First Time Buyer: Securing Property
By Kim Howard on 06 Aug, 2010
After seeing one of our emails with land for sale in Barbados, Ron, a first time buyer sent us a question. He asked:
How much would I have to pay upfront to secure this piece of land?
We’re always happy to answer real estate questions, especially from a first time buyer!
As a first time buyer, it’s always important to ask as many questions upfront prior to making decisions. Don’t let anyone make you feel uncomfortable about needing to know more – real estate is a big investment that you should be clear on before going ahead.
To reserve or not to reserve
There are various procedures involved in securing a property – whether it is land or a house. In some cases, you need to pay a reservation deposit. This can be refundable or non-refundable and there is no set amount. In other words it is subject to the discretion of the vendor (the person selling the property).
With other properties there is no reservation deposit and you go straight to making a down payment (usually 10 percent) of the purchase price on the property. One of the advantages of having a reservation deposit, is the leeway it gives you to explore financing options in anticipation of making your 10 percent deposit and signing the sales agreement (the two normally go hand in hand). While reservation deposits can be refundable, generally your 10 percent deposit is not.
When the popular Bird’s Eye Ridge development was first launched a few years ago, a $2,500 reservation deposit was required. However recently, when there was just one lot remaining, the developers requested a 10 percent deposit on the purchase price for this lot.
As a first time buyer, always ensure that prior to making a 10 percent deposit and signing the sales agreement that you seek financial advice from a mortgage lender.
Ron, we hope this answers your question!