More persons are exercising the option of acquiring a house by way of private treaty, according to data provided by the National Housing Trust (NHT).
Essentially, this mode of purchase describes the sale of a piece of land or a property is being sold by one party to another without the help of an auction.
But in the NHT's case, the trust only markets property under private treaty if it had been put to auction but failed to secure a buyer.
In 2007, the trust sold 55 properties by private treaty, said Dr Lanie-Marie Oakley-Williams, general manager of operations at the NHT, up 72 per cent from 32 in 2006.
The data also show that the numbers have been growing exponentially, from 21 in 2004 to 24 in 2005.
Private treaty sale is more often used by financial institutions to legally recover outstanding mortgage loans in default, and which are secured by properties, such as residential homes.
It offers the lending agency the opportunity to recover its debts or a portion of it, while the buyer is often able to secure assets at bargain prices.
Both NHT, the largest state housing and mortgage agency, and Jamaica National Building Society, the largest private mortgage lender, offer properties on the open market through this means.
According to the trust, the value of properties being sold by private treaty is not disclosed to prospective purchasers, and no price is set until a bid is accepted.
Being a successful bidder
If you are a successful bidder, the NHT requires that five per cent of the bid sum be paid as a deposit, providing the other associated costs can be covered by the mortgage loan - if seeking a loan from NHT.
Loan from other sources require that you pay 15 per cent of the bid sum as a deposit, providing the other associated costs can be covered by the mortgage loan.
For those purchasing the property by way of cash, 15 per cent of the bid sum is payable as a deposit.
Evidence of the balance of the purchase price and the other associated costs must also be provided before the offer is considered acceptable, according to the NHT.
The trust reserves the right to accept or reject any bid, and is not compelled to sell the property to the highest bidder.
THE STEPS - In purchasing private treaty
Here are steps to follow when purchasing a property by way of private treaty through NHT:
1. Visit the property of choice to determine its external condition, and if it is in a suitable location. Research its value.
2. If you are interested in purchasing the property, write a letter, which must include the following information: full address of the property of choice. This letter is your 'bid' for the asset. Make a reasonable offer.
3. Identify your source of funds and set aside the deposit. If you are borrowing the money from a bank or from the NHT, say so in the bid letter. This information is usually not compulsory.