Bermuda to ease stiff property ownership rules for foreigners

Government authorities of Bermuda are considering easing the rules on foreigners wanting to acquire property in this British overseas territory.

With one of the highest property costs slapped on non-residents, Bermuda is now bent on reviewing laws hinged on

The British Overseas Territory’s National Security Minister Wayne Perinchief told delegates at the Real Estate Division of the Bermuda Chamber of Commerce in a recent convention that the government is seriously considering changes to existing property laws that have scuttled interest from foreign buyers.

“I support an urgent review of the ARV (Annual Rental Value) bands with a view to permitting the sale of properties by Bermudans to non-Bermudans provided they fall within that highest ARV band,” said Mr. Perinchief at the conference attended by the country’s real estate firms and brokers.

Global Property Guide Research cites that part of the challenges faced by foreign buyers in Bermuda is in securing a licence for a non-Bermudan spouse in order to purchase a property.   

“I have recommended to Cabinet that the requirement for a licence in these circumstances be removed and that this legal barrier denying home ownership to non-Bermudan members of Bermudian families be eliminated,” Mr Perinchief said.

This is one of the key policy changes for review, which according to the new president of the real estate division of the Chamber of Commerce, Ms Dale Young this is a welcome development that could further promote the growth of the property sector.

Ms Young said this move by the government if it would really take effect will increase the development of properties as there would be more people to sell to. Buyers of property would also be encouraged if the government would be able to reduce the fees slapped on PRC holders, which currently is that they have to 18% of the value of the property.

She cited that the government was able to lower the fees to about 6% for condominiums built at Tucker’s Point, and it would matter to buyers if the PRC rate will be reduced and best to abolish it altogether.

Source: The Royal Gazette Online

Foreign investors 'returning to South African property market'

International investors are increasingly considering the merits of buying a property in South Africa, it has been claimed.
Berry Everitt, managing director of international property group Chas Everitt, explained that a favourable exchange rate between the South African rand and major currencies such as the euro, US dollar and sterling has helped drive interest.

"Since May, the value of the rand has shown a sharp decline that was bound to catch the attention of overseas investors, especially in light of the economic distress in Europe," he stated.

Mr Everitt added that around 30 per cent of the enquiries received by his firm now come from foreign investors, with many people from the UK, China, Germany and the US contacting the company.

In terms of the assets being targeted, holiday homes and buy-to-let properties are the most popular among overseas buyers in South Africa, he noted.

However, the recent FNB Estate Agent Survey for the third quarter of 2011 found that domestic investors are less enamoured by the prospects offered by buy-to-let housing in the country.

According to the organisation, just eight per cent of transactions were made in this sector during this period, with more people concentrating on purchasing a primary residence. (globalpropertyguide)

Mortgage Delinquencies To Decline in 2012: Study

The current year will close with a 7 percent yearly decline in mortgage delinquencies, matching last year’s decline, according to predictions released Wednesday by TransUnion.

The percent of borrowers 60 days or more delinquent will fall to 5.95 percent by the end of the year, and will fall to 5 percent by the end of 2012, according to TransUnion.
However, despite yearly declines, the forecasters expect a slight rise in delinquencies through the first quarter of 2012.
After reaching 6.02 percent in the first quarter, delinquencies will decline for the following three quarters, the forecasters predict.

Tim Martin, group VP of U.S. housing in TransUnion’s financial services business unit, believes house prices and unemployment will continue to pose problems for the market in the coming year, but the market will see some positive movement due to “improving credit quality of new originations, consumer confidence, and GDP.”
“If things go as expected, there are no additional negative shocks to the U.S. economy and the average borrower’s situation, mortgage delinquencies could fall as much as 16% in 2012 compared to 2011,” Martin said.
While the nation is expected to experience overall declines in mortgage delinquencies in the coming year, 12 states and the District of Columbia will likely see increases. Thirty-eight states will experience declines.
TransUnion expects Florida, Nevada, and the District of Columbia to close the fourth quarter of 2012 with the highest delinquency rates.
Florida and Nevada will be seeing double-digit delinquency rates at 13.20 percent and 11.09 percent respectively. The District of Columbia will follow with a rate of 7.91 percent.
At the other end of the spectrum, North Dakota will see the lowest delinquency rate in the nation at the end of 2012 at 1.3 percent.
South Dakota and Wisconsin will follow with rates of 1.96 percent and 2.11 percent respectively. (DSNews.com)

Foreclosure Crisis Isn't Even Halfway Over: Study

The foreclosure crisis has had a long and destructive run – five years and counting, with millions put out of their homes. According to the Center for Responsible Lending (CRL), we’re not even halfway through the devastation.

