Buyer's Information
First Steps for First Time Buyers
Many people use real estate investments as a means to generate income and provide a viable tax shelter while still providing financial benefits to the investor. The first time home purchaser is more likely to be buying a new house for a primary residence rather than for a real estate investment. While the primary residence is still a major investment in real property, the start to finish method is a little different than it is for the investor.
The first time buyer should always start the search for their dream home with a recognized lending agent. Whether this means the loan officer at their personal bank or a more formal mortgage broker in a larger financial institution, this is the place where everything begins in the process of real estate investments.
A good mortgage broker will be able to explain all of the necessary details about the process of real estate investment. They will also be more fully qualified to look at the individual situations of the prospective homeowner and give them a more complete analysis of what financing options are available and which types of loans or mortgages will best suit the individual needs of the real estate investor.
Sometimes an option on a piece of real property will include the ability to lease to own or rent to own the property. This option is often a good idea for people who do not have a substantial amount of capital to invest as a down payment in a real estate venture. Rent to own, or lease to own will also be beneficial to many people who may have very good credit, but for whatever reasons, do have some discerning commentary in their recent financial credit reports.
Other options which may be viable are large down payments for someone who has the capital to invest, but does not have the credit. Some mortgage lenders offer very enticing deals to first time buyers, which include benefits that may not be available to other parties who are purchasing real property as an actual investment instead of buying a primary residence.
Still other mortgage and financing options include the use of zero down loans for real estate investors. These loans will usually cover all of the closing costs when buying a house as a primary residence.
Real estate investment is a major expense, and as such, it is important to know how much the homeowner has to spend before going out and trying to spend it. There are so many loan and mortgage options available to the real estate investor that it is imperative to start any home or property purchase with a lengthy discussion with the loan officer or mortgage broker in order to make sure that all of the proper options can be readily explored.
Preparing to Buy a Home
1. Plan to Buy a Home in an Area You Intend to Stay.
Make sure you can commit to remaining in one place for at least a few years. When looking at areas of interest take into consideration your job and commute time, school district, distance from loved ones and any other factors that are important to you.
2. Check Your Credit.
Since you are likely to need a mortgage to buy a house or property, make sure your credit history is as clean as possible. Ask for a copy of your credit report and correct any inaccuracies before you begin house hunting.
3. Calculate your Finances.
Aim for a house you can afford. The rule of thumb is that you can pay for a house or property that is two-and-one-half times your annual salary.
Getting pre-approved by a lender will ensure that you are looking at properties in the right price range.
4. Hire a Professional.
You can use the internet to find real estate agents in your area.
Also, it is best to ask for recommendations from people who have used agents when buying their home. Ask them what their experience was like and if they would use the same agent again. Interview several agents before determining the one you want to work with.
5. Do your Homework.
When making an offer on a house or property, your opening bid should be based on the sales trend of other homes or properties in the neighborhood. Use a Comparable Market Analysis of homes or properties sold in the last three months. If homes or properties are selling five percent below the asking price, then make your offer five to ten percent below the listing price.
6. Hire an Inspector.
Even though your lender will require a home or property appraisal in order to determine the worth of the property, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. This will establish if there are any problems that would require costly repairs.
Deciding Where to Buy.
For whatever reasons, many people are selling their homes every day. Some people are selling because of a job promotion or a new job. Some people are selling because they have new needs for their primary residence. Many of these people are selling their primary homes so that they can purchase a new piece of real estate. Purchasing a new home can be a difficult affair. This is often made worse when the homebuyer does not know the area they are moving to. They must trust someone else's judgment about where is a good place to live, or must they?
Certainly, they will need to find someone who knows the area where they will be moving. That should be understood, but it frequently is not. Not only is a quality realtor going to be familiar with all of the different aspects of the law in regards to real estate transactions and investments in real property, but they will also usually know all of the neighborhoods and general statistics about those areas as well.
If the potential real estate investor has done their homework and has already checked with loan officers or mortgage brokers, they already know about how much home they can afford. This will keep them from wasting either their time or the time of the realtor looking for housing that is unobtainable for them financially.
