Buying a Home for the First Time in the Cayman Islands

If you are a buying a home for the first time in the Cayman Islands, your journey begins with searching for a local real estate professional to work with. In fact, it can be one of the wisest and most strategic decisions you can make.

While the process is relatively simple, purchasing real estate in the Cayman Islands has become quite competitive in recent years because of the high demand. Having a reliable and experienced realtor by your side can turn what could be a painstaking process of searching for the right property and dealing with tons of legal paperwork into a smooth, seamless and generally stress-free transaction.

With the nitty-gritty details out of your hands, you can focus your energy and attention on the things that are most important to you.

“A trusted real estate agent will want you to ask questions — lots of them,” says ERA Cayman broker Jeanette Totten, who has been professionally guiding both first-time home buyers and experienced real estate investors in the islands for over three decades now.

“Maintaining open communication with our clients helps us manage expectations. At the same time, it also allows them to enter into the transaction with more clarity and insight. This is especially important when we are working with first-time buyers.”

If you are in the market for purchasing your first residential property in the Cayman Islands, here’s a simple home buying guide from ERA Cayman.

Step One: Know Your Budget

“First you have to determine how much you are willing to spend, as this will largely determine the next steps of your transaction,” advises Jeanette. “Know your budget and get pre-approval from your bank if you require financing.”

Once you have settled on a figure, you can then work with your ERA agent in pinpointing the things that are most important to you such as location, size, and other personal requirements. Establish your non-negotiables and make sure to express these to your agent early on.

Take time to go through the listings available on the ERA website to see which properties meet your pre-requisites, and check out the photos and videos to see which ones are most appealing to you.

With a more defined idea of your wants and needs, you can plan a home viewing itinerary with your agent.

Step Two: Home Viewing

Based on your initial discussions, your ERA agent will arrange for viewings of homes that have been meticulously pre-selected to match your preferences.

 What to expect when visiting homes: You will be visiting the homes together with your agent based on a pre-arranged itinerary. More often than not, the owners will not be there so you will be free to look around at leisure.

“Buyers often have a gut reaction when visiting a home,” observes Jeanette. “While first impressions count, it would also be prudent to also consult your agent to learn more about home values — and possibly, to re-evaluate your priorities in the context of what’s available in your price range.”

“You may not always find your dream home on those first viewings, but don’t be discouraged,” she says. “You will know it when you see it and we will set up as many viewings as you need.”

What to look for when visiting homes: Home viewing can be an overwhelming experience for first-time buyers, especially when there are more than a few contenders that stand out. To help narrow down your choices, Jeanette suggests to look beyond the staging and imagine your own personal items in the home.

“Eventually, that property will become your own space and you will decorate it according to your own taste and needs. Try to visualize bringing in your personal style into that space and see if they match.”

She also offers some important practical advice when visiting prospective homes: “First, check the condition of the property. Look for the potential, including any improvements you could make. Keep track of your observations with photos and notes that you can refer to later on.”

“Next, study the location. Your ERA agent will be able to advise you on what establishments are close by,  including schools, stores, restaurants and other amenities.”

“If the property is part of a strata (HOA), ask your agent about fees and what they include. Also, find out if there are covenants registered on the property.”

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Step Three: Making an Offer

When you finally arrive at a clear favorite, collaborate with your agent to make an offer on a home.

Your ERA agent will provide and accomplish for you an “Offer to Purchase” contract which will include the following information: the offer price, personal information (including legal name/s and address), terms and conditions of the offer, target date for closing, deposit (your agent can advise you on the suitable amount), and time limit for the offer.

“Financing is always a primary consideration,” Jeanette points out.  “Unless you are paying in cash, it is typical to write your offer with a condition clause that allows you to withdraw your offer if you cannot finalize your mortgage within a certain number of days. Even though you already have pre-approval for a loan, it would be smart to protect yourself.”

If purchasing a property that is in a strata (HOA), Jeanette advises to obtain a copy of the strata by-laws and financial statements, as well as  any upcoming special assessments. If it is a rental property, then get hold of the recent financial statements and future rentals.

How will you know how much to offer? Your ERA agent is your best ally in strategizing for your offer to be accepted. With access to real-time market data, your agent will know how to best position your offer.

Note that if your offer is not accepted, it is likely that the owner will make a counter-offer to get a better price and terms.

Jeanette recommends working closely with your ERA agent to find out what’s important to the sellers, and to discuss the possibility of waiving certain conditions or adjusting your offer. Your agent will be happy to assist you every step of the way to ensure a positive outcome.

Once the offer is accepted, your agent will be required by the Cayman Islands government to obtain due diligence on each party on the contract.

“As realtors, one of the most frequent questions we get from first-time buyers is knowing when to continue to negotiate, and when to let go and find another property,” shares Jeanette. “Your ERA agent can guide you, but you also need to decide how much you really want a particular property and what you’re willing to accept to get it.”

“You may want to let go if the counter-offer is too high or if the appraised value of the home is below your offer. Also, if the sellers are unwilling to make reasonable repairs or if you learn about strata problems and rules that won’t work for you.”

“But don’t worry,” she assures, “your ERA agent will work with you to find another property if that one is not meant to be.”

Step Four: Before Closing

 When preparing to close a transaction, there are several requisites that need to be accomplished. While your ERA agent will be taking the lead in this undertaking, it would be good for buyers to be well-informed of the steps that will be taken to finalize the deal:

  • The purchaser’s deposit will be paid as per the signed contract. Once received it will be disbursed as per the contract and held in the CIREBA Listing Members Escrow account.
  • Both the vendor and purchaser need to provide the agent with details of their respective attorneys. Should any of the parties choose not to secure an attorney, then they must sign an “Attorney Waiver Form.”
  • As per government regulations, due diligence must be completed. It is the responsibility of each CIREBA member to obtain this information for their client only.
  • If the property is being sold with chattels, the vendor and/or the listing agent will prepare the Chattel List along with values, and forward this on to the purchaser’s agent. The vendor and purchaser must sign the inventory list to show they accept it.
  • Each condition listed in the “Offer To Purchase” must be addressed. Once they have been met to the purchaser’s satisfaction, the purchaser will need to sign a “Conditions Satisfied” form, officially informing the other party that the conditions have been met. These conditions must be met according to the contract, if this is not possible than both parties must agree to an extension to that condition.
  • Once all conditions on the contract have been satisfied, the contract is considered firm and it will move towards closing.
  • Should the sale be a property that is in a strata, a Section-6-4 will be required from the strata management. Likewise, a confirmation of the insurance policy will be required to be provided to the purchaser’s representative.
  • Within 14 days of the scheduled closing, the vendor will be asked to sign an “Official Search” document in duplicate. This will be prepared by the purchaser’s attorney or agent. Once the vendor signs these two original documents, they will return them to the purchaser’s representative, who will submit these documents along with a fee to government. This document will freeze the title for 14 days.
  • Completion/ closing statements will be exchanged by all parties prior to closing for approval.
  • Land transfers will be prepared and distributed to the vendor for signature. Three original copies are required and must be completed as per government’s requirements.
  • Closing will take place at an agreed location. At closing, the balance of the funds will be handed over by the purchaser/ purchaser’s bank/ purchaser’s representative, in exchange for the duly signed land transfers.
  • After closing, the three land transfers signed by both the vendor and purchaser will be submitted to the government’s Land Registry Office, along with the required fees and stamp duty. This is done by either the purchaser’s attorney or representative.

Step Five: Closing

“It’s normal for first-time buyers to feel nervous before the closing,” says Jeanette, “but your ERA agent and lender will make sure you are fully prepared.”

While preparing to close, she advises buyers to maintain close contact with both their agent and lender. At this point, it is important to confirm that their conditions are resolved within the timeframe indicated in the Offer to Purchase contract. Also, if the property is mortgaged, the buyer will need to obtain life insurance to cover the value of the mortgage.

Also within the closing stage, Jeanette recommends the following to be included in the buyer’s to-do list:

  • Gather your down payment and closing cost funds in an accessible account.
  • Arrange a wire transfer or get a bank draft for the funds you need for the settlement.
  • Schedule a walk-through of your new home within 24 hours before closing to check its condition and chattels, if sold furnished.
  • Arrange to have utilities transferred.
  • Confirm that the Official Search has been registered with government.
  • Review the Closing Statement from your attorney and/ or your ERA agent.
  • Ensure the Closing Statement includes stamp duty (7.5% of purchase price) payable by purchaser to the Cayman Islands government.

There are different sets of requirements to be furnished, depending on whether the property is purchased with a mortgager or in cash.

If purchased with a mortgage, the following shall be required:

  • loan commitment from the lender
  • charge document in favor of the lender
  • life insurance covering the mortgage
  • home insurance policy
  • bank draft (as detailed in the Closing Statement)
  • four (4) original signed and notarized Transfer of Land documents
  • government-issued photo ID copy of the Closing Statement
  • local bank draft, if outstanding funds are required.

For cash purchase, the requirements include:

  • government-issued ID for everyone on the Offer to Purchase contract
  • four (4) original signed and notarized Transfer of Land documents
  • local bank drafts or confirmation of receipt of wire transfer

Should the buyer be unable to attend the closing, their ERA agent will attend in their place with all relevant documents.

What’s next?

Congratulations — you now have the keys to your new home in the Cayman Islands! Before getting caught up with the excitement, Jeanette leaves the new homeowners with a few more reminders.

“Always keep all your signed documents in a safe place. Make sure to inform important entities about your change of address. Don’t forget to change the locks and security codes of your new home. And do stay in touch with your ERA agent for future recommendations and service.”

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