Bahamians must be educated on the correct process of purchasing land and securing its financing, as to avoid losing thousands of dollars in investments, according to Dwayne Gibson, partner at Gibson, Rigby & Co. law firm. Gibson told Guardian Business he has noticed over the years that many Bahamians are still "very clueless" when it comes to looking at capital purchases for homes.
He said the extensive process begins with buyers having to come up with a five to 10 percent deposit.
Though it has been tough, Gibson admitted that initiatives like the government implementing a stamp duty exemption has been a significant help to those purchasing real estate, in particular first-time owners.
"Apart from that, you would then have to look at what the commitment fee is going to be. That can vary between one to two percent depending on which institution you go to," according to Gibson.
"You will have to determine what the stamp duty is going to be, whether you are paying a particular percentage will depend on the property's value.
"For instance, if your purchase is worth $300,000, the stamp duty would be five percent. If it's your first home, you will be able to have that waived and that will reduce your overall cost," he explained.
From a banking perspective, Gibson noted that in addition to the commitment fees, interested buyers will also have to secure life insurance for the loan's face amount, along with mortgage indemnity insurance to bridge the financing between what one is qualified for and allowed to borrow.
Gibson believes a huge challenge is that Bahamians do not fully understand the process they are being exposed to, in terms of the overall cost.
"Since 2009, as a result of the economic conditions, we have seen persons wanting to purchase, having the deposit and portion of the fees but then when they get to the bank, the banks say to them well in addition to what you have, these are the additional requirements," he shared.
He pointed out that another barrier buyers are faced with is the requirements laid out by some banks that need them to still have the stamp duty's value on the account before an approval is given.
"In my judgment, that practice has to be modified because it wouldn't make sense for persons to come forward with all of those funds if they are not going to be applied towards the actual purchase. That's been taking place in more than one institution," Gibson added.
"Persons also come in with their five percent and the banks are now requesting up to 15 percent. You also have situations where a mother and a child perhaps want to purchase and because of that type of relationship, they ask for a larger injection than if it was a single person coming forward."
Gibson advised that buyers consult with and enlist the services of a lawyer that is recognized by the Bahamas Bar Association and Bahamas Real Estate Association (BREA) before making any payments.
He revealed: "It's important to have a lawyer because what we have been seeing when you don't have an attorney and things go wrong, buyers are challenged in getting the monies they invested back."
Gibson further noted that a lawyer is paid based on the transaction and the time spent working on the case.
"Lawyers charge on an hourly basis or what they do up to the point of producing the conveyance and certifying title. There is a flat fee of 2.5 percent of the consideration that an attorney can charge. This is in addition to the disbursements, including government fees and independent fees to have a search performed by a company outside of the firm," he explained.
He advised Bahamians to save, maintain some stability and visit an attorney before purchasing real estate.

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