That in itself will narrow down the search considerably. Other factors such as crime, conveniences, flooding, location and the needs of the potential homebuyer individually all must be factored in. When these ideas are effectively communicate with the real estate agent, the realtor is then able to narrow the search down even further. It is important to look at all of the requirements and needs of the buyer in order to properly decide where to move.
Factors such as crime rates become even more important if there are children or families involved. How close the schools are or how far away they are will be information that has a substantial impact on the everyday life of the new homeowner. How much time is going to be needed to get to the grocery store? Multiply that by two or three times a week times fifteen or more likely, thirty years over the life of the mortgage, and it becomes easy to see why these are deciding factors.
Getting the right and relevant information before purchasing the home will allow the homeowner to avoid any unpleasant surprises after the home purchase. If nothing is known until then, it is too late to do anything about it. If the real estate investor is well informed before purchasing a new property, the whole experience will be greater.
Using a qualified real estate agent, the potential real estate investor can get all of the relevant questions answered before it is too late to do anything about it. While an investment in real property is a major financial affair, it is also about lives and living. Decisions should only be made once all of the information is available for review. Finding a good realtor who can make that happen will make everything a lot better.
Common Buyers Mistakes
Too much home, too little home, and waiting for the final word on financing can be easily avoided!
For the first time homeowner, the whole prospect of investing in a home of their very own can be very exciting, and very intimidating. Knowing some of the more common mistakes that real estate investors have made in the past can keep the new homebuyer from repeating these errors. Purchasing a home is the largest investment that over ninety percent of homeowners will ever make in their lives.
A very common mistake made by many real estate investors is actually not so very severe. It will however, cost them valuable time and many headaches which could otherwise be easily avoided. Most potential homeowners want to run right out and find their dream house before they worry about financing. While the emotional effects can be devastating to some people, the actual financial repercussions are not so severe. Still, sleeping in an apartment dreaming of a home that an investor may or may not ever be able to purchase is something many people would prefer to avoid.
When seeking out opportunities for real estate investment, whether for a primary residence or a secondary investment property, the real estate investor should always seek financing before looking for a new home. Unless the investor has a substantial financial holdings at hand and excellent credit, it is not likely that they will be pre-approved for any set amount. However, this will give the potential homeowner a better idea of how much home they can afford and let them seek out the best value for their money.
While the home that you have found may be the home of your dreams, why would you want to set yourself up for failure or disappointment? Knowing the approximate amount that you can feasibly receive financing for will allow you to narrow down your search to homes that will fit into your allotted budget and houses that you can be certain you are able to purchase.
On the other side of the aisle, what if the potential real estate investor is seeking only a modest home, believing that it will be easier to obtain good mortgage rates and financing for a smaller house. After having spent so much money on escrow, closing, appraisals and the other costs of investing in real property, they then discover that they could have purchased the home that they really wanted if only they would have known.
The wise real estate investor will find out at least an approximation of how much they can spend before they do any actual spending or investing. Knowing how much home can be afforded will set the homebuyer up to succeed more easily and be less likely to be faced with harsh, unexpected realities and difficulties in regards to home financing. Real estate investment is a great means of building up personal assets and a viable means to provide additional income. Knowing how to invest your finances properly in the real estate market is going to be a determining factor in the success or failure of your financial portfolio.
Buyers Questions
When someone is considering purchasing a new home, the idea of a real estate transaction may seem simple enough at first. In reality, an investment in real property is much more difficult than it may seem. It is always a good idea to utilize the services of a licensed real estate agent when considering an investment in a home.
Using a licensed real estate agent will allow the buyer to remain informed about exactly what must be done at every step during the home buying process. The question now becomes; how does a homebuyer qualify the real estate agent? What questions should the real estate investor ask to find out about the realtor and their qualifications?
The real estate agent is hired to do a job. Anytime someone is hired, it is necessary to ask certain questions in order to find the best person for the job. A good place to start is by getting references. While the real estate agent will only use satisfied customers as references, those people will still be able to give the real estate investor an idea of what exactly the realtor did or did not do to their complete satisfaction. Careful examination of references will usually provide both the strengths and weaknesses of a real estate agent.
The seller will pay for most of the fees, especially those incurred by the real estate agent. It is still necessary for the homebuyer to ask about any fees that may result in out of pocket expenses. Frequently, the buyer pays for a home appraisal. Asking the realtor about the fees which the buyer will be expected to pay beforehand, will give insight as to how much cash on hand must be available to complete the home purchase.
It is very important that the realtor is familiar with the areas where the homes are. Knowledge of the neighborhoods is important to the homebuyer so that they will know that their specific needs can be met with the real estate transaction. This is an especially important qualifying question if the home being purchased will be used as a primary residence for the homebuyer.
Carefully qualifying the real estate agent is an important part of any real estate investment. The effects of a miscommunication or a problem will often be lifelong or a difficulty for at least the fifteen to thirty year life of the mortgage. Finding a qualified realtor can bring about a lifetime of joy and happiness from a new home purchase.
How Much Home Can You Afford?
Many real estate investors who are purchasing a home for the first time have no idea exactly how to figure out how much house is enough, and how much is too much. There are some key points to take into consideration when purchasing a home. The first time investor will need to examine their budgets, their finances and the potential real estate assets closely in order to be able to make an informed investment decision.
People make careers out of writing books to tell us how to budget our money, how to manage our finances and how to get the most bang for our buck. There is one major problem with all of them however. They do not include any "real-world" variables. Not everybody is a whiz with finances, able to live off very little money and spend only what is necessary while dutifully saving the rest.
Then there are the minor inconveniences, which are so frequent in the real world and so seemingly unimportant to the authors of those books. The car breaks down, the kids braces need to be replaced; the other child has broken the neighbor's bay window playing baseball in the yard. All of these factors force the investor and potential homeowner to face the very real fact that they have to spend a lot of money just to survive.
When we are renting our homes, we do not freely associate many costs with home ownership. If the garbage disposal breaks at two in the morning, all we have to do is call the property owner or the maintenance person and they fix it. When the real estate investor or homeowner has a problem, the costs multiply rapidly. Throw that in on top of the normal costs of life itself, and it should be easy to see that the potential homeowner needs to look beyond what they pay for rent as a basis to decide how much home they can or cannot afford.
For over ninety percent of the population, a home purchase will be the single largest financial investment of their life. Care should be taken so that investment lasts for a lifetime and not foreclosed or lost due to poor financial planning.
Ideally, the homeowner should be able to pay all of their most basic bills including the mortgage, electric, phone, car payment and so forth with one paycheck. Not very many people live in an ideal world however.
A more realistic approach is that all of the major bills can be paid with what the primary financial investor earns in two weeks. If all of the bills can comfortably be paid with the pay that is earned in three weeks, it is still viable, but there will not be many luxuries available to the homeowner until such a time as the mortgage is paid off.
If you are looking to purchase a home, especially for the first time, make sure that all of the bills can be paid at the very least with three weeks earnings. There will always be unforeseen circumstances which arise as a part of everyday life. Financial planning must be completed in such a manner as to allow the real estate investor to have a way and a means of paying all of the bills, no matter what eventuality arises. Careful budgeting and financial planning before purchasing the home is imperative to being a successful real estate investor.
Ensuring a Smooth Home Purchase
Whether you are a first time homebuyer or a hardened and experienced real estate investor who knows all of the details about a purchasing real property for your investment portfolio, there are steps that should be taken in order to assure the buyer that the home buying experience would be a smooth and uneventful transaction.
For the potential homebuyer, nothing is more important for the first step than arranging proper financing. This can be done through either a regular bank or lending institution or even a mortgage broker. The reason financing is so important is the same principle as preparing your budget before you go shopping. How will you know how much money you have to spend if you do not properly calculate the amount first?
The second crucial step when purchasing real estate is going to be looking at what areas you want to live in. Whether the real estate will be purchased where the home buyer has lived all of their life or in a city entirely unknown to them, deciding which part of town they wish to live in will not only shorten their search, but make their experience as homeowners a much more pleasant one.
The third step is going to be finding affordable housing for sale in the desired neighborhood or those areas where the homebuyer has decided they would like to live. By narrowing the field down from all of the available real estate to a few select homes, costs can be cut and the whole process of buying a home will become shorter and less taxing.
When real estate for sale has been found in the areas where you wish to live, then arrangements can be made with the realtors of record for those listings to show you the homes in more detail. This fourth step is frequently attempted first by many new homebuyers. Unfortunately, if they set themselves up to look at houses that they may or may not be able to afford in areas, which they may or may not want to live in, they are going to make the whole tedious process of home sales a trying and expensive proposition for everybody involved.
By completing these steps one at a time in the order that they are listed here, the potential homebuyer will be able to be ready for each subsequent step in the real estate purchase. They will not be wasting the time of the realtor or the bank’s loan officer trying to buy more house than they can afford. The homebuyer will not be settling for less than what they want or need when it comes to buying their new home. In this manner, the real estate investor is more likely to get exactly what they want without all of the tribulations that they do not need when buying a home or property.
Finding the right Realtor
Purchasing a home is going to be the single largest financial investment for over ninety percent of all people today. Surprisingly, many real estate investors go in blindly, accepting as truth, every story which is told to them by every homeowner and salesperson they talk to. Finding the right realtor can be instrumental in making sure that the financial capital invested in real properties is not only well spent, but will produce the desired results as well.
A good real estate agent should be able to make the whole process of real estate investment a pleasing and rewarding experience. It is important to remember that the real estate agent is a sales person, and as such, some of them will try and push certain properties which they know will be more personally and financially rewarding for them. A very simple process can weed out real estate agents of this nature. Actively communicating with the agent and discussing what housing options are available that suit the needs of the individual. If the agent is unwilling to listen carefully to the needs of the real estate investor and will not discuss specific options, than another real estate agent should be on the priority list before any deals are completed.
The real estate agent should be very specific with questions and answers. This does not mean that they should not be friendly; on the contrary, being friendly is part of their job. It just simply means that if the real estate investor is looking for a home less than two blocks away from an elementary school, the real estate agent should not be showing them homes in a neighborhood that has no elementary schools.
Qualifying the real estate agent is just as important to the real estate investor as qualifying the buyer is to the real estate agent. Even for the first time homebuyer, there should be no fear of asking questions. Whether the real estate investor is looking at purchasing a home for the primary residence or looking at capital investments in order to establish a financial portfolio, finding the proper real estate agent can make the whole process much easier. Finding a real estate agent who can answer with specifics will most often result in finding a real estate agent who can provide for specifics.
Choosing a REAL ESTATE AGENT
You’ve decided to enlist the help of a professional to help you find and buy a home or property. Here are some tips to help you find a real estate agent.
1. Find at least three real estate agent’s to interview.
· Ask friends, family and even neighbor’s for recommendations. Who did they use when purchasing their home? Would they use that same agent in another real estate transaction? Did they feel safe and trust the agent they used throughout the search and during the buying process?
· Use the internet. The internet is a great way to find professionals. Increasing numbers of agents have web sites readily available for you to evaluate before you even pick up the phone to arrange an interview. Simply go to your favorite search engine and conduct a search for real estate in the city you hope to buy. Try different variations like “Yahoo or Google search engines”, “Bahamas Real Estate Association website at www.bahamasrealestateassociation.com ” or even “Your Telephone Directory yellow pages”.
Check out the agent’s web site to see if they include a page that discusses their own achievements, experience and years in the industry. If you have special needs such as relocation from a different Country or Island, you may want to consider an agent that specializes in relocation needs. Or, if you are a senior looking for retirement property, you may want to consider hiring a Senior Specialist.
Don’t discount an agent simply because they are new and don’t have much experience. Generally, new agents have more time to help you and are eager to please.
2. Interview the top agents you’ve found yourself or were recommended to you by others. You should be prepared to ask relevant questions to help you determine if the agent will be a good match for you.
· Are you a licensed REALTOR® with Bahamas Real Estate Association?
It is usually in a Buyer’s best interest to find a licensed REALTOR®, not just a person who say they are a real estate agent. REALTORS® generally work full time, are committed financially to their business and have been extensively trained to serve your needs. They are also members of the Bahamas Real Estate Association of REALTORS® and can show you the license.
· Are you a full time REALTOR®?
Part time agents might miss your dream house or property as it hits the market. If the market is hot, you risk losing your dream home or property. Full time agents are better options.
· How often will you inform me of new listings that match my criteria?
If an agent is not ready, willing and able to inform you of new listings matching your criteria the same day they hit the market you may want to consider a different agent. In hot markets homes sell quickly.
· How long have you worked the real estate market in this area?
Experience can certainly play an important role in helping you find and buy the perfect home or property. New agents may not know how to deal with certain situations that occur during the transaction. An agent capable of handling difficult transactions can be the key to closing the deal.
However, remember new agents generally have much time on their hands. They may be more vigorous in your home or property search than an agent currently working with many other buyers. In addition, they have extensive backing from their Broker during situations they may not be familiar with. Don’t discount new agents simply because they are new. Take into consideration whether the other agents you interview already have full plates.
· How quickly will you return my phone calls? Do you have a call back policy?
Some agents return phone calls during specific times each day while others will call you back as soon as they receive the message. Make sure the agent gives you one good phone number that you’ll be able to reach them with at all times.
· Don’t conduct your interview as a question and answer interview. Have a real conversation. You need to get a feel for the agent’s personality as well.
· Agents that answer your questions stating yes or no are probably not someone you want to deal with. Find an agent that will happily answer your questions extensively so you understand the details of your relationship from the beginning. This will help you avoid any problems down the road.
· If you have special needs such as relocation, first time home buying, or any others, tell the agent and ask if they have any experience and training with buyers like you.
3. Ask the agent or broker if he or she is licensed by the Bahamas Real Estate Association, If they say yes, ask to see their real estate license, if they say no, ask if they are under apprenticeship with a licensed Broker, if they are, then you would want to meet the Broker and see his/her license which should be posted on the wall of the agency office. This apprentice is under supervision the Broker and can be more enthusiastic to sell you a house or property then a season agent who may have their hands full and may not time you need. Remember, selling you a house or property is a legal transaction and a licensed Broker/Agent is trained and bound his/her license under the laws of the commonwealth of the Bahamas “The Real Estate Brokers and Salesmen Act Chapter 171” enacted for your protection in a real estate transaction. Don’t trust your investment with an un-licensed person.
4. Compare the agents you interviewed to make the final decision of whom to hire. What do you like and not like about each? Make a list and discuss it with family and friends that have been through the process. They may have valuable tips to help you make the right decision.
ATTORNEY
The standard practice throughout The Bahamas is that an Attorney affects the closing process of a real estate sales transaction, this will involve but not limited to a 30 year property title, restrictions and encumbrances search, Conveyance, Mortgage Agreement, Deeding and registering of documents.
Therefore, the Buyer and Seller should retain their own respective Attorney and ascertain the closing process and the related cost involve.
At Bayshore Realty we have built strong relationships with a first-rate team of Real Estate Attorneys who have a longstanding experience in local real estate transactions and successful closing. Whether you're a buyer or a seller you need to advise your Broker/Agent prior to the preparation or the offer or contract to purchase the name of the Attorney you have chosen.
Although professional ethics would not allow us to recommend one in particular. Please contact our office if you need a list of Real Estate Attorneys for your choosing who have worked with us and other Realtors in Grand Bahama.
If you are a buyer and you are considering financing the home or property you are purchasing, your Mortgage Agent will require you to use one of their approved and insured Attorneys.as part of your mortgage application
APPRAISER.
At Bayshore Realty we have built strong relationships with a first-rate team of professional appraisers who have longstanding experience in analyzing local properties of all types.
Whether you're a buyer seeking financing or a seller wishing to secure a fair market value on your property and a return on your investment, these courteous and fully accredited experts are committed to providing you with the very highest levels of service, consistently delivering reliable, timely and impartial opinions of value.
If you are a buyer and you are considering financing the home or property you are purchasing, your Mortgage Agent will require you to use one of their approved and insured Appraisal as part of your mortgage application
Although professional ethics would not allow us to recommend one in particular, Please contact our office if you need a list of Real Estate Appraisal for your choosing who have worked with us and other Realtors in Grand Bahama.
The Government Stamp Tax on Property Conveyance is as follows:
Value ($) Stamp Tax (%)
Less then $20,000 4%
$20,001 to $50,000 6%
$50,001 to $100,000 8%
$100,001 and over 10%
The above fees are usually shared equally by the buyer and the seller.