When it comes to home buying, mistakes can be costly.

I have asked some of the top names in the Jamaican Real Estaet Industry for their advice on the mistakes to avoid.

Read the top 4 mistakes below and take note.

1. Do not share professional services with the vendor!

The gravest mistake Home Buyers frequently make is to engage the services of the same professionals used by the vendor. This practice does not necessarily cut costs but on the contrary often lead to some horror stories and should be avoided at all times.

The purchaser should always obtain the services of an independent Attorney-At- Law and other professionals to avoid conflict of interest. Never pay over any money directly to the vendor or his agent.

Make all payments through your Attorney and ensure that you are given a statement when the transaction is completed to ascertain that all payments have been accounted for. This will avoid nightmares and save you money in the final analysis. In other words don’t be penny wise and pound foolish.

Thanks to: Terrence V. (T.V.) Allen of TV Allen Properties.

2. Don’t Let the Little Things Turn You Off

Don’t let the little things turn you off when viewing a house. Not all homes are in “showable” condition. Look beyond the badly kept garden, the overcrowded closets or the old, peeling paint to find what could be a diamond-in-the-rough and your next dream home.

Thanks to: Gina Harrison of Coldwell Banker Jamaica Realty.

3. Remember that the agreed Sale Price is not the final price to the buyer!

You have to add Closing costs including Mortgage registration costs(say 3%) to determine the full amount required to complete the purchase. Also remember to add another 3% to Purchasers’ Costs for mortgate costs, as most Sales are usually subject to Mortgage.

Thanks to: Anthony Harris of Access Property Investments Limited.

4. Get a Valuation Report

Procure a Valuation Report before signing Agreement for Sale.

Thanks to: Edwin Wint of La Maison Property Services.

With the start of the New Year, I started thinking about New Year’s Resolutions and what prospective home owners can resolve to do more of (or perhaps less of!) to be more successful in 2011.

In that spirit, I decided to call on my respected network of Jamaican Real Estate Industry players to find out their best pieces of “New Year’s Resolution” homebuyer advice. Their answers are presented below in no particular order.

You may notice some similar pieces of advice, but I kept the insights separate, as something in the way one is framed may resonate differently with you.

1. Be Prepared!

This is one of the most important decisions an individual will ever make.

Home Buyers must first determine exactly what they want. The location, type, size, condition, price of the property and security are very important components in the decision making process; as is accessibility to public and private amenities.

Establish a budget, how much can you spend. Can you afford it? If not; find something close to you budget. Look at all the attendant costs such as cost of financing, legal fees and Government Taxes and Duties.

Establish very early how will the purchase be financed. Check the various sources NHT, Building Societies etc. and be sure that you can meet all their requirements. Look at the interest rates and terms and conditions of prospective lenders and ensure you get the best deal possible.

Engage the services of professionals. Home purchase is one of the biggest investments you will ever make, so you choose wisely and ensure that you get value for money. At the end of it all make sure you enjoy the FRUITS of your labour.

Thanks to: Terrence V. (T.V.) Allen of TV Allen Properties.

2. Get your finances together before you start looking for a house!

There are costs to buying a house — find out how much cash you will need in addition to the down payment plus moving expenses. Get a pre-qualification letter from your mortgage lender that tells you how much money you can borrow. Not being financially prepared is like going to the supermarket checkout and not knowing if you have enough money to give the cashier.

Thanks to: Gina Harrison of Coldwell Banker Jamaica Realty.

3. Negotiate, we are in a Buyer’s Market!

Negotiate,especially on the associated fees. i.e.attorney,realtor. Also try to find a way to reduce closing costs, for example a Split contract (why pay Tansfer Tax etc. on Chattels?).

Remember this is a buyers market and Cash is “king”

Thanks to: Anthony Harris of Access Property Investments Limited.

4. Get Qualified Help!

Use a Realtor who can assist you with market analysis.

Thanks to: Edwin Wint of La Maison Property Services.

Win the Jamaica Real Estate Guide’s Collector’s Set!

We are giving away the 8 print magazines to 1 lucky reader in celebration of our 8 publications to date.

The first 3 issues of our magazine are not available online as you know. However, it contains the same glossy layout, informative articles, great photography, industry updates & insights that the current online issues contain.

It will make for great coffee table reading and a nice conversational piece.

