Buying a home should be an exciting adventure. Here are some useful tips to help you navigate through the buying process.
Who Does The Agent Represent?
In a real estate transaction, it is possible for the Agent to represent a seller only, a buyer only, or both parties simultaneously. You and the Agent need to agree on one of these three alternatives:
- The Seller Only
Under a listing agreement or other agreement with the seller, the Agency and its Sales Associates act as the Agent or Sub-agent of the seller. They owe their fiduciary duties to the seller only. Where an Agent who is representing the seller has listed the property with another Agent, that Agent is called a Co-broking Agent.
- The Buyer Only
The Agent and its Sales Associates act as Agent for the buyer, only if the buyer pays all or part of the Agent’s commission. The Agent and Sales Associates owe their fiduciary duties to the buyer only.
- The Seller and the Buyer
The Agent is the Agent of both parties. This arrangement is called dual agency. The Agent should only act as a dual agent if both the seller and buyer consent. The Agent is obligated to treat both parties honestly and impartially and to work so as to not favor one party or disadvantage any party.
When you enter into discussions with a real estate Agent regarding a real estate transaction, you should know whom the Agent will be representing in that transaction. All real estate Agents and their Sales Associates should promptly disclose their agency relationship to each actual or prospective party to a transaction. This disclosure will help you understand the choices that you can make regarding agency relationships.
The Agent’s Duties
A real estate Agent normally will enter into an agreement to represent and act as the “Agent” for its client. Where an agency relationship exists, the Agent and their Sales Associates owe a “fiduciary duty” of loyalty, obedience, confidentiality, advice and reasonable care to the client. No real estate agent has any authority to make or give any warranty in relation to a property. Regardless of which party the Agent is representing, the Agent and Their sales associates are required to treat all parties honestly and to deal in good faith. Agents must promptly present all offers, respond truthfully to questions concerning the property and offer their services without discrimination.
There are two situations where Dual Agency occurs:
1. The Sales Associate is acting as the Listing Agent & the Selling Agent for both buyer and seller.
2. Two Sales Associates from the same company; one acting as the Listing Agent whilst the other is acting as the Selling Agent. Should parties agree to Dual Agency where the Listing Agent is not the same person as the selling agent, the Listing Agent will be deemed to be representing the seller only and the selling agent will be deemed to be representing the buyer only. Each Agent will keep confidential all information obtained from that Agent’s client unless that client consents to disclosure.
Stamp Duty/Conveyance Fees
|BASE LEGAL FEE||STAMP DUTY|
EST. STAMP DUTY
The above is a schedule of the standard fees based upon the scale recommended by the Council of the Bermuda Bar Association to its members. The recommended fee schedule of the Bar Association also allows for additional ‘extras’ which are normally chargeable in each conveyance and mortgage transaction. These would be added to the above fees. On average this varies between $500.00and $1,000.00.
Additionally, there may be disbursements incurred in connection with any transaction including for example, stamp duty on the Sales Agreement ($27.00) and in most cases a Planning Search fee ($525.00).
As of April 1, 2009 a stamp duty exemption has been enacted for First time Bermudian buyers purchasing property of $750,000 or less. Please see your Coldwell Banker Bermuda Realty sales representative for more information.
Stamp Duty Exemption
FIRST TIME HOME OWNERS
Are you buying a house under $750,000?
If so, you should know that the Government of Bermuda offers exemption from the payment of stamp duty on the conveyance of a property for a purchase price of $750,000 or less to first time homeowners.
- All circumstances affecting the criteria for eligibility for the exemption must be set out in the conveyance itself and the respective parties must sign declarations in order for the transaction to be assessed as exempted by the Tax Commissioner.
- In order to qualify as a fist time homeowner, the purchaser or purchasers must be Bermudian and have never held an interest in another residential property greater than 25% of its market value.
- Those transactions which meet the criteria for exemption must be adjudicated by the Tax Commissioner’s office.
- The purchase price must be of fair market value and must be paid in cash or by way of a mortgage.
- The parties must declare that the conveyance is not a part of a larger transaction where the consideration exceeds the required $750,000 threshold.
- The purchaser must intend to live in the house or condo for at least 3 years. If the property is a parcel of land, the purchaser must declare that they will complete the construction of the residential unit within a 3 year period.
- Conveyances relating to fractional ownership units or condominium hotel units will NOT benefit from the exemption.
Ask your Coldwell Banker Agent for details.
What Should You Know About Offers
YOU’VE MADE AN OFFER… NOW WHAT?
So you’ve made an offer on a property and you are anxiously awaiting a reply. What should you expect?
Your agent should have explained to you from the outset that *all Real Estate Representatives in Bermuda have a fiduciary duty to the Vendor to present all offers and get the best price possible for the property. In other words, we (the realtors) work for and get paid by the Seller or Vendor.
Typically, the Seller will make a decision within a few days as to whether or not they will accept your offer. In fact, they may accept, reject or come back with a counter-offer.
Once your offer is accepted, you have a number of things that must be done prior to the property being removed from the market. Unless the ENTIRE list of below items is completed, the property will continue to be shown, advertised and offers encouraged in accordance with established legal practices and contract law.
