At William Holden International Realty, we follow a professional path from beginning to end to secure clear title when buying real estate. Our leadership is fully licensed in real estate and abides by ethics, license law, and continuing education in the USA. Based on years of training we have created a 10-step process to help buyers reach their goals and objectives. In our opinion, choosing professional representation for a buyer is as important as choosing the right real estate investment. So, let’s begin the process there.
Step 1 – Choosing Representation for Real Estate Transactions
The first step in searching for real estate is to decide who will represent you:
1. Will you search for properties on your own?
2. Will you use a Sales Agent representing the Seller?
3. Will you use a Buyer’s Agent representing the Buyer?
Most people begin the process by browsing for properties on the Internet. Yes, a picture is worth a thousand words — but pictures may not always tell the whole story. This is especially true if a property shows well on paper, but located in an area that is currently “out of favor” and facing marketability issues. So, we believe the old fashion way of “kicking tires” and asking local professionals for their opinion on value trends is the best route to take. We also recommend that you build a relationship with a broker who will represent you as a buyer. The extreme opposite is going directly to a developer whose primary goal is to sell that project without showing you other options. Stating this in a different way: working with a broker who represents you will show you multiple options for you to choose from, and at the same time, will give you objective pros and cons of each option.
Step 2 – Searching for Real Estate Properties
There is no Multiple Listing Service in the Dominican Republic. So, you have 4 choices:
1. Use an Online Search Engine.
2. Use Multiple Real Estate Websites.
3. Choose a Professional Real Estate Agent.
4. Become Familiar with an Area on Your Own.
Before discussing specific real estate properties, we should first discuss why you are considering the Dominican Republic for real estate investment. Did you visit the DR while on vacation? Did a friend recommend investing in the DR? Were you told the DR was a great place to retire? In any case, we highly recommend a visit (and possible tour) to the Dominican Republic to judge things for yourself. Stating this in a different way, we recommend you clarify the main reason you are considering a real estate investment in the DR. This should be considered so an analysis can be done to determine which part of the DR will match the reasons you are considering the Dominican Republic. Once an area of the DR is chosen, we can then start searching for specific properties.
This choice of how you build a “short list” of potential properties is simply up to you and what makes you most comfortable. In many cases, the same property may be listed for sale by many real estate offices. If this is the case, who you choose to represent you may depend on a website presentation or real estate office location. As stated above, the process involves more than just viewing photos, and in the end, it will all be about trust and relationships formed. To be clear, your representation should be chosen wisely and it should be based on who you feel will represent your best interests.
Step 3 – Rent vs. Buy Analysis
We at Holden Sotheby’s International Realty recommend visiting and renting in the Dominican Republic before buying. One of the treasures of the DR is the many different lifestyles the country has to offer. And based on our experience, we find that “lifestyle” and “time in country” are key factors in deciding whether to rent or buy real estate. For example, if time in country is less than six months a year, we may recommend a condo (or condo alternative) over a villa. On the other hand, if time in country is projected to be more than six months a year, a private villa may be the best choice. Once lifestyle and time in country is determined, we can then assist you in a Rent vs. Buy Analysis.
Step 4 – Offer and Acceptance
Once representation is established and a property has been chosen with a decision to buy, the next step is to make an offer to purchase. The goal is to make an offer that the seller will accept — and this most likely will involve negotiation. Purchasing Real Estate in the Dominican Republic does not always follow international norms, which include a written Offer to Purchase and a signed Acceptance. In the Dominican Republic, offers and acceptance are often made on a verbal basis, then followed up with written agreements.
We at Holden Sotheby’s International Realty prefer to do everything in writing so that there is no confusion on content or intent. We sometimes get verbal agreements from both Buyer and Seller, but we put the agreement into writing. Once signed, we present our simple Purchase Agreement to both the buyer’s and seller’s attorney(s) who will prepare the official Promise of Sale, which is discussed in more detail in the following section.
