I am going to go a little off real estate info for a minute here.  On Tuesday this week the United States of America held presidential elections and on January 20, 2009 the newly elected president will take his oath of office.  Presidential elections mean more to me now that I live in the Virgin Islands because we are a territory and cannot vote for president.  I have missed two elections since I moved here.  They are really the first elections I have wanted to take part in.  I always thought that no matter what, I would not like what happens in the White House, so it would not matter who was sitting in the Oval Office.  I felt very differently about the 2004 and 2008 elections.

Here in the Virgin Islands, because we could not vote, many people became supporters both physically and monetarily.  We were the cheerleaders and bakesale fundraisers in a game we were not allowed to play in.  It seems there is a huge sense of pride in the Virgin Islanders as they have adopted President-elect Barack Obama as their own.

President-elect Barack Obama means a lot of things to a lot of people.  He is a minority.  He did not come from a privliged family.  He is a family man.  He is a father, a husband, and a grandson.  He has faith.  He was a Senator for Illinois.  On January 20, 2009 He will be President of the United States.  I have been reading articles in the paper and watching the news.  Many people are mentioning that he is the first black president.  This is a big step forward for a group of people who would not have even dreamed it possible just 40 years ago.  This step forward is not just for black peoople, but for any minority including women.  His message is that you can be whatever you envision yourself to be.  Wheather that is the best plumber in the area or President of the United States.  There are still people who would try to hurt the president and his family just because he is black.  I hope we can get past the color of his skin to just see what kind of president he is to be.  

Let us not focus on the color of his skin.  Focus on what he says, what he does, and how he handles situations.  Does he listen to the people?  Does he keep his promisses?  Does he conduct himself in a Presidential manner? 

It was his message and the sense of hope that I was attracted to.  It would seem that  George W. with his failures has actually set up President-elect Obama to succeed.  We will have an intelligent, articulate, and energetic soul in the White House who may actually remember that he works for We The People of the United States, not for his family and his cronies.

I am finally a homeowner myself here in the beautiful US Virgin Islands.  AAAHHHHHHH…the wonders of homeownership.  The cleaning, the spackleing, the painting, the renting…Oh, did I mention I now have apts to rent?  Well I do. 

There is a very nice 2 bedroom, 2 bathroom apartment on the lower level.  It has a large kitchen and is about 1000sf.   It will be available to rent Nov 1.

I am fixing up the 3bedroom, 2.5 bathroom main unit now.  It will be ready mid to end of Nov.  It also has a large kitchen, wrap around porch on the main level and a balcony on two of the bedrooms.  It is about 2600 square feet. 

Both have beautiful views from Inner Brass off Magens Bay all the way to Tortola and St John.  Windows on all sides, so there are great cross breezes!!  The house is on 8/10 acre and is mostly fenced at the end of a dead end road.  Both come fully furnished.  I will accept pets, but if the pets are not taken care of, the owner has to go!

Contact me at islandrealestate@joimail.com for more info!

When a seller puts his home on the market, he signs a listing agreement with a Realtor.  This agreement spells out what is to be expected of the Realtor and states what the seller will pay for the Realtors services.  The amount paid to the Realtor is usually a percentage of the sale price if, during the time of the listing, a “ready, willing and able buyer” is brought to the table .  A “ready, willing and able” buyer is one who wants to purchase the property after all inspections, signs a contract of sale, and is able to pay cash or obtain financing in order to conclude the purchase.  The seller is obligated to sell the house and the buyer is obligated to purchase the house once the contract has been signed by both parties if all conditions are met within the timelines set in the contract. 

The seller puts up his house as collateral and gives the buyer the right to have it inspected.The buyer puts up an earnest money deposit usually (10% of the agreed upon price) that is held in the Realtors escrow account.  An escrow release form must be signed by both parties if the sale does not go through.   Once in a while either the seller or the buyer has a change of heart and decides they do not wish to go through with the contract. 