The organization’s analysis of 27 million mortgage loans originated over a five-year period found that 6.4 percent of mortgages made between 2004 and 2008 have ended in foreclosure, and an additional 8.3 percent are at immediate, serious risk.
The study also offers up evidence that foreclosure patterns are strongly linked with patterns of risky lending. According to CRL, foreclosure rates are consistently worse for borrowers who received high-risk loan products that were aggressively marketed before the housing crash, such as loans with prepayment penalties, hybrid adjustable-rate mortgages (ARMs), and option ARMs.
Looking at the demographics of foreclosure casualties, CRL found that the majority of people affected by foreclosures

have been white families. However, borrowers of color are more than twice as likely to lose their home, the organization says.
According to CRL, these higher rates reflect the fact that African Americans and Latinos were consistently more likely to receive high-risk loan products, even after accounting for income and credit status.
African Americans and Latinos were much more likely to receive subprime loans with high interest rates and loans with features that are associated with higher foreclosures, CRL explained. The nonprofit group found that these disparities were evident even when comparing borrowers within the same credit score ranges, with the gap especially pronounced for borrowers with higher credit scores.
“Our study provides further support for the key role played by loan products in driving foreclosures,” CRL said. “Specific populations that received higher-risk products-regardless of income and credit status-were more likely to lose their homes.”
While some blame the subprime disaster on policies designed to expand access to mortgage credit, CRL says the facts undercut these claims.
Instead, the group argues that dangerous products, aggressive marketing, and poor loan underwriting were major drivers of foreclosures in the subprime market. CRL credits the Dodd-Frank Act as the first vital step taken to strengthen mortgage protections by restricting the use of risky products and requiring lenders to consider each borrower’s ability to repay a loan.
“These new rules will certainly have a positive effect on the success of future mortgages,” CRL said. (DSNews.com)

Fraud Schemes Adapt to Evolving Market Environment

While the government has recently enhanced its efforts to fight mortgage modification scams, mortgage fraud remains a prevalent issue throughout the industry.

According to Jenny Brawley, associate director of mortgage fraud investigations for Freddie Mac, three elements drive mortgage fraud schemes: pressure, opportunity, and rationalization.
The recent lending environment, which includes enhanced regulation, tighter underwriting standards, and full-documentation loan requirements, will not necessarily decrease mortgage fraud, Brawley said at a panel on mortgage fraud at the Five Star MPact Mortgage Conference and Expo.
In fact, the FBI characterizes mortgage fraud schemes as “particularly resilient” and credits them with being able to “readily adapt to economic changes and modifications in lending practices.”

According to Brawley, one common fraud scheme in the current environment of high lending standards involves recruiting a straw buyer with a high credit score to apply for mortgage loans, often in return for $10,000 to $20,000.
The scam artist enters a separate agreement with the straw borrower agreeing to pay the mortgage and pay him or her a specified amount. The scheme amounts to “buying” good credit. However, the fraudster then defaults on the mortgage, damaging the straw borrower’s credit and leaving him or her with the liability.
Stephen M. Hladik, partner in Pearlstine, Onorato & Hladik, LLP, based in Pennsylvania, has seen instances in which a straw borrower later attempted to sue the lender under the Truth in Lending Act. However, having signed the promissory note, the straw borrower is not offered sympathy from the law but rather treated as a fraudster as well.
Brawley points out that they key to preventing this type of fraud is for the lender to get to know the borrower. She believes the lender can often detect a borrower’s intent with straw borrowing schemes.
In addition to straw buying schemes, Brawley points out that steep qualifications such as the proposed qualified residential mortgage under Dodd-Frank, which would require a minimum down payment of 20 percent, will put pressure on the industry that will likely lead to misrepresentations of loans through inflated sales prices. (DSNews.com)

Miami Pending Home Sales in October Rise 10% Over Last Year

(MIAMI, FL) -- According to the Miami Association of Realtors, October cumulative pending home sales - including single-family homes and condominiums - in Miami-Dade County were 10 percent above what they were a year earlier, up from 10,264 to 11,245, and 0.4 percent below the previous month, down from 11,296.


October Sales Activity

The total number of listings, including single-family homes and condominiums, that pended during the month of October increased 26 percent, from 2,861 in October 2010 to 3,609 last month.  Compared to the previous month, pended sales increased .22 percent.   Single-family home and condominium sales that pended during the month increased 27 percent and 26 percent respectively compared to the previous year.

"In Miami, where market performance has outpaced the nation, strong pending sales activity has mirrored robust closed sales figures due to international buyers who mainly pay all cash and are not impacted by mortgage financing issues," said Jack H. Levine, 2011 chairman of the board of the Miami Association of Realtors.  "However in other parts of the country factors such as stronger underwriting standards and appraisal issues are impeding closings that are much more dependent on financing."

Cumulative Pending Sales Rise

Pending sales of condominiums were 10 percent higher than they were a year earlier, up from 5,878, and 2.3 percent below what they were the previous month, down from 6,620.  Pending sales of single-family homes were nine percent above what they were a year earlier, up from 4,386 to 4,775, and five percent below the previous month, when pending single-family homes sales totaled 4,676.

"In addition to the unyielding demand from foreign buyers that has boosted the local market and resulted in Miami outperforming the nation, there is also increasing demand from domestic buyers," said 2011 Miami Association of Realtors Residential President Ralph E. De Martino.  "Domestic buyers are now accounting for a higher percentage of closed sales.  In addition, the stronger rental rates have resulted in strong demand for rental properties, which is putting increased pressure on the greatly reduced inventory of properties for sale."

Nationally, the Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 4.6 percent to 10.4 in October from 84.5 in September, according to the National Association of Realtors. The index is 9.2 percent higher than the 85.5 index reported in October 2010.

Increased pending sales are an indication of increased future sales.  A sale is listed as pending when a contract is signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. (worldpropertychannel.com)

18 Questions For Every Home Seller (Part 20)

What if winning bidder won’t buy?

Online bidders who have validated their identity and provided credit card information take auctions seriously and rarely try to renege on their winning bids. If they should do so, a $300 or $500 penalty will be assessed; the second-highest bidder is then contacted and allowed to purchase the property.

If the winning bidder backs out after they send the cashier’s check for the earnest money deposit, the sale cannot be cancelled without the forfeit of the deposit funds (which usually is substantial more than the credit card penalty.) The non-refundable nature of the deposit funds was made clear in the terms and conditions agreed to by the winning bidder.

18 Questions For Every Home Seller (Part 19)

How does the auction work?

Potential bidders are required to verify their identity and provide credit card information to guarantee a basic deposit; this discourages frivolous bids. Bidders are next briefed on what they are expected to do: thoroughly research the property and visit it if possible to verify its description and consider its value. They should review the preliminary title report to verify any that the title is clear of issues or at least as reported, and also to check zoning regulations and environmental credentials. The termite report and any disclosures mandatory in your state should also be reviewed.

An Oresy.com auction allows bids from the moment a property is listed until the closing second of the auction. When a bid is made, Oresy.com automatically confirms it with an email to the bidder and to you, the seller. Other potential buyers who have already bid will be notified that a higher bid has now been placed, prompting them for a response. In a typical online auction, bids are slow and low in the opening hours and even days, but bidding will intensify in the last day, hour, and quite likely even the last moments.

Important note: if a bid is placed at the last moment, the auction will be automatically extended by a few minutes to allow other bidders the opportunity to respond to the bid.

At the end of the auction, the system congratulates the winning bidder by email, and informs you, the seller, of the winning bid. Other bidders are notified that another bidder has won the auction.

Contact the winning bidder immediately to congratulate them and to arrange a meeting to sign the Purchase Agreement and to collect the earnest money deposit. The earnest money deposit should be in the form of a cashier’s check. If the high bidder is out of the area, and it is not possible to meet that day, you should email or fax the purchase agreement to the buyer and have the buyer return a signed paper copy, along with a cashier’s check for the earnest money deposit, within 72 hours.

The deposit should be made out to the escrow company; once the purchase agreement has been signed, the escrow process begins.

