The global economic crisis has had a significant impact on home prices around the world. Prices have gone down, and most sellers know this. They know they will be presented offers lower than their asking price. They know they will have to negotiate. A few still think their homes are worth top dollar and will not budge off the price, or tell their agent, â€œIâ€™ll wait for my price.â€ Well, right now they should get to know that lonely guy, the Maytag repair man. They will continue to wait.
This is a good time to buy your first home in Mexico. There are plenty of homes on the market, and prices are good. It is opportunity time for you.
Just remember: You are not 007. This downturn, also known as a â€œBuyersâ€™ Marketâ€ is not a license to kill. Making drastically low offers will infuriate the seller and cause her to reject your offer outright or make a counter offer higher than she would have if you had presented a fair offer. Your real estate agent is duty bound to present all offers. If she thinks your offer is too low, your agent will tell you and try to prepare you for a counter offer from the seller. That is part of her job Be fair in your offer.
You have a job as well. Â Yes, you are the hero; you have the cash; and you are about to take someoneâ€™s house off their hands. That means the seller is free to move back to the old country or build a new home, or travel the world.
They have run the numbers on every price scenario and know what they need to net from the house. If they have followed their agentâ€™s advice and priced it well, not pie-in-the-sky, then they will be able to respond to your offer fairly. Then you can move to the closing process and soon have the keys to your piece of paradise.
Letâ€™s get back to your job. Choose one real estate agent in each area you are thinking about. Make contact with that agent and tell them what you absolutely must have in a home, including amenities, views, and proximity to a beach or golf course. La Paz and Los Cabos have multiple listing services, so one agent can show you all of the properties on the market. Professional agents are not going to work with you and take their time and money to prepare home tours for you only to find out you are working with other local agents.
Most buyers spend a few weeks or months looking at homes online. As you find homes that interest you, ask your agent about them. That way, she can be prepared for you when you arrive and get a good understanding of what you like. Be open and honest about how much money you have to spend. Also, remember that closing costs are much higher in Mexico than in the US or Canada. You need to factor in that amount. Your real estate agent can give you an idea of closing costs so that you know what the transaction will cost.
We now have escrow services in Mexico and your agent can introduce you to a closing agent at the escrow company. Closing agents can also give you an estimate of closing costs. Be prepared to wire your good faith deposit to escrow at the time you write your offer. You may have to visit your bank and let them know you are buying in Mexico and will be arranging a transfer of funds. The escrow companies all have US accounts, so this will be easier to do than you think. Have color copies of your passport with you. Once you make an offer, the wheels start moving and that document is going to be needed many times over during the process.
If you are going to need a home loan, follow the instructions of the loan officer and be patient. There is much more paperwork involved in a loan transaction in Mexico. And yes, there are competitively priced US dollar loans available in Mexico for Canadians and Europeans, as well.
If you know you will need a mortgage, ask your agent to refer you to a loan officer. You should have your loan pre-approved before you get on the plane. Having your loan approved ahead of time means that the seller will be more comfortable about accepting your offer. You will know exactly how much you can spend and what your closing costs will be, within a thousand dollars. Nothing is worse than spending days looking at properties, making an offer, picturing yourself having margaritas on the terrace, and then finding out you cannot qualify for a loan!
Although the buying and selling process works the same way as it does in the US or Canada, the closing portion of your transaction is completely different. It is time consuming and paper intensive and it costs more. Donâ€™t compare the closing of a Mexican transaction with what you know from home. There is no comparison and the process of comparison will drive you and your agent crazy.
Donâ€™t be blinded by â€œhouse loveâ€. Beautiful colors, giant cactus, and gorgeous bougainvillea near the crystal clear, infinity edge pool do not make up for poor construction, faulty plumbing, and cheap or old fixtures. Turn on the faucets, flush the toilets, open the refrigerator, light the stove, and flip switches. Do not take anyoneâ€™s word about the condition of the property. Open your eyes wide and look around you. In Mexico, there are no certified physical inspections, termite reports, or roof reports. It is up to you to be aware and obtain competent advice from experts.
Know your limits; know what you are willing to repair or change in a home. Most sellers have done the best their budget will allow to spruce up and repair their homes. Other properties are sold â€œas-isâ€. An as-is listing means just that. So donâ€™t ask the seller to make repairs on an as-is listing.
If you love the house and you can afford it and there are some repairs that are obvious, ask the seller to repair them or give you a credit for repairs, do this in writing in your offer. Donâ€™t try to knock thousands off the price for some cracked stucco or chipped tile. When you want something from the seller, the best way to get it is to offer as close to their price as possible, show them your approved loan and that you are prepared to wire a deposit to escrow. Do all of this in writing. That has clout and it means the seller sees that you are serious. But do this only if you intend to follow through if they accept your offer.
Buying real estate in Mexico is very safe and it is a good investment. And you may even be able to earn rental income on your new dream home. Lastly, get informed. Read about Mexican real estate practices online. Understand what a fideicomiso is and who does what. And stay away from all the â€œbarstool expertsâ€. There is no â€œbetter wayâ€ or easier way to buy property in Mexico than using a professional. Your agent is a professional and can guide you.
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