Step 5 – Promise of Sale
When an offer from a Buyer has been accepted by a Seller, a written Purchase Agreement prepared by the broker is given to the Buyer’s attorney who will then prepare a “Promise of Sale” which contains all details of the transaction up to the point of closing. This legal document is then given to the Seller’s attorney for review. In some cases, one attorney prepares the Promise of Sale to be reviewed by both the Buyer and the Seller.
When all is in agreement, both the Buyer and the Seller sign the Promise of Sale in front of a Notary Public. The role of the Real Estate Professional is to make sure all parties are protected and all funds are secured in an escrow account. A portion of the purchase deposit may be controlled by the broker, but the balance of funds should be held by the attorney representing the Buyer. The original Promise of Sale document is always prepared in Spanish, but most attorneys prepare an additional copy in a mutually agreed upon language.
Step 6 – Pro-Ration of Fees
In some cases, the status of Home Owner Fees and utilities go unnoticed. If this occurs, a professional real estate agent will make sure that these issues are addressed. Fees to Pro-Rate may include the following:
1. Community Association (HOA) Fees
2. Electricity Charges
3. Cable TV and Internet Bills
4. Outstanding Special Assessments
The effect of outstanding fees or credits can affect the Buyer in two ways:
• The Buyer may be billed for fees that occurred before transfer of title.
• The Buyer may get luck and have credits when they take ownership.
In either case, the Administrator of the community should be consulted for confirmation of fees and their status. (See Deed of Sale on the next page for tax payments.)
Step 7 – Deed of Sale
The Deed of Sale (Contrato de Venta) is used to convey a property from seller to buyer. It is a formal document signed in the presence of a Notary Public and is binding on both parties. In the event of an agreement to exchange cash for conveyance of clear title, the Promise of Sale document may be bypassed and replaced by the Deed of Sale. Once signed by both Buyer and Seller in the presence of a Notary Public, the Deed of Sale it is taken to the nearest Internal Revenue Office to request an appraisal of the property for valuation.
Depending on the availability of the property inspector, the valuation may take a few days to a few weeks. Once government value is determined, the Internal Revenue Office calculates Transfer and Registry Taxes, which are currently 3% of the government valuation (may be different than actual sale price). Once the property has been appraised and taxes paid, the Deed of Sale and the Certificate of Title of the seller are deposited along with the documentation provided by Internal Revenue. This occurs at the Title Registry Office for the jurisdiction where the property is located.
Step 8 – Certificate of Title
Once a property has been appraised and all taxes paid, the Deed of Sale and Certificate of Title of the “Seller” are deposited at the Title Registry Office for the jurisdiction where the property is located. Once the sale is recorded, a new Certificate of Title is issued in the name of the Buyer. This process may take a few days to a few months, but the property legally belongs to the buyer once the sale is recorded at the Title Registry Office.
Step 9 – Title Insurance
In many countries, all legal documents, escrow accounts and closings are handled by a Title Company. In addition to handling all the legal documents, they also insure against any future defects in the title which is conveyed by Deed. In the Dominican Republic, authenticity of the title is determined by the Buyer’s attorney. The attorney traces the title back to its origin and gives his opinion on the clarity of title. If clear, most buyers in the DR do not feel the need to pay for title insurance.
Step 10 – Property Management
Depending on time in residence, new owners can manage a property themselves or use a professional Property Manager. The end goal of Property Management is to maintain or enhance the value of the real estate investment. In either case, the following must be addressed:
1. Community HOA Fees
3. Swimming Pool Maintenance
4. Building Maintenance
5. Building Insurance
6. Electric Expenses
7. Backup Electricity if Needed
8. Security Contract or Employee(s)
9. Employee Payroll
10. Cable TV & Internet
11. Rental Promotion if Desired
12. Accounting of Income & Expenses
13. Payment of Taxes (Personal or Business)
14. Time to Rehab or Resell
William Holden International Realty specializes in Sales, Rentals, Community Administration, and Property Management.