- Remit a Ten percent (10%) deposit
- Have your attorney approve the Sales and Purchase Agreement with agreed conditions
- The Vendor’s attorney will be doing the same
- Provide a letter of final approval of financing from your lending institution
- Once the Sales and Purchase Agreement is agreed by all, this is signed in triplicate by the Purchaser followed by the Vendor and Agency
- The copies are stamped by Coldwell Banker Bermuda Realty
- One copy is distributed to the Purchaser’s attorney, one to the Vendor’s attorney and one is retained by the Agency
Until such time as ALL the above is completed, the Vendor has the right to accept any other offer or rescind his acceptance.
Only after the deposit is received and ALL parties have signed the agreement is it a legal and binding contract.
It is important to be aware that because the Realtor is in a contractual relationship with the Vendor, the Agent is REQUIRED to present ALL offers to the Vendor even if the Vendor has already accepted another offer.
***There are rare cases where the Realtor will enter into an agreement to represent the Buyer. This is called a Buyer’s Agency and the Buyer is then responsible for the commission.
Preparing to Buy
PREPARING TO BUY A PROPERTY
STEP 1 – Pre-Approval
Your first step in purchasing a property is to get pre-approved by a lending institution (currently banks do not charge a fee for this and the pre-approval is typically for 3 months). This will not only establish what you can afford to purchase, but most vendors will not accept any offer without proof of funds and new AML Compliance requires proof of funds.
STEP 2 – Preparing for Bank Meeting
Prior to your meeting with the bank, you will need to complete a mortgage application form (nearly all lending institutions have applications on their websites now). The application will outline the particulars required and ask you to bring these items to your first meeting, i.e. salary verification, passport, employment letter, etc.
What Can You Afford
The banks are very competitive these days with current interest rates listed online. When taking into consideration what the bank will loan you, they use a debt service ratio of 45% to a maximum of 55%. This means the bank does not want fixed expenses to exceed 55% of your net monthly income. See example below:
|Applicant’s Salary (net)||$6,500|
|Joint-Applicant’s Salary (net)||$4,500|
|Rental Income (75% max)||$1,875|
|Monthly Fixed Expenses|
Monthly Fixed Expenses are regular payments such as credit cards, loans, mortgages, rent, insurance, education and childcare. Please note that the list above provides samples only. Each bank has specific criteria and some may look at “credit debt” only and not allocate for insurance and school fees when completing the budget. Debt ratio is determined by dividing your monthly fixed expenses by your monthly income.
In the above example $3,375 ÷ $13,075 = 26% (plus housing), so you should be able to afford a home within the guidelines of a 45 – 55% debt service ratio with the new mortgage payment.
STEP 3 – Closing Costs
Your agent can provide you with estimated closing costs including mortgage fees, stamp duty and legal fees. You must also have proof of a homeowner’s insurance policy in place to receive a mortgage (unless you are purchasing vacant land or a condominium).
Why Choose Coldwell Banker
WHY CHOOSE COLDWELL BANKER BERMUDA REALTY
- We are involved in 1/3 of all of the property transactions in Bermuda.
- Our agents are ranked in the top 2% of Coldwell Banker Representatives Worldwide.
- We are 100% Bermudian owned/operated and have been a trusted local company since L.P. Gutteridge Ltd. was formed in1953.
- We are a Full Service Real Estate Company including sales, rentals, commercial sales & leasing, appraisals, land surveying, property management and vacation services.
- We are the largest real estate company in Bermuda, with the largest inventory, client base, and marketing exposure.
- Our award winning website, www.bermudarealty.com, is updated daily to give your listing continuous exposure.
- www.bermudarealty.com gets 8.5+ million hits per year with 10,000+ unique visitors monthly.
- Our exclusive Realty Plus sales database (used by our professional valuers and agents to help value property) has over 16,200 islandwide records dating back to 1993.
- We have over 600+ collective years of experience in real estate and over 40 licensed personnel.
- We fully expose your property to the market which includes open houses, electronic media, print advertising, websites and social media.
- Your property is listed on www.bermudarealty.com, in addition to a number of other sites including www.coldwellbanker.com the #1 website for online visits.
- Most importantly, you should hire Coldwell Banker Bermuda Realty because we care about you and selling your home!
Why Use An Agent
WHY USE A REAL ESTATE AGENT?
When you employ the services of a licensed real estate agent, you are hiring an individual who is familiar with the legal and marketing process of selling a home in Bermuda.
In essence, you are “buying” the experience and skill necessary to facilitate the transaction for you. Commission involved in the transaction, covers the cost of the Agent’s time, as well as the cost of the design and implementation of the materials necessary to market your property.
When you employ the services of a Coldwell Banker Sales Representative, you are hiring a Company who is committed to servicing all of your real estate needs.
With over 40 full-time staff, Coldwell Banker offers qualified marketing staff, professional land surveyors, accredited valuers, and the administrative support to make it all work for you!
Generally speaking, all Agents in Bermuda charge the same rate of commission (5%). You want to choose the Agent with the most experience, the best marketing strategy, and skill to achieve your objective in the shortest time possible. Coldwell Banker can offer you over 100 years of real estate experience from a network of approximately 85,000 real estate representatives worldwide. This equates to less time on market and more money in your pocket!