Resources: Buying Overview

Shopping for a new home can be time consuming and frustrating. This overview describes the major steps in the buying process and shows how My-Bermuda-House can make your life easier.

Property Search
At My-Bermuda-House (MBH), we make it easy to find the right property. You can use our website to search for properties using a wide range of criteria, including property type, price, location and must-have features. Search results can be viewed in list mode or by map location and every individual property has a full detail page. Nothing could be more straightforward.

Our goal is to convey as much information as possible to help you shortlist potential properties. Image galleries, virtual tours, location maps, floor plans, facts, features, room dimensions and property descriptions all assist the selection process. Once you have identified target properties, you can add them to a favorites portfolio, book viewing requests, ask follow up questions, submit offers online and generally move through the buying process quickly and surely.

But we don’t stop there. If you don't see what you are looking for on our site, call one of our agents at 292 6245 and we will help you to find the right property.

Seeking pre-approval from at least one lending institution is one of the most important steps you can take even before you begin to look for a house. First and foremost, the pre-approval process will confirm how much you are able to borrow and so helps to set your sights on affordable properties. Furthermore, in today’s market, many sellers will not take an offer seriously unless the prospective purchaser has pre-approved backing from a mortgage lender.

The process of acquiring a pre-approval limit from a lender is quite straightforward. Simply call your bank’s lending department and make an appointment with a loan officer. They will assess your personal circumstances and issue a letter, normally valid for six months, stipulating how much the bank is willing to lend you. With this letter in hand, you are ready to meet with your real estate agent and begin the property search in earnest.

When you have short-listed your target properties, you are ready to inspect them in person. Here again, MBH makes life easy. On the detailed listing page of every property, we indicate the agents who are showing the property. Often it’s MBH, but sometimes it’s another agency or the owners themselves. Choose the agent you want to work with, click the “Make an Appointment” button and submit the request. It's as simple as that. Whoever you choose will be alerted to your request and will typically confirm the appointment within 24 hours.

Property Prices
Pricing is not quite as straightforward as you might think. You may, for example, encounter prices listed as "gross" or “net”. Quoting the gross price is the norm in Bermuda and means that the vendor will pay (from the sale proceeds) half of the stamp duty and half of the conveyancing cost (the closing costs) plus the sales commission, while the purchaser pays the other half of the closing costs. However, sometimes prices are quoted as “net” or “net net”, meaning that the vendor receives the full purchase price from the buyer who, in addition, pays the closing costs and commission.

Making an Offer
When you've found a home you like, you should start the negotiations by making an offer. MBH allows you to submit an offer directly from the property details page. Simply click the button, submit the form and your offer will be sent to the party who showed you the property. You should know that all data sent from the MBH website is SSL encrypted to ensure security and privacy.

Your first offer may be accepted, but you should be prepared to negotiate before a final price is agreed. It is quite common for offers or counter-offers to involve different allocations of closing costs as a way to fine tune the final agreement.

Selecting an Attorney
When buying a home, you must have a lawyer to represent you in the transaction. Selecting the right lawyer is an important decision. Purchasing a home is a significant legal matter and probably the most expensive investment you will make. Involving an experienced real estate lawyer will ensure you receive sound advice and will help to avoid future problems that can have expensive repercussions.

For example, if you require a mortgage to complete the transaction, your lawyer should review the mortgage papers to ensure they have been properly prepared.

Your lawyer will also conduct a title search to confirm that the seller is able to deliver all legal and equitable ownership interest in the property. The title search also identifies those who have claims (e.g., taxes, mortgage, judgment) against any current or past owners of the property. These claims must be satisfied and cleared in order for you to obtain clear title to the property.

How do you make a good choice? The best way to locate an experienced real estate lawyer is by referral. Besides friends and family members, another reliable source is your real estate agent who has doubtless worked with many lawyers. And, as in the selection of any professional, you should ask the lawyer to explain their fee structure and what other charges may be included in your legal costs.

Sale and Purchase Agreement
Once your offer has been accepted by the vendor, the Sale and Purchase Agreement (SPA) is prepared. In Bermuda, the SPA is based on a standard Bermuda Bar Association Agreement. It is drafted by the vendor’s lawyer and forwarded to the buyer’s attorney for comment and review. The SPA is the legal document that fixes the rights and obligations of the parties, and establishes the terms of the transaction that binds the parties. Once signed by the parties, the SPA becomes a binding contract for the purchase the property, subject to any conditions stipulated in the contract.

The SPA includes details about both the seller and the buyer, describes the property to be conveyed, lists the general and special conditions that attach to the transaction and also stipulates the closing date for the transaction. It is very important that your lawyer reviews this document carefully and confirms that the clauses reflect the transaction agreed by the parties.

In addition to reviewing the contract with you, your lawyer will negotiate contract changes with the seller’s lawyer and provide notice to the seller’s lawyer regarding the results of such items as financing discussions, engineering surveys and other agreed conditions to the contract. He will also liaise with the lending institution, undertake the title search and disburse the funds at closing.

Special Conditions
A topic of discussion with your attorney should be the special conditions that you wish to attach to the Sale and Purchase Agreement. Property sales in Bermuda are on a caveat emptor basis and the sales contract typically contains a clause to the effect that the purchaser has satisfied himself as to the condition of the property. So you may wish to stipulate that a satisfactory structural survey or home inspection be undertaken by a qualified professional as a special condition in the sales agreement. Among the most common special conditions included in SPA are:

  • Financing
    most buyers require a mortgage from their bank to purchase a home. If so, you will probably need fourteen (14) days to confirm that your bank will lend you the money to purchase the particular property in question - even if you have been pre-approved. Be sure to inform the bank of the closing date specified in the Sale and Purchase Agreement.

  • Structural Survey
    although quite rare in Bermuda, the requirement for a structural survey is a prudent step in older properties that have not been rewired or re-plumbed for many years, where termite damage is evident, or where the site may be steeply sloped.

  • Property Staking
    it is becoming common to ask the vendor to stake the property to confirm that there are no encroachments or illegal developments.

  • License
    To acquire a property, non-Bermudian purchasers require a license from the Minister of Labour, Home Affairs and Public Safety. License applications must be submitted in respect of a particular property and will be co-ordinated and submitted by the purchaser’s attorney. There is a fee associated with the license application and it is not uncommon for the grant of a license to take between 4 and 6 months, so specifying this condition will impact the closing date.

When the terms of the SPA, including any special conditions, have been agreed, the contract is ready for signing. The normal process is for the purchaser to sign first followed by the seller and finally the agent. At this time, the buyer is required to pay a deposit, normally 10% of the purchase price. These funds are held by the “stakeholder” (either the the real estate agent or the vendor's lawyer) in a segregated account until the transaction is completed or cancelled. Once the deposit is paid, the property is effectively off the market.

With an executed contract in place, it is incumbent on both the buyer and the seller to act in good faith to satisfy all conditions to the contract by the date stipulated in the SPA. However, if a condition cannot be met and cannot be renegotiated, then the SPA will be rescinded and the deposit returned to the buyer.

Mortgage Financing
Most buyers require a mortgage to purchase their home. You will have already had discussions with your mortgage lender prior to signing the SPA and, upon signing, a copy is delivered to your loan officer by your attorney. The loan officer will arrange for the property to be appraised to satisfy the lender’s collateral requirements and will also prepare your “Offer to Finance” letter, which will contain the details of your mortgage. The loan officer will send instructions to your lawyer, who will complete the closing documents for you to review and sign. These documents create a lien against your property and also obligate you to repay the loan, so a legal review is a prudent step. Your lawyer will return the executed closing documents to the bank and the loan officer will arrange to transfer the mortgage funds to your lawyer to complete the purchase.

Closing Costs
When considering a property purchase be sure to factor in the associated closing costs. Among the heftiest is stamp duty, usually shared between buyer and seller, which is based upon an escalating percentage of value. (For more information, see our detailed explanation of Stamp Duty.) There are also fees for preparing the property transfer deed and the mortgage deed, legal costs for the negotiation and preparation of the sales contract, a bank administration fee of up to 1% of the face vale of the mortgage, government search and document registration charges, surveying costs, property valuation costs and license fees if any of the purchasers are non-Bermudian. Ask your lawyer to estimate and explain these charges and make sure they are included in your financing calculations with the lender.

The SPA will specify a closing date for the conveyance of the property. It is common in Bermuda for this date to be set as the thirtieth (30th) day following the full execution of the contract, though the closing could take longer. The thirty day hiatus allows time for the Department of Planning to inspect the property for illegal development.

Although it is tempting to ignore this step, we would strongly recommend against such a course of action. If you take possession of a property before the Department of Planning has completed its inspection, you would become liable for any illegal development that may have occurred at any time in the past. When the Department of Planning has completed its investigation and the property is deemed free of illegal development, the final hurdle to your purchase of the property is cleared.

Typically, on closing day both you and the seller will sign the conveyance documents. Once these documents are executed, your lawyer, who is holding the mortgage funds, will then disburse the monies, including paying any real estate commissions, legal fees, mortgages or liens on the property. The balance goes to the seller, you get the keys to the door and the deal is complete.