Mistakes

By Jim Reed


There are some simple steps that homebuyers often miss when looking for a new home. Taking the time to consider these can save you thousands of dollars, time, and stress.

1. Be honest with your realtor and lender about your credit history. Your credit, whether good or bad, affects everything from your down payment to your interest rate. Your realtor or mortgage consultant can often advise you as to how you can get credit problems cleared up or completely eliminated from your credit report before you apply for financing or make an offer on a new home.

2. Get pre-approved for a loan before you begin your search for a new home. Then you will know in advance exactly how much home you can afford. This makes it possible for you to make an offer on your new home with confidence that enough funding is available.

Market for Vacation Homes Is on the Rise

By S. MITRA KALITA
Reposted from The Wall Street Journal

Sales in many vacation communities across the U.S. soared last year to levels not seen since boom times, driven by deep discounts, cash purchases and buyers' rising stock portfolios.

On Mercer Island, Wash., waterfront sales nearly tripled in 2010, compared with a year earlier, reaching par with 2006 volume there. Sales on Hilton Head Island, S.C., rose 14% for the year. Palm Beach, Fla., experienced a 40% annual increase and a 54% increase in homes under contract, indicating an especially strong fourth quarter. Palm Beach sales volume now is comparable to its 2007 peak. These figures were gleaned by brokers in each locale.
"The proverbial train has left the station," said Ned Monell, an agent with Sotheby's International Realty in Palm Beach. "We haven't felt energy like this in a long time. Buyers sense that they've been on the sidelines long enough."

The question now is whether the momentum will last. The strength of second-home sales paints a stark contrast to the overall housing market, which is expected to worsen in 2011.

Existing-home sales in November rose 5.6% on an annualized basis, according to the National Association of Realtors, a trade and lobbying group. Last month, the Case-Shiller housing index of 20 cities showed prices across the U.S. fell in October, and most analysts predict another 5% to 10% slide in the coming year.

Data for the nationwide vacation-home market aren't tracked regularly. The National Association of Realtors conducts an annual survey of home buyers, but results for 2010 won't be out till March.

Yet the market for vacation homes, based on local sales data, appears to be booming. The comeback, NAR economist Lawrence Yun said, has been helped by gains in the stock market and an improving economy, which have made wealthier Americans more upbeat about the future. "It also implies that prices in some markets have come down so much that people are fighting for those properties," said Mr. Yun, noting that demand is strongest in areas close to stable labor markets.

According to the NAR, one in 10 real-estate transactions in 2009 was for the purchase of a vacation home. And though a small fraction of the overall market, it is significant because vacation homes are often big-ticket properties and attract discretionary buyers. Just four houses sold last year on Madeline Island, Wis., for example, but the island's average dwelling sells at two to three times the price of the county average, said Eric Kodner, a realty broker on the island.

Sales of second homes are showing an uptick even in more-affordable communities. In some locations, prices are even inching upward. Cape Cod sales climbed nearly 9% in 2010 from 2009, while prices rose 7%. Monroe County, Pa., in the heart of the Pocono Mountains, saw a 3% decline in transactions, but its Lake Naomi resort community was up nearly 15%. A one-acre plot off Lake Naomi recently fetched $1.1 million, a record deal for the area.

Still, in most markets where demand has improved, prices haven't. For Realtor Andy Twisdale in Hilton Head, S.C., it is too soon to rejoice; prices are down almost a third over the past five years. "People are buying at the very low end of the product," he said. "The financing is very difficult. Banks are requiring 25% down and crystal clean credit."

Buyers who qualify or can pay cash say this is the time to take the plunge. On New Year's Day, the Makarewicz family arrived in Pocono Pines, Pa., to look for a vacation home. They already own their primary residence in northern New Jersey and own a property in Damascus, a northeastern Pennsylvania town along the Delaware River. But the family says the latter doesn't offer enough things to do: Not enough shopping. Not enough activities for kids. Not even enough fish.

"How's the bass here?" Joe Makarewicz, a vice president for sales at a financial-services firm, asked Re/Max Realtor Rob Baxter as the two looked at floor plans.
The family plans to sell the Damascus house, which would allow them to pay cash for one near Lake Naomi. The resort community at Lake Naomi boasts pools, tennis courts, a recreation center and a golf course—and is equidistant from New York and Philadelphia.

Some second homes had been stuck on the market because sellers wouldn't budge on price; unlike owners of primary homes, they often aren't in a hurry to move.

