Rules Governing Sales
GROSS PRICES: A price given to a broker by an owner shall be deemed to be gross and the broker shall charge the regular commission on such price.
NET PRICE: Acceptance of net listings by brokers is not allowed.
WHEN COMMISSION IS EARNED: A commission on a sale is earned and payable when, through the agency of the broker, the minds of a seller and a buyer have met on the terms of sale, as evidenced by a cash deposit or written agreement.
BUYING REAL ESTATE: The same commission rates and rules which apply to sales apply to purchases in which a broker is employed to purchase property, and the broker shall collect a commission based on the total cost to the purchaser if he or she is authorized to buy property at public auction, forced sale or private sale (Article 13, part 2, Code of Ethics).
OPTIONS TO BUY PROPERTY SECURED BY BROKER: If a consideration, cash or otherwise, has been paid for an option arranged by a broker and the option is not exercised, the broker shall charge the principal granting the option one-half of the consideration received, but in no event shall this amount exceed the sales commission to which the broker would have been entitled had the option been exercised. If a broker is engaged by a prospective purchaser to secure options, the broker shall have an agreement in advance for compensation by the prospective purchaser, and he or she shall charge compensation accordingly, whether the options are exercised or not the same commissions rules and customs which apply to exchange.
EXCHANGE OF REAL ESTATE: Commission shall be paid by each owner on full sales price of each property and shall be stated in the exchange contract.
What are the costs involved in buying or selling property?
A typical sale, called a “Gross Sale”, assumes that the vendor (seller) will be responsible for the payment of:
1. The real estate agent’s commission. The commission on the sale of developed property is 6% of the gross sales price. The commission on the sale of undeveloped property is 10%.
2. One half (1/2) of the Government Stamp Tax (tax on the conveyance of real property). This is a graduated tax. The total amount of the tax is :
- Value up to $20,000 the rate is 4%
- Value greater than $20,000 and is less than or equal to $50,000, the rate is 6%
- Value greater than $50,000 and is less than or equal to $100,000, the rate is 8%
- Value equal to or greater than $100,001, the rate is 10%
3. The vendor’s legal fees. Legal fees on a conveyance of property are usually 2 ½% of the first $500,000, 2% of the next $500,000, 1% of the next $4,000,000 and ½% thereafter.
The Purchaser will be responsible for:
1. 1/2 of the Government Stamp Tax as set out above,
2. The purchaser’s legal fees as detailed above.
3. Recording fees on the conveyance and other closing documents which need to be recorded.
4. Payment of the permit under the International Persons Landholding Act, if applicable.
In the event that the sale is a “Net Sale” the purchaser would be responsible for payment of all of the above mentioned fees (both vendor and purchaser).
Schedule of BREA Commission Rates, “Minimum Rates” Sales Commissions
All real estate commissions in the Bahamas are based on the total gross sales price of property, not on equities or partial payments.
DEVELOPED PROPERTY: – 6% of the sales price
FARMS, GROVES, AND UNDEVELOPED PROPERTY: – 10% of the sales price. Minimum commission is $100.
BUSINESS OPPORTUNITIES: – 10% of total sales price, including inventory. If property is also sold at the time of sale of business, use applicable rate for property.
CAR PARKS: – 10% of total sales price.
LEASEHOLDS:– For the selling of leaseholds, the charge shall be 6% of any consideration, paid by the purchaser for the leaseholds plus the regular brokerage commission on the unexpired portion of the lease, calculated as a new lease.
DEFERRED SALES COLLECTIONS: – On collection of deferred payments, 2 ½ of the amount collected. When the broker has a mortgage service agreement, this condition need not apply. The minimum charge is $1.00 per collection.