One lucky winner will receive the Collector’s Set delivered to their home or office.

How it works!

You can enter the contest in 1 or more of the following ways. The more ways you enter, the more entries you receive. [Yes, you read that right!]

1. Tell a Friend, using the share link at the bottom of this post. Share via email, address book or Social media

2. Record a video using your webcam or other device, upload it to YouTube & share the link saying why you like to read the Jamaica Real Estate Guide. The video can be no less than 20 seconds and no more than 60 seconds.

How will I know if I won?

You will be contacted via email, don’t worry.

How much time do I have?

This contest ends on Sunday, October 10th @ 11:59am EST

You can use the time converter at this link to find out what that time means in your ‘neck of the woods’

Enjoy & Good Luck!!!

Once you have decided to purchase real estate, you will need to secure the services of an Attorney-at-Law. Your Attorney will protect your interest before and during the transaction and it is most unwise to purchase real estate without an Attorney on your team. Choosing an Attorney is a process that requires your good judgment. You should ensure that he or she has substantial experience in real estate transactions. Your Attorney will liaise with the other party’s Attorney on your behalf and a pre-transaction conference with your Attorney is desirable, so that you can hammer out all the terms you want to govern the transaction and obtain the full guidance of your Attorney.

The legal process of buying real estate has two aspects – signing the Agreement for Sale and signing the Instrument of Transfer. The cost of preparing the Agreement will normally be shared equally between Vendor and Purchaser.

The Agreement for Sale contains all the business aspects of the transaction, that is the terms and conditions agreed between Vendor and Purchaser as regards the monetary aspects of the transactions and other specific conditions regarding, for example, who will bear the risk of the property pending completion. This last aspect bears some elaboration. If the property is being purchased at the height of the hurricane season, then the Purchaser may want to have the Vendor bear the risk pending completion, so that any hurricane damage would be the Vendor’s expense.

So the Agreement will contain, among other things, provisions regarding the purchase price, how the same is payable, a description of the property as contained in the Certificate of Title, whether you will take possession at the completion of the transaction or whether the Vendor will agree to early possession, subject to a probable nominal interest charge, depending on the circumstances. This is the stage of the transaction where your Attorney will try to obtain the best possible terms for your purchase.

The Agreement for Sale will also cover the matter of taxes and fees involved. On one hand, the property taxes payable on the property being sold will usually be pro-rated as of the date of completion. On the other hand, most Agreements will provide that the Stamp Duty (approximately 5.5.% of the purchase price ) will be shared equally between the Vendor and Purchaser. The Transfer Tax, that is the tax on the capital gain earned by the Vendor on sale of the premises is payable exclusively by the Vendor at a rate of 7.5% of the purchase price. The Registration Fee, that is the fee payable for the Purchaser’s name to be endorsed on the Certificate of Title is normally shared equally between Vendor and Purchaser and is normally 0.5% of the purchase price.

When the Purchaser signs the Agreement for Sale, he or she will pay approximately fifteen percent of the purchase price plus half the cost of the Agreement for Sale. It is unwise for a Purchaser to pay over money to the Vendor prior to the signing of the Agreement for Sale, because among other things, it may become difficult to determine the commercial purpose of the payment at a later date. One copy of the Agreement will be returned to the Vendor’s Attorney for signing after which your Attorney will keep a copy of the binding Agreement on your behalf.

The Agreement for Sale will contain the date for completion of the transaction, normally ninety to one hundred and twenty days from the date of signing. During this period, the Purchaser normally finalizes all documents and requirements of the mortgage company if purchasing with a mortgage. If the Purchaser purchases by cash, he or she will at this stage enable his or her Attorney to give the Vendor’s Attorney an undertaking, that is, a legally binding guarantee, for the balance of the purchase price plus costs of the transaction.

Once all the business aspects are completed, the Instrument of Transfer is signed. This is the document that conveys ownership of the land from the Vendor to the Purchaser and is oftentimes witnessed by each party’s Attorney-at-Law.
Your Attorney will charge as his or her fee for guiding your hand and protecting your interest at a rate of 3% to 5% of the purchase price of the transaction. This amount is payable on completion of the transaction.
To get the most from your Attorney, ensure that you understand the process so that you can pose relevant questions at each stage of the transaction.

An informed client is a satisfied client.