"Sellers have become aware that they have to price their homes accordingly," said Harald Grant, a senior vice president at Sotheby's in New York's ritzy Hamptons region. "There's a perk in the market because a lot of prices have come down to where they should be."

This shift became clear to K. David Hirschey, who runs a consulting business in Minneapolis, as he hunted for a home on Madeline Island.

After competing in a summer swimming competition on the island, Mr. Hirschey decided to buy a home there, perhaps to rent it a few years and maybe retire there eventually. The first offer he made was rejected, he recalled, because the seller said, "We don't negotiate on properties here." The same thing happened with his bid on the next house.

Then he found a third property—four bedrooms, three baths—that began as a sale by owner, was taken off the market, then relisted under one broker, then another. It had been initially priced at $1.25 million, and remained on sale for two years.

"When I saw it, it was listed at $687,000," said Mr. Hirschey, a father of four children. He offered $530,000, furnishings included. "They wanted to negotiate and I said no," he said.

The tactic—an all-cash offer—worked, and Mr. Hirschey closed on the house in November, just in time for his family to spend the holidays there.

'Major concern' over planned 'foreclosure tax'

Tribune Business Editor

BAHAMIAN home buyers could have to significantly increase their equity down payments if a proposed Stamp Tax amendment goes through, the Clearing Banks Association (CBA) chairman warning that the sector had "a significant concern" over the Government's plan to impose Stamp Duty on the sale of all court-ordered foreclosed properties.

Paul McWeeney, who is also Bank of the Bahamas International's managing director, told Tribune Business that the change - part of the Budget amendments to the Stamp Act - could negatively impact the entire home buying process, and was causing significant concern to the major international banks, particularly in regard to large syndicated loans.

"It's a big issue we are trying to address with the Ministry of Finance," Mr McWeeney confirmed to this newspaper. "Prior to the amendment, or the proposed amendment, any sale of real estate as a court-ordered foreclosure was tax exempt.

"It is a significant element for us to be concerned with and make representations to the Minister of Finance to reconsider that amendment. I understand they are taking a look at it. It is a significant concern, especially for international banks in syndicated loans. The cost of doing it may be prohibitive. The CBA made representations to the Ministry of Finance and they are reviewing it."

Court-ordered foreclosures are ones where a Bahamian court orders that a bank, or any mortgage lender, can take possession of a property and sell it in accordance with the lien/charge it has over it. This power, and procedure, are commonly invoked when a borrower has long defaulted on their repayments, and there is no prospect of the lender recovering its money.

The international banks - Royal Bank of Canada/FINCO, FirstCaribbean International Bank (Bahamas) and Scotiabank (Bahamas) - were those who commonly used the court-ordered foreclosure route, and led large syndicated loans secured on underlying real estate.

Take, for instance, a $20 million loan secured on Bahamian real estate. Previously, a lender or lending syndicate could go through a court-ordered foreclosure, take possession of the property and sell it to a new buyer, recovering their loan without having to pay any Stamp Duty on the purchase.

The Government's proposed amendment, though, would see the banks now having to pay 12 per cent Stamp Duty (6 per cent if split with the buyer) to the Government, which would cost them either $2.4 million or $1.2 million.

What is being viewed as a revenue grab by the Government would, if approved, percolate and have ramifications for the entire Bahamian real estate and home buying market.

If they have to pay Stamp Duty upon selling a foreclosed property, a bank or banks may not recover the full amount on what is already a defaulted loan, forcing them to continue pursuing the defaulted borrower for the balance.

With the banks running the risk of being 'out of pocket' on a defaulted loan as a result of the new tax burden, Mr McWeeney suggested some might seek to mitigate the changed risk profile and increased loss possibilities by demanding higher equity down payments from borrowers, raising requirements from 5 per cent to 10, 15 even 20 per cent.

This will make home ownership costs more prohibitive, and could exclude an even greater number of Bahamians from the mortgage market.

"It almost imposes a penalty or impediment to that [court-ordered foreclosure] process," Mr McWeeney told Tribune Business, warning that it could "negatively affect" the Bahamian banking sector.

He added that not just banks but all mortgage lenders, such as insurance companies and cooperative societies, as well as potential new market entrants, stood to be impacted if the proposal was passed into law.

"It adds to the losses, the cost to take possession, and if you see it, you have to pay 12 per cent of the purchase price. It's a significant cost," Mr McWeeney warned.

"The international banks, with those future syndicated loans, I imagine the banks that design those may have serious concerns about these changes if they go through."

Another banker said of the Government's proposals: "We've got some pain to endure, and the willingness of banks to forgive and do all those things is very slim. It's a risk in the long-run when you need banks to fuel recovery. It's shortsightedness."

Smart Tips for Single Women Home Buyers

This "Two Minute Expert" video from This Old House takes you through some simple tips for single women looking to buy a home.

DEALS IN REAL ESTATE

As we approach the end of June that means that we are half way through 2009. These past 6 months have given some of us a lot of gray hairs and taken all of us on an emotional rollercoaster ride. Many experts predict that the real estate market is close to or has reached the bottom. Unfortunately no one can tell you exactly when we reach bottom because when the market prices begin to rise you missed the bottom. There is no doubt in my mind that if you are looking for motivated sellers and deals in real estate this is the time. It’s one of those times when the aggressive people make a lot of money and the timid just look from the sidelines and become what I call a “Would of Could of Should of”.
If you are a potential Homebuyer, Condo Buyer, Duplex buyers, land speculator, canal home buyer or commercial buyer get up off your seat and look around for deals. The market is soft right now so this is the time to get your deal at the right price. Listing prices have not fluctuated on paper but as I have said many times the actual deals that are being made reflect reduced prices. No one knows for sure what is in store for the world economics and Freeport but what we do know is that throughout history Real Estate has always been a great investment and while prices are down and sellers are motivated this may be the right time for you. So don’t be surprised if prices begin to rise again as local sellers start to feel more confident about the future of the market.
Prices really are a reflection of psychology or consumer confidence. So if you have been thinking about real estate this is the time to get out there and start looking now. How do you begin your search?? First, find a real estate professional that will help you identify and locate the features you’re looking for in a property. Ask your family, friends and business contacts for referrals of real estate professionals that they have worked with and helped them successfully with their real estate purchase and sale. When you find the real estate agent/broker talk with them about your practical needs and describe the property of your dreams.. Work with a realtor you feel you can trust, who communicates a clear understanding of your goals and shows you listings that match your search criteria. Do your financial homework.
Meet with the banks to determine how much you can borrow based on your income, and research interest rates. Decide how much cash you can put together for a down payment and how much you need to put aside for closing costs, which typically amount between 4 % and 7% to purchase price of a property. Do your home work. As you go out property-hunting, concentrate on neighborhoods that are ideal for your needs. Look at homes that have enough square footage, a pleasing floor plan and a suitable yard for your family, and boat dockage if that’s important to you. You can always repaint the walls and replace the carpet, but changing the “footprint” of the home is more complicated and costly.
Don’t procrastinate. If your realtor has a property to show you, go out to look at it immediately. If you really like the home and can picture yourself living in it contentedly, consult with your realtor about making an offer right away Before entering into negotiations for the home, ask the seller to fully disclose any serious defects that may require repairs, particularly any that involve one of the major systems in the home. Don’t wait for interest rates to climb – initiate your home buying process now because the future of Freeport might just surprise you. Many of us who have been around Freeport for many years know that Freeport has always been the bridesmaid and never the bride but the time is coming that Freeport will in spite of itself fulfill its potential. We all become very jaded and think that Freeport will never get ahead but it is impossible that Grand Bahama Island with all its potential will stagnate for ever. From a pine barren island inhabited by Aarwak Indians, then re-discovered by Columbus, settled by The loyalists and slaves and re-discovered again by Wallace Groves, the island has come a long way already. Consider the size and scope of the container port, the shipyard, the industrial sector, the airport, the infrastructure, the homes, the condos, the communities, the utilities, the schools, the restaurants, the shops, the business owners and employees, the canal system and the people.
Freeport is a city with great potential and it will move forward. Sure we could improve on everything but it only takes a small change to make a major shift. If we fix things like the airlift situation, create a first class cruise port, develop medical tourism, create more jobs, attract more investors and visitors, beautify this island and have all of Freeport working together then these changes will create a major shift in the economy and Freeport will be reborn. This will of course change the Real Estate landscape and this market could change from a buyers market to a sellers market almost overnight. There are many people working towards this change and we all need to pitch in to help our community fulfill its potential. It will not be done for us. All of us in our small way must make it happen and it will.
It is time to bring the magic back to what was once proudly called the Magic City. There are many new players on the scene now and the old guard is changing. There will be new opportunities soon to present themselves and new optimistic people from the Bahamas and around the world who will see the potential and act. At James Sarles Realty we believe in the future of Freeport. Good Luck with your property hunting and as I always say, don’t be a “woulda coulda shoulda” become a proud owner !