We are already 29 days into the New Year with a new president of The United States, who has given the world hope of recovery from the economic meltdown we saw in the U.S. at the end of last year.
With the most incredible year bogged down in financial disasters, the energy crisis, the housing collapse, the stock market collapse and foreclosure catastrophe, 2008 is going down in the history books as the worst year in real estate and financial history. There certainly wasn't a shortage of news grabbing headlines. But now that is behind us and we all look to the future. Everywhere I go everyone wants to know how is the market in Freeport and what is the future of Real Estate on the island?
As we all know when the U.S. sneezes Grand Bahama Island catches a cold which basically means that we are very affected by the U.S. and World market trends. Real estate markets in the United States could hit bottom in 2009 and then flounder for much of 2010, according to the Emerging Trends in Real Estate® 2009 report by the ULI and New York-based Pricewaterhouse Coopers LLP.
During this period, ongoing drops in property values, foreclosures, delinquencies, and a limping economy will continue to crimp property cash flows. So the picture is not that great for the U.S. but what does that mean for Bahama property values. Well we have seen an interesting trend in the Bahamas. Home owners have not really lowered their prices very much when it comes to listing prices BUT the transactions taking place indicate that prices are down about 20 percent for those who really want to sell. Without property taxes and many foreign second home owners in many in-stances there is a lack of urgency to sell, so many sellers have refused to budge too much on their prices.
The good news for property owners is that this has kept prices from dramatically dropping like our neighbours across the "pond." The prices based on comps have dropped so you really want to sell I suggest that you price your home right! The market in Freeport has not been booming for many years so it is not unusual for a property to sit on the market for a long time. In the states the longer the property sits on the market the lower the prices go.
This is not the case for Grand Bahama property. Sellers just sit and wait until the brokers bring the perfect offer or any offer and then the negotiations begin. There is very little liquidity in the market so it is important to be patient when you are selling property. Some argue that Freeport has been in a recession for years so now the rest of the world is just catching up. The good news is that if you are a buyer this is a good time to buy believe it or not, 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. As the old saying goes "It aint over till the fat lady sings." We don't look at deal is done until the cheques clear, you have keys in your hand and you move in 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 is customarily split be-tween buyer and seller, whereby each party pays for their own attorney fees and seller pays for the real estate fees. 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. Its real estate and its 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.
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.
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 U.S. dollars to Bahamian dollars (.995) or Bahamian Dollars to U.S. (1.0125) as Bahamians can't accept or hold U.S. 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 YOU ARE NEGOTIATING THE DEAL!
Your real estate broker sho-uld make sure that there are no surprises in the transaction and that all aspects of the deal are covered. The team of a professional competent attorney, a professional competent real estate broker and a buyer who wants to buy and a seller who wants to sell makes for a smooth transaction. If you have been thinking about getting in the market this may be your opportunity to buy that property at the right price with sellers who are motivated.
Good Luck with your negotiations.
Contact James at Coldwell Banker - James Sarles Realty james@sarlesrealty.com