Originally published & written for the Jamaica Real Estate Guide by: Annette Johnson, Attorney-At-Law.

Home Renovations

With the current cost of housing, the desire to find exactly what you want can be challenging at best, frustrating at worst. If you’re on the verge of giving up, don’t. There is the option of purchasing a home that ‘will do’ and renovating it over time to suit your needs.

The Wish List

As with all major expenses, create a ‘wish list’. Do you eventually want an equal number of bathrooms to bedrooms? How about a larger laundry area? Is there ‘room’ to make more room in the kitchen? These are serious aspects for consideration. Other less technical aspects would be repainting the home to create a different feel for each room. Be careful though: this ‘simple’ project could become continuous. More vibrant colours can lead to the need for more vibrant furniture, new lighting fixtures or a change of appliances etc.

When contemplating a major remodelling, apart from determining what it will cost, when will it start and how long it will take to be completed, a very important consideration is how much the work will add to the value of the home. Some experts say that remodelling the kitchen is the most popular home improvement project as it adds almost instant increased value and equity to the home. Some renovations however, can price the home out of the neighbourhood, given the current prices in the market and where the home is located.

It is also very important to know that changing the structure of the home will require getting a permit from the Parish Council – the local regulatory body. Oftentimes, construction codes dictate building minimum distances from the road, minimum distances from the fence etc. and these must be adhered to. Also, some communities may have restrictive covenants that limit the types of modifications that can be done.

The Search

Apart from checking the newspapers and realtors, paying attention to auction notices can be worth the while as well. However, auctioned homes can be very costly ‘fixer-uppers’, so try to get as much information on the condition of the unit before bidding. Also, seek the advice of industry professionals such as structural and electrical engineers, architects etc, lest the re-plumbing leads to the re-wiring, which leads to…and the list goes on.

In the search for reputable experts, don’t be reluctant to ask even just acquaintances for recommendations, especially if you know that they’ve recently done some work on their homes. And never go with just the first estimate, get a second and even perhaps a third.

Some Simple Renovating Ideas

• Repainting the rooms with different colours
• Adding/changing moulding or skirting strips
• Changing closet shelves and doors
• Replacing/adding lighting fixtures
• Changing doors and framing windows

Expectations

Once you have decided what needs to be done, what approximate costs are associated with each and consequently which area to tackle first, there are several other important issues that you should be aware of before construction begins.

Larger projects, such as room additions, may change the living conditions in your home for the duration of the project. While some of the changes may only be minor inconveniences, you should know beforehand the problems you may encounter when the renovation begins.

Be mindful of the fact that with every renovation, the home becomes transformed into a ‘construction zone’. Expect inconveniences. Workers will be coming in and out of your home, dust will settle, most likely throughout the house and the access to other rooms may be limited, especially if materials and equipment have to be stored inside while the project takes place.

The most important thing to remember is that quality takes time. This may mean waiting an extra day or two for special order materials, or waiting for a particular specialist (such as an electrician) that you know is reliable. While delaying construction for a couple extra days is not an easy thing to do, ensuring that the project is completed to your total satisfaction will be worth it in the end.

Murphy’s Law

And of course, there is also the fact that even the best made plans can become unraveled. No matter how well you and your electrician/plumber/carpenter etc. plan your construction project, chances are there may be a conflict along the way. Oftentimes, the weather may delay construction or on occasion, a shipment of the materials may not arrive on time. Being aware that problems like delays and weather conditions are a possibility means you will be better prepared if they occur.

Being prepared for such inconveniences also means not finding the renovation as problematic or irritating as the homeowner who plans to continue living as if nothing is taking place in the home. The best way to prepare for and limit stress during the project is to talk with your contractor: knowing exactly what will be taking place during construction can help settle some of the concerns you may have.

For individuals considering renovating, home improvement loans are available from Scotia Jamaica Building Society. Loans are also available for the purchase of a home, lot, build on own land and mortgage refinancing. Visit our link at www.scotiabank.com.jm for further information or email us at sjbsgen@scotiabank.com.

Originally Written for & Published by the Jamaica Real Estate Guide: July 2006

Now that’s the BIG question? But here’s the thing, it’s NOT what the bank or lending institution says you can afford. The lending institution will give you a guideline as to what you can afford based on what you earn, how much you owe and other factors. However, you need to do a careful examination of your own finances, your budget and your expenses. This article will guide you through that process.

Start with determining your Budget

This is very important. Its one thing to go to a lender to find out how much you can afford. In fact, what they really tell you is how much you can borrow. How much you can afford depends on determining your budget and the size of the Monthly payment you can afford.

Then look at your income vs. expenses

Subtract your Monthly expenses from your Monthly net income (that’s after all deductions, taxes, etc.) and that will give you a general idea of what you can afford to put towards a Mortgage each Month. Here are some of the things that should be on your list of Monthly expenses:

* Monthly grocery and other shopping expenses
* Credit card and other loan expenses
* Car loan and insurance payments (even if you do not pay these Monthly, calculate the Monthly cost)
* Any ongoing out-of-pocket health care costs you may have
* Entertainment expenses (movies, dining out, parties, etc.)
* Monthly savings and retirement payments

Of course, if you are also paying rent, you can omit that from your list of expenses as this will disappear when you buy a house.

Once you subtract your expenses from your income you will have a working figure that you will be able to put towards a mortgage.

Start the ‘numbers’ game

Once you have arrived at your “number” start plugging it into some basic mortgage calculators. There are calculators on this website that you can use. You can start by working backwards from the price of a house you may be interested in. Or you can start with the Monthly amount you can afford to see what kind of house you can get. These calculators will only give you a general idea though. You still have to sit down with a lending institution.

Be careful not to become ‘house poor’

It is important to be honest with yourself when doing this exercise. If you are unsure of what you spend each Month or unsure of the cost of your expenses, do an audit of your spend for 1 to 3 Months. Record each transaction during this time period. Then after you arrive at the amount of money you can put towards a Mortgage, be careful NOT to exceed this amount. Otherwise you may find yourself in a position where:

1) You have to get a second job or find other means to supplement your income to make your mortgage payments, or

2) You gradually fall behind on your mortgage payments and wind up in a position where you could face foreclosure

I hope you found this information useful. Good luck to you and happy househunting!

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Let me ask you this? How have you applied some of these tips to help you save toward buying your Jamaican home?

Start or join in the conversation using the comments box at the bottom of the page.

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Glossary of Common Real Estate and Mortgage Terms

Amortization – Method of repayment in which the amount you borrow is paid for over a period of time through monthly payments of principal and interest.  During the first few years of the loan most of the amount paid is applied towards the interest.  In the last few years of the loan, most of the amount paid is applied towards the principal.
 
Appraisal Fee – a few charged by an appraiser whose business is to render an opinion on the value of a specific property.  This is usually required by most lenders in order for the buyer to obtain a loan.

Closing Costs – Fees or costs paid in addition to the down payment on closing day of the mortgage loan.  This can include attorney fees, loan origination fees, appraisal fees, escrow fees, title insurance, taxes and other items which must be prepaid.

Contract of Sale – The agreement between the buyer and seller on purchase price, terms and conditions to be met to convey the title to the buyer.

Down payment – The difference between the purchase price and that portion of the purchase price for which a mortgage is being obtained.  The down payment can be paid from the buyers own funds or from gifts from relatives.     Minimum down payment required is usually in the region of 20% of the purchase price however some lenders have special plans that requires no money down or 5% down.

Equity – The difference between a home’s fair market value (appraised value) and the outstanding mortgage balance.

Gross Income – The income of the borrower before taxes and other statutory payments are deducted for qualifying purposes.

Home Equity Loan – A fixed or adjustable rate loan secured by the equity in the home.  This type of loan can be obtained for a variety of purposes including home improvement, other real estate or investment, car loan, education loan, credit or medical debt or emergency.

Mortgage loan – A loan which utilizes real estate as security or collateral to provide for repayment should the buyer default on the terms of the loan.

Prepayment Penalties – Fees charged by  the lender to a borrower who pays off his loan balance before it is due.

Qualifying ratios – comparisons of the borrower’s gross Monthly income vs debts and expenses. Usually the Monthly payment cannot be more than a specified amount by the lender, of the borrower’s gross Monthly income.  Also all the borrower’s Monthly debt usually cannot be more than a specified amount by the lender,  of his Monthly income.  Some leniency may be applied based upon down payment, credit history, etc.

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Tips for Homebuyers

Contributed By Kedeisha Tapper

Whenever you decide it’s time to purchase a home, the first thing you should do is be in a position to determine what is affordable.