18 Questions For Every Home Seller (Part 18)

Setting auction dates

When setting the auction dates, keep in mind the following for residential single-family homes and condos:

●     Give yourself sufficient time to prepare for and advertise the first preview (open house), typically 7-10 days. If you start advertising the property only two or three days before, you are unlikely to attract a sizable pool of potential buyers and, therefore, a less competitive number of bidders.

●     Some properties require just one or two open houses to generate a sufficient pool of bidders, while others may require three or more. The relative desirability of the property and local level of demand are the determining factors. Rural properties, for example, may require several preview events, while suburban properties rarely require more than two. More showings is not always better; dragging out the open house marketing process may cause potential bidders to lose interest.

●     Experience shows that the best time to end an auction is a day or two after the last open house. If you have only one preview event, market the property for seven to 12 days and finish the auction on the 14th day. This is the minimum recommended marketing time for an auction.

●     If you have two preview events, allow seven to 10 days before the first preview to market the property and then another seven days to market for the second event. Again, end the auction a day or two after the last event.

●     Land, agricultural, commercial, and industrial properties usually take longer to market. Allow at least 30 days; many such properties will require 60 days or more.

●     Of course every property and every market is unique. The above guidelines have worked well for many sellers, but of course it’s up to you to judge your circumstances.

●     The best days for an auction preview are when most potential buyers have time to attend: weekends from 9 AM to 1 PM or from 1 PM to 5 PM. During these hours, you’ll draw “street traffic”who see your signage while driving by in addition to those who’ve read about your open house in advance.

●     If you sell land rather than a built property, you won’t need formal open houses by work with interested parties to show the property on request.

18 Questions For Every Home Seller (Part 13)

Contingencies: what, why and when?

A contingency exists as a way for the buyer to exit a deal or to reopen negotiations. There are two common types of contingencies: those relating to financing and those relating to the physical condition of the property. Whatever the type, for you the seller, contingencies mean uncertainty.

Financing contingencies

Your deal is conditioned upon a lender or other interested party supplying financing for the deal under certain terms. Since even pre-qualified buyers have yet to sign a loan deal, they may insist on, for example, an interest rate contingency. If for any reason they are denied a loan below a certain maximum, they are allowed to pull out of the deal. All-cash buyers are the only buyers likely to waive financial contingencies.

Inspection contingencies

It's perfectly reasonable for a buyer who loves your property to make an offer quickly, before a definitive inspection has been made. In this case, the offer should allow the price to be renegotiated (or the deal to be cancelled outright) if an inspection turns up an unexpected issue.

Keep negotiations calm

If you find yourself (or your agent) getting frequently upset during negotiations, making accusations of deception, or otherwise losing your cool during negotiations, it may be a sign that you haven't done your homework or need to find a new agent. Think cool, keep calm and collected, and remember that a sense of humor is your best defense in a heated negotiation. Ultimately it’s just a business transaction and any posturing or mindgames are intended to push you to act irrationally. Don’t do it.

A very low offer isn’t an insult, it’s a sign of interest. Offers and counter-offers are just positions, a possibility put on the table. For your position to be accepted as the actual value of the property, you will have to make your case, answer the buyer's concerns, and then simply say nothing more. A little silence (rather than airing your frustration or nervousness) puts the ball back in the buyer's court.

It's always negotiable

Every offer you see can be modified to make it a little better. Don’t just say yes or no, ask yourself what would make a bad offer acceptable and what would make an acceptable one great. Then ask! It doesn’t hurt to ask, so the saying goes, in a formal counteroffer or conversationally if you’re looking for a small adjustment.

Decide in advance what terms are most important to you so you can be flexible elsewhere. In other words, if you need to close by a particular date, you may need to offer a price adjustment or adjust another term important to the buyer.

Read the terms, re-read the terms, and read them again

You can be sure that a buyer has been painstaking in prepare an offer; be twice as careful when reading it. Consider each terms of each offer, not just the price. For example, will the down payment suffice? Is the buyer pre-approved or at least pre-qualified? Are major contingencies (discussed above) required? Remember that selling a house is a bit like buying a car: calculate total cost, not just the price in the window.

George Avram

Broker/Owner

Continental Realty Inc.

DRE# 01422589

925-548-5461