A Buyers' Market
Jeanie Mahon, Real Estste Agent
What Strengths and Opportunities are you finding in the current market?
1 Reality is that buyers are in the driver’s seat; they dictate market pricing. The result of Brexit last June caused list prices to be adjusted downwards by as much as 20% to reflect the devaluation in the Pound. This has opened the door for good opportunities for buyers to acquire properties at discounted prices.
2 Properties have become more affordable than they have been in the last 10 years.
3 Reduced prices means that buyers can acquire some homes at prices less than replacement costs!
1 For vendors, there is opportunity to sell property quickly by adjusting property prices to keep in line with market expectations. However, even with the opportunity to sell quickly, price adjustments are typically indicative of significant price drops which are often further negotiable at the time of sale.
2 Many vendors purchased in earlier times when the Pound Sterling was strong and the exchange rate to the USD was 2:1 so vendors can afford to discount their prices and in some cases, still profit on the sale of their home.
What Weaknesses and Threats are you finding in the current market?
1 A major obstacle is the length of time a transaction can take to complete. Sale transactions can take 3 - 6 months to close, sometimes longer. Sometimes, the delay can be caused by attorneys working slowly. This is why it is so important for purchasers to choose reputable lawyers known to be responsive and thorough but also work quickly.
2 The recent introduction by the BRA (Barbados Revenue Authority) which mandates that TCC (Tax Clearance Certificates) are filed to ensure that tax affairs are in order, can cause the process to slow down drastically if either party does not have all of their affairs in order. The requirement for this document is mandatory from both vendor and purchaser and must be sorted prior to sale completion.
3 Another weakness we experience is the drawn out mortgage process - banks can take months to approve serious purchasers. This delays the buying process and can sometimes cause deals to fall through. In recent times, banks like RBC have become more competitive with turn around time and favorable mortgage rates. There is also the option of using a mortgage broker like that of Caribbean Mortgages which helps the mortgagor find the best suited mortgagee at competitive rates and cuts down research time significantly.
1 They must reduce pricing significantly to move their properties
2 Some lose on trade prices and do not have much choice if obligated to sell
3 They continue to experience very low offers on their homes - too low for consideration. These are low offers against already reduced asking prices. They also can experience frustration with the uncertainty amongst buyers due to some reasons stated herein.
4 Buyers have options outside of Barbados. Property is considered ‘expensive’ and with trendy islands offering a similar lifestyle to buyers, it creates a competitive climate.