You should have an idea of the type of property you would like to invest in, the location, as this is a key factor and indeed familiarize yourself Real Estate market, how it functions and whether it is a buyer’s or a seller’s market. This information can be obtained by visiting Real Estate websites, speaking to Realtors, Developers, etc. and by so doing you would be in a position to determine whether the property is affordable.

Firstly, the buyer should prepare a budget, i.e. income and expense statement including whatever savings is available in order to determine what is affordable to cover the deposit and closing costs. The minimum deposit is usually 15% (of the consideration or sale price of the property) when purchasing from a private individual.

Let me explain further; say, you have Seven Hundred Thousand ($700,000.00) in your bank savings account and wish to purchase a property – the market value or sale price of the property that you are looking for should be approximately $2,500,000.00 as your 15% deposit would be approximately $375,000 plus the closing cost, covering Registration fee, stamp duty, attorney’s fee, and the cost for preparing the Agreement for sale as well as mortgage costs. Mortgage costs also include commitment fee, registration fee and Attorney’s fee.

There are several mortgage institutions, visit most if not all and determine the one/s that best suits your needs, be sure to asks questions and get documentations and names of the Representative that you spoke with, so that in the event that you should return then you will see a familiar face who is already aware of your business. Having decided on your mortgage institution, pre-qualify your self so that as soon as you have found a property the processing will go much faster.

After these steps, you will be absolutely sure of the price house that you can afford and you would already have familiarized yourself with the real Estate Industry so now you can start looking for your ideal property. Call or visit Real Estate companies or websites. Be sure to shop around (but in this process if you spot a good deal don’t let it pass you by).

You can choose to work with just one Realtor if you find that person is reputable, reliable, efficient and understands your needs (you can check with the Real Estate Board to find out whether the Realtor is licensed and also to know the company that he/she is affiliated with). Explain your needs and your reasons for these needs to your Realtor so he/she knows exactly what you are looking for. Develop a positive relationship with your Realtor so that he/she will go the extra mile for you. Keep in mind that the Realtor is a professional in this business and may be able to give you expert advice throughout the sale process in-order for you to have an easier and faster closure.

Upon purchasing, recheck boundaries with your surveyor especially with lots. Remember its better to be sure than sorry. I am sure you wouldn’t want to buy a lot with a view and after the sale you find that the lot you bought is really the lot beside the one you loved and been looking forward to build on and worst yet the lot is located in a gully with no view, sounds terrible but it happens.

Personally, I would like Home buyers to take this into consideration when purchasing Real Estate. Every seller wants the best price for their property but it’s up to you the purchasers to determine the price you are willing to pay. Sometimes your offer may be less than the asking price or even the market value in the Valuation report and on the other hand your offer can be more. The point is that the real Market value is what the willing buyer is willing to spend based on the demand for that property. A buyer should know whether paying more or less for a property is in accordance his needs.

Kedeshia Tapper is a licensed Real Estate Associate with D.C. Tavares & Finson Realty Company Limited, and an active member of the Realtors Association of Jamaica. She may be contacted directly using the form below.

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• Know what you’re looking for and what types of houses you are looking for
• Know who are the key players involved in a real estate transaction and their role in the process
• Get your financial picture in focus; credit card debt, school loans and other commitments
• Familiarize yourself with the mortgage process
• Get prequalified for a mortgage. This will significantly strengthen your offer when you find a house to your liking
• Find an Agent you trust

• Start househunting!
• Negotiate your best price!
• Make a formal loan application
• Make arrangements for a home inspection
• Make arrangements for a closing agent or attorney-at-law
• Secure the final loan approval from your lending institution
• Do a final walk through of the house
• Final closing and settlement
• Move in to your new home and enjoy!

  
  

YOU are invited!

YOU are invited to sign up for weekly featured listings, smart resources & updates!

You will also receive the following:

• Financial Action Plan Guide by Financial Consultant, Cherryl Hanson Simpson
• Audio interview w/Cherryl Hanson Simpson (MP3 version) Financial Action Plan for buying a home
• Mortgage Application Checklist
• Mortgage Calculator Worksheet
• Free Subscription to our e-Newsletter

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This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind. This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers can understand and know where you are coming from.

This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind. This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind.

This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind.

This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind. This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind.