What makes real estate run so smoothly in the US and Canada?
By Susan Fogel

This is a long article, but a must read if you are in the process of buying a home in Mexico
Escrow and title companies!
What is an escrow agent and what do they do? And why do you need to use them in your Mexico real estate transaction? For the same reason you use them in the US or Canada: safety for your funds, security of title, and ease of disbursing all funds at closing. Escrow services work for buyers and sellers.
Let’s start with security of your funds. In the bad old days of real estate transactions in Mexico, the buyer would hand their deposit to their agent or seller. In the first instance, your money may be safe if your agent is trustworthy and doesn’t co-mingle your funds. In the second, your money can be spent the day you hand it over. If you see the seller driving a shiny new pickup only hours after he accepts your offer ― beware. Why is this bad? Perhaps you cannot close the transaction or the “seller” may not have been the legal owner or there may be issues with where the property starts and ends (metes and bounds) or there may be repairs beyond what you are willing to deal with. How do you get your money back if the seller has it? Even if the seller didn’t spend it, how do you get it back? Most likely you cannot.
If you’re the seller, you are protected from tire kickers. Most listing agreements state that if the buyer backs out of the transaction for reasons not outlined in the purchase contract, then you, the seller can keep the deposit money, less the agent’s commission. If you have accepted an offer and the funds do not arrive in escrow within the prescribed time, you can cancel the deal. You do not have to chase down the buyer and beg them to pay. You simply inform escrow that since no money has arrived from the buyer, