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.

Sales Commissions

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. 
    
2. One half (1/2) of the Government Value Added Tax (VAT). *This is a graduated tax for Bahamian citizens and Permanent Residents only, all others pay 10% regardless of the value.*
   
   The total amount of the tax is :
   • Value is less than $100,000, the rate is 2.5%
   • Value is between $101,000 – $300,000, the rate is 4%
   • Value is between $300,001 – $500,000, the rate is 6%
   • Value is between $500,001 – $700,000, the rate is 8%
   • Value is between $700,001 – $1,000,000, the rate is 9%
   • $1 Million & Above, the rate is 10%
      
3. The vendor’s legal fees. 

The Purchaser will be responsible for:

1. 1/2 of the VAT as set out above,
2. The purchaser’s legal fees.
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

Commissions, fees, and rates charged by licensed Brokers and Salesmen (“Agents”) shall be those as hereinafter prescribed or which shall be prescribed by the Bahamas Real Estate Association Board (“BREA Board”) from time to time.

1. SALES COMMISSIONS

   (a) Rates:

   · Residential Property (Freehold)

   a. Undeveloped Land (e.g. vacant lot & vacant acreage) – 10%

   b. Developed Land (e.g. home, apartment & condominium) – 6%

   · Commercial & Industrial Property (Freehold)

   a. Undeveloped Land (e.g. vacant lot, vacant acreage, farmland, groves, un-platted land, car park, etc.) – 10%

   b. Developed Land (e.g. docks, buildings – office, retail, warehouse, parking garage, etc.) – 6%

· Leasehold Property

Subject to the property type, same as the applicable freehold rates herein this subsection.

· Business

The commission shall be 10% of the total sale price, including any inventory. However, if real property is an asset of the business and is included in the sale, the commission    on the real property portion of the total sale price shall be charged at the applicable real estate commission rate set forth in this subsection for the relevant property type, and    the remaining portion of the total sales price (i.e. business value, goodwill, inventory, etc.) shall be charged at 10%.

· Deferred Sales Collections or Installment Payments of Total Sales Price

Upon each installment payment received by the vendor toward the total sale price, the commission shall be calculated at the applicable real estate commission rate set forth in this subsection for the relevant property type. The commission shall be chargeable on the amount of the installment payment together with any interest paid or payable by      the purchaser to the vendor in respect of that installment.

(b) Rules Governing Sale Commissions:

· A commission for the sale of property shall be based on the total sales price and not on equities or partial payments.

· Earnest Money

If the earnest money is forfeited by the purchaser to the vendor, it shall be divided equally between the Agent and vendor, provided the total amount paid to the Agent shall not exceed the full commission which would otherwise be due and payable to the Agent under the Agent’s listing agreement with the vendor.

· Price

The Agent shall charge its real estate commission at the applicable real estate commission rate set forth in this subsection for the relevant property type and on the gross price.

Subject to any modification made by the BREA Board from time to time, “gross price” shall mean that total sale price from which the vendor shall pay its legal fee (and VAT thereon), the applicable commission rate as set out above and corresponding to the property type (and VAT thereon), and one-half of the VAT transfer tax and the remainder thereof is the vendor’s proceeds of the sale.

· When a Commission is Earned

An Agent has earned or otherwise is entitled to a commission on the sale of a property when the work for which the Agent was hired has been accomplished. That is:- (a) the Agent is engaged by a written contract, (b) is the procuring cause of the sale (i.e. started an uninterrupted chain of events that resulted in the sale), and (c) upon the vendor’s acceptance of an offer from a ready, willing and able buyer (i.e. one who is prepared to buy on the seller’s terms and is ready to complete the transaction).

· When a Commission is Payable

A commission is payable when the contracted terms and conditions of the sale have been satisfied and the sale is therefore consummated (i.e. delivery to the purchaser of the accepted title in exchange for payment of the consideration).

· Option or Right of First Refusal to Purchase Property, Secured by Agent

Where an Agent procures an option or right of first refusal for the benefit of a purchaser, the Agent shall obtain a written agreement from the vendor providing that, in the event the property is sold pursuant to such option or right of first refusal, the vendor shall pay the Agent a commission at the applicable real estate commission rate set forth in this subsection for the relevant property type.

Where an Agent procured the option or a right of first refusal to purchase a property for the purchaser:-

a. Then, if the purchaser exercises the option or right of first refusal and completes the purchase of the property, the Agent shall be entitled to payment of a commission at the applicable real estate commission rate set forth in this subsection for the relevant property type.

b. If the purchaser exercises its option or right of first refusal, pays the required earnest money, and thereafter fails to complete the purchase, any forfeited earnest money          payable to the vendor shall be divided equally between the vendor and the Agent. However, the Agent’s share shall not exceed the commission that would have been otherwise due under the Agent’s listing agreement with the vendor. If an Agent is engaged by a prospective purchaser to obtain an option to purchase or a right of first refusal,  the Agent shall first enter into a written compensation agreement with the prospective purchaser. The Agent’s commission shall be charged at the applicable real estate commission rate set forth in this subsection for the relevant property type.

· Exchange of Real Property

Where an Agent is the procuring cause of the exchange of two or more properties between two or more persons, the Agent shall be entitled to payment of its commission on the market value or listing price of each property being exchanged. The Agent’s commission on the exchange of each property shall be charged at the applicable real estate commission rate set forth in this subsection for the relevant property type.