Q. There are a lot of properties on the market that I'd be interested in viewing, but they are all listed with different agents. Is it better for me to call the different agents and make appointments with them to view these properties, or should I choose one agent and ask him/her to set up viewings where we can go together?
A. That is a great question, finding the right home to suit your needs can be a daunting task, from discovering what properties are for sale to determining what homes fit your criteria, one soon realizes finding a home can be hard work.
The Cayman Island Real Estate Brokers Association (CIREBA) uses a multiple listing (MLS) system, wherein all agents affiliated with the Association have access to information and showing each and every property listed. Selecting one agent that has your best interests at heart will make the process quite straightforward and as painless as possible for you. Instead of having to call and research each separate property you have been able to locate, the right agent can do this leg work for you. They can present you with multiple options, comparisons, industry statistics and valuable knowledge that take the guess work out of the process for you.
Selecting the right Real Estate Agent can be the difference between finding a home and finding the perfect home for you.
Q. My husband and I have been living in Cayman for almost a year now, and we are thinking about buying a home. Is it easier to try to get pre-approved for a mortgage, or apply after we have found a house that we like?
A. When you have made the decision to purchase a property, the next step is to determine what your budget is. If you fit into the category that most of us do, you will need a financial institution to assist in determining how much this budget is based on how much money you are able to put down on the property and what the banks will term your debt to service ratio. (How much money you have coming vs. how much you have going out).
Banks are competing for your business, so shopping around for terms may prove beneficial. By visiting the banks first you will be able to determine the price range of homes you must keep your property search within rather than falling in love with a property only to discover it is beyond your means.
Determining specific ground rules up front could save you unnecessary disappointment down the road.
Q. In a perfect world this is great but what happens if you do find your dream house before you have visited the bank, what happens then?
A. If you have found a property that you wish to purchase before having spoken to a bank and you are fairly certain the home or property is within your means the best option for you would be to put in a formal offer on the property subject to a financing condition within a certain amount of time. This will, if these terms are accepted by the vendor, hold the property for you, whilst giving you the opportunity to arrange your financing. If by chance the bank turns down your request for financing, the contract becomes void, any deposits paid by you will be returned to you and the property will be put back on the market for sale.
We do not like to suggest you go ahead and put in offers on properties not knowing whether you can get a mortgage and in some cases the vendors may not want to take their property off the market while you sort out your financing, but if you are quite certain the financing shouldn't be a problem this may be a viable option.
Q. What type of fees can be expected when purchasing a property in the Cayman Islands ?
A. When purchasing a property in the Cayman Islands or even just scouting for properties you need to make sure you know what fees are involved in the sale of a property in order that you can budget accurately. Most fees are due at the end or close to the end of the sales process and banks don't generally lend on these fees, so you will need to have this money available on or near the "closing" or completion of the sale.
Stamp duty is due within 45 days of the land transfer being signed and dated, this one time fee or duty can range from 0% for first time Caymanian purchasers meeting certain criteria to up to 7.5% for properties in the Seven Mile Beach and Georgetown areas. Along with stamp duty there are fees associated with your mortgage of 1% on a lending figure of under $300,000.00 CI and 1.5% over $300,000.00 CI. Along with the bank's fees there are legal fees which average 1% of the purchase price. If you are financing your purchase these fees will apply. Keep in mind all fees mentioned here are averages and may change depending of the circumstances.
I like to suggest that one builds in a buffer to your budget which includes an additional 1% of the purchase price. This buffer will cover such items as property evaluations or life insurance costs that are or may be required by your lending institution as well as any other items that apply along the way. Better to over budget and have some money left in the bank to celebrate your new purchase rather than trying to count your pennies at the end.
Q. There is a specific complex that I am interested in purchasing but there are no real estate signs on the property, how do I find out if any units are for sale?
A. Some complexes do not allow real estate signs on the property so it is hard for one to know if there are any units available for sale in these particular properties. The best way to source available units would be to contact your Real Estate Professional. Agents included in the CIREBA (Cayman Island Real Estate Brokers Association) network, have access to a MLS (multi listing system) which allows them to use specific search criteria to look up the availability of units in certain complexes as well as what may be available in similar complexes or properties in or around the same area.
Q. I am looking to purchase a pre construction unit, what type of payment schedule can I expect?
A. All developments are quite different in regards to their deposit policies; it would depend on the development as to what payments could be expected. Generally there are a couple of different scenarios you can expect with a pre construction development, one is a deposit down at the time of the contract which is usually 10% of the purchase price, the remaining 90% would be due at closing. The other option that you may see is what is called a staged payment plan. The staged payment plan means you would put a certain percentage down at the different stages of construction. The stages would be outlined in the contract in advance so you will know what percentage of the purchase price is required and when. The staged payment plan can tend to be harder to finance through conventional means as there can be more of an element of risk from the banks point of view.
Your best bet is to ask your Real Estate Associate to clarify up front with each developer what the payment terms are at each development you are interested in, from there you can discuss options with your financial institution if necessary.
Q. Are there any laws restricting foreigners (Non Caymanian Residents) from investing in land or property in the Cayman Islands ?
A. In a nutshell no, there are virtually no restrictions on land or property ownership, unlike other Caribbean territories, for foreign investors wishing to invest in the Cayman Islands. Foreign investors are permitted to own up to two properties anywhere on one or any of the three Cayman Islands. Many other Caribbean Islands have numerous restrictions on foreign ownership, ranging from where they can own, how long they can own or if they can own at all on these islands. These facts alone, along with the attractive price point of Real Estate in Cayman based on a worldwide marketplace, make the Cayman Islands a very attractive opportunity for foreign investors. The real job here is to spread the word, on how competitive we really are, as right now I personally think Cayman is one of the best kept secrets out there. Our goal through Sotheby's International Realty is to do just that, we are now poised to reach a global market place through an worldwide referral network of offices and agents.
Should a person wish to own more than two properties on our islands including multifamily residences under one roof equaling more than two units, they would need to apply for a LCCL (Local Cayman Company License) The ownership of multiple properties are looked at as income producing therefore they need to be treated as a business and all businesses need to be registered in the Cayman Islands.
Q. Can properties be financed offshore?
A. Yes, if you have the ability to finance your purchase offshore this is acceptable. What will need to happen if you are sending money for a purchase from another country is proof of where the funds have originated from and by what means it has come from. The Cayman Islands have very strict anti-money laundering laws and Due Diligence rules and regulations. Your Real Estate Professionals have been trained in the procedures necessary to provide accurate due diligence on their purchasers to the Cayman Islands authorities. Should there be any question of how funds may have been obtained to make a purchase in the Cayman Islands, it is required by law that these be reported. Failure to do so may result in considerable penalties, fines or imprisonment for all parties involved including your Real Estate Professional. So the long and short of things are yes the money can come from abroad but there needs to be proof of where the funds have come from and how.
Q. Should I employ an attorney when buying or selling property?
A. Buying or selling a home is not always a straight forward procedure, for piece of mind or if you have any hesitation or concerns at all I would always suggest you employ a conveyanceing attorney to assist in your transaction. Real Estate Agents are considered experts in the field of Real Estate but they are not attorneys and cannot or should not advise on legal issues. All CIREBA (Cayman Islands Real Estate Brokers Association) agents have undergone extensive training in the procedures of selling real estate in the Cayman Islands and they are familiar with the local laws but again they are not attorneys and cannot act in such a capacity. If you are financing your purchase your financial institution will appoint an attorney to act on behalf of the bank and yourself when completing the sale.
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