If the SELLER does not want to sell and the buyer is “ready, willing and able”,  the buyer may request his earnest money deposit returned or, if the buyer still wants to purchase the house, he can sue for specific performance.  Specific performacne is a legal action to compel a party to carry out the terms of a contract.   The seller will still have to pay the Realtors a commission because they performed as to the listing agreement.

If the BUYER decides he does not want to purchase the house after the deadlines in the contract have expired, the seller has the option of making him purchase the house (specific performance) or keeping part or all of the earnest money deposit (minus the Realtors share) for the time the house has been off the market.  He may then put the house back on the market to try to sell to someone else.

There are certain “outs” and time restrictions built into the contract.  These were mentioned in the previous post.

There are several ways the contract to purchase a house may be cancelled.  Certain deadlines must be met and several ways of determining value that may be negotiated.

The seller must have the bound posts marked to show where the property lies if requested to do so.  I recommend Brian Moseley & Assoc www.visurveyors.com A survey is standard in the US Virgin Islands and required by lending institutions and title companies because there were no building codes or zoning laws until the 70’s.  An owner could literally have built part of his house or fence on a neighboring property. 

The buyer must have a survey and “as built” performed within seven to ten days.  An “as built” shows where the house is in relation to the rest of the property.  This is done to show there are no encroachments (see previous post) and the buyer can have clear title.

A buyer, as an option, may have a home inspection performed within the first seven to ten days of an executed contract.  I recommend Adrian Bishop at The Home Inspector abishop@homeinspect.vi This would make the buyer aware of possible faults with the house.  The buyer then has the option of requesting the seller correct the faults, renegotiating the price, or backing out of the purchase and having his earnest money deposit returned.  The seller has the option of fixing, renegotiating the price, or saying take it as is.  This clause is in consideration to the condition of the house, it is not related to encroachments and clear title.   

Next is the appraiser.  Having your house appraised is always a good idea especially if you are not familiar with prices in the Virgin Islands.  I recommend Tripp Torcia at Appraisal Associates tripptorchia@gmail.com If you are in need of bank financing, an appraisal will be required.  If the appraisal comes in at the agreed upon price or higher, the bank will probably fund the loan if you qualify.  If the appraisal comes in significantly lower than the agreed upon price, the buyer may try to renegotiate the price to satisfy the bank.  If the buyer is unable to obtain financing within the specified time (usually 30-60 days), he will have to cancel the contract.

If the seller and buyer cannot come to an agreement and both are within the timelines set in the contract, the contract may be cancelled.  If either party is outside the timelines set in the contract, the parties each have their different recourse.

For this post I would like to define two terms.  Encroachment-when a structure of any kind (a building, fence, or wall) or portion of it extends beyond the land of the owner and illegally intrudes on land of an adjoining owner.  Easement-the right given to use the land of another for a specific purpose.

A closing date was finally set for last Friday.  All three lawyers, the buyers, the sellers, the listing agent, the selling agent, a rep from the title co, and a rep from the bank were all available.  All final bills had been submitted and the HUD statement was sent out.  Thursday afternoon I received an email from the sellers atty that the seller did not want to pay the commission to the real estate agents.  Since the seller became mysteriously unavailable until Friday evening, the closing was called off.

Over the weekend the listing agent had a chat with the seller and it was my understanding that the closing would take place on Monday or possibly Tuesday at the latest depending on everyones schedules. 

On Monday the seller decided that since he still had to pay the commission, he would try to have the buyer pay for the cost of removing the encroachments to the tune of about $12,000.  In the contract it states the seller must give clear and marketable title to the buyer.  This means the property has to be clear of encroachments.  The seller is now claiming that the buyer said they would pay for removal of the encroachments.  I have a few issues with this.

1. The buyer NEVER said they would pay to have the encroachments removed. Why would the buyer offer to pay for something that was not their responsibility? 

2. This language was never written in to the contract for sale, added as an amendment to the contract, and is not in writing from the seller or the sellers atty.

3. The buyer was never given estimates, consulted as to cost, or allowed to interview the company to do the work.  Why would the buyer give the seller carte blanche with their checkbook?

4. One of the encroachments was to be given an easement.  This means that the owner of the property to the north was going to say on paper that it was ok for the rock wall to be on their property and that that part of their property now technically belongs to the owner of the property to the south. 

5. The seller spent unnecessary money he is now trying to charge to the buyer for removing the wall that was to be granted an easement. 

6. The removal of the wall reduces the value of the property.

7. When the closing was scheduled for the week before and the bank requested all final bills to be submitted, there was no mention of the buyer owing the seller $12,000+. 

8. And finally, THE SELLER IS ALREADY SUING HIS TITLE COMPANY FOR THE MONEY SPENT ON CURING THE ENCROACHMENTS!!!   He is claiming his bank allowed him to purchase the land with encroachments without telling him.

You would think the seller and his lawyer would have remembered about a bill as large as $12,000.  It was only after the seller saw the amount of money they were receiveing from the sale of the house and the commission that was to be paid that the attemt to not pay the commission was tried.  After that failed,  the seller and his atty brought this bill up.

The problem for the buyer is that even though seller put his house on the market knowing about the encroachments, and the buyer has been waiting for the encroachments to be cleared for 7  1/2 months (they are still not officially cleared),  and the buyers have kept to everything on their side of the contract, the buyers cannot make the seller sit down and sign the paperwork.  The seller can tie up the buyers earnest money deposit that is held in escrow.  The only recourse the buyer has is to sue the seller.  This means going to court and could take years to settle.

 Yes, insurance here is expensive because of hurricanes and possible flooding from such storms as find their way in to the Atlantic. The “replacement cost” on the appraisal is what the insurance companies look at when they decide what to charge you.  The appraisal does not go by square footage alone.  Other factors are what the house is constructed of and if it has hurricane shutters and clips.  When purchasing a home, the appraisal will have this information.  It will also have the three different ways the home was valued.    With a concrete, shutterd three unit home the insurance will be over $10k/yr.  Ouch!  That breaks down to about $850/month.  That is on top of the mortgage and taxes.  The different insurance companies do have slightly different rates, so shop and compare.

The bank will require flood insurance for beachfront, waterfront, and low laying areas, or a flood certificate if your home is not in a flood zone.  If you have rental apartments, I would suggest obtaining liability insurance.   Liability insurance does not cost much extra and it is well worth it.

After reading the previous posts, you may be asking yourself, why would I use a lender on island?  Well, you may have to.  St Thomas and the other US Virgin Islands are territories of the United States, not states themselves.  Although the laws and citizenship are US, there are some differences that become more noticable when trying to purchase property here. 

If you have a good relationship with your bank or credit union in the states, or if you own property in the US, you may be able to use a stateside lender.  The problem is that lenders in the states cannot use a property in the USVI as collateral on a loan.  This means you would have to own something in the US of equal value to what you are purchasing in the USVI.  If you default on your loan in the USVI, the lender would forclose on your US property.

Unfortunately when it comes to finding a financial lender in the USVI, there are very few choices.  We have recently had the opportunity to use lenders located stateside that are licensed to practice in the USVI.  That is a welcome change.  Half of the transaction is still on island time, but it seems to move along a bit better.

Buying a first home or a vacation home should be an exciting experience, not one you loose sleep over.  I have been looking for a home to purchase since I first moved to St Thomas in 2004.  I know that sometimes it will be years before you see the home you love.   I will help you find that home in paradise!

Lucky for me a loan officer from another bank came in to my office.  After I told her the story and showed her the appraisal, she said she didnt understand why my 30yr was not approved.  After speaking with her boss, a 30yr mortgage at a great rate would be mine.  Send in the paperwork.  I told her that the only way I could change lenders at this time is if we could close the first week of September.  This gave her just over a month.  She said no problem.

I sent in all the paperwork that was requested.  I mentioned that I would be off island for ten days and anything else they needed had to be submitted before I left since I would return at the end of August and we were supposed to close a few days later.  Upon my return I had a list of ten things the bank needed that were not mentioned before.

After asking many times for a truth in lending statement, I received it Friday September 19, 2008.  Three weeks after we were supposed to close.  Looking over the statement, I noticed the rate stated is one point higher than quoted.  When I asked about the difference I was told that since I was putting it into a trust, they had to charge me a higher rate.  This was not mentioned when I applied for the loan.  

I also wanted to mention that hiring council is recommended here.  There are certain functions that would normally be preformed by a title company or the lending institution in the states that an attorney must preform here.  Inform yourself  as much as possible and stay on top of what is going on.  You are paying these people to work for you.  Make sure they do their job. 

Next…Getting financing from the states 

Every time a lending institution thinks about lending you money, they want an expert opinion that what they are lending the money for is worth the amout they are lending you.  Welcome to the appraisal process.

When in need of an appraiser, I always recommend Appraisal Associates on St Thomas.  The appraiser went to the property to give his opinion on what he saw.  He took measurements of the rooms, rated the condition of the property, stated what the house was constructed of, took in to consideration the area, etc.  Then he researched what other properties are listied for and the sale price of recently sold properties in the area.  In his opinion, the house in question was a two unit property with an accessory room (an extra bedroom outside the two units) and it was undervalued.  In other words, the buyer was getting a good deal! 

At first the bank said we were good to go.  The buyer turned in all requested paperwork.  The buyer was going to get a good rate on the mortgage, and I helped them look for potential renters.  Then the bank said they couldnt get a traditional 30yr mortgage because the house was not zoned for three units.  Fannie Mae had rejected them.  Even after explaining that the third unit was just a bedroom, showing them pictures of the unit, and pointing out that even the appraiser said it was just a bedroom with an exterior door they said Fannie Mae said no. They suggessted a thirty year ammortized, ten year renewable in house mortgage.  Oh, and the loan would be considered commercial property.  This means that the buyers would have to come up with a 25% - 30% down payment (instead of 5%-20%) for a ten year mortgage with payments as if it were a thirty year mortgage, but at the end of the ten years they would either have to pay the mortgage in full or “renew” the mortgage at whatever the prevailing rate was.  The difference between this financing and a traditional ten year balloon mortgage is that if the bank lets them renew there are no closing costs.  This information comes when we have been under contract for almost 90 days and they cannot back out because of financing since the contract states they have 30 days to secure a loan.  MAKE SURE YOU HAVE A COMMITMENT LETTER FROM THE BANK!

Let me start by saying, buying a home here is the same process as buying one in the states.  Oh wait, but it is not.  

As far as I can remember, the lending institutions here need all the same information, they just go about collecting and organizing it differently.  There are a few additional requirements (like hurricane insurance) that were not required in other states I have lived in.  My customer and I have been under contract since February 14th, 2008 to purchase a lovely two unit home on St Thomas.  Today is September 21st and we still do not have a closing date.  Now it is not all the banks fault because there have been some changes and the seller has been slow (very slow) about some items, but I do believe if the banks here had more of an interest in doing things in a timely manner, this would not be taking quite so long. 

The first problem was that the property had three encroachments.  This means that a part of a structure (building, fence, driveway, etc) from one property is actually on another property.  Every time a home or lot of land is purchased in the USVI, a surveyor must go to the property and map the boundries.  According to the original builder of this house, everything was built two feet within the properties boundries, however the current surveyor has said that this is not true, so the present owner of the house has to “cure the encroachments” prior to closing.  Normally a lending institution will not lend you money if someone else can lay a claim on part of the land they are funding.  The present owner of this house was fully aware of the encroachments before listing the property.  In the contract it states that the owner has 60 days from notification to cure encroachments or leins against the property.  The encroachments were supposedly cured and resurveyed by August 15, 2008. 

My buyer could have (in retrospect should have )backed out of the contract after the 60 days.  The problem was that there was not a alot of choice in that price range, they really liked the house, and they could see a lot of potential for improving the property.

So, the next issue… the banks take on the appraisal.

Right now it is hurricane season.  The Louisana coast is getting hit with Gustov and Florida is getting ready for the next one.  The US Virgin Islands are in the hurricane belt.  We have not been hit since 1995 with a big hurricane, but we get some heavy weather even if the big storms dont score a direct hit. 

There are several precautions that can be taken to secure your home.  Hurricane shutters are a must!  They can be simple wooden shutters that are secured from the inside, they can be metal panels that have to be put in place, or they can be the fancy roll down kind with an electric switch. 

Having a generator on property is always a good idea even when there are no storms brewing.  Anyone on island knows WAPA can and will fail at any moment.  I dont even use my alarm clock anymore because I had to reset it 3-4 times a week.  Make sure the generator is powerful enough to run the water pump, the fridge, a few lights and fans, and the stove as well as the electric shutters or gate (if you have them).

Always keep a supply of canned food and fresh drinking water handy.  (I have heard a supply of rum can help 

Dont forget about your pets.  Keeping some extra food nearby for them will be one less thing to worry about later.

If you have decided that you want to build your own dream home, you must first find the perfect property. There are several beautiful pieces of land available. The closer to the water, the more expensive. We have cliff waterfront, rock beaches, and sand beaches available. There are also parcels farther from the water with beautiful views. These cost a bit less and, since most places are about 15 minutes from any beach, this may be just what you are looking for.

The terrain here is different for every square foot - and it is rock.   A topographical survey (topo)of the land should be performed for an architect to design a house that fits the land.  It is a lot easier to build the house around the rock than to move it.  I have seen some very interesting rock formations incorporated into homes.

Keep in mind the cost of building here is on the high side - between $200-$500 per square foot. This is because everything must be shipped here and we must build for hurricanes. Whether you use poured concrete, concrete block, steel frame (force-10@earthlink.net ), or mixed masonry such as Deltec  (www.asenciosconstruction.com) you will have to build your cistern and septic tank first.

Also, remember that everything has to be shipped to the island - that means materials to build with and items to finish your home. Whatever amount of time you are told it will take to build or ship, assume it will take twice that amount of time to actually get done. Sometimes this is due to workers on “island time”, other times it is because in order to accomplish one thing, something is needed and it is not on island.

Whatever you decide you wish to purchase - home, condo, timeshare, or land - contact your trusty Realtor (that would be me) for listing information.

Of the two main services a property management company provides, the first is called ‘keeping your calender’.  This simply means the company will book people to stay in your villa.  It is a bit more complicated than that though.  They will keep open any dates YOU want, make sure two families are not arriving at the same time, arrange and collect payment, and arrange any of the optional services listed in the last post.

The second main service is maintainance of the actual property.  This can include regular maintenience such as gardening, maid service (once daily, once weekly), pool service, etc.  It will also include emergency services such as plumbing, cistern, septic, electrical, storm shutters, etc.  This is a very important service especially if the owner does not live on island.  It means there is only one number for the owner or a paying guest to call if a problem or an ememrgency arises. 

Another option is sometimes available because of the way most houses are built in the Virgin Islands.  Many homes here are built with an extra apartment.  This apartment can be rented out, but it is often used as a residence for a handy man (or couple) free of charge in exchange for their services.  If the problem is too big, the handy man makes the call to a professional.

How many services the management company provides and to what degree will determine the cost.  Check around for different prices and services provided, but look for recommendations or referals.  Remember, you may not be on island and you have to be able to trust the company or individual with your home and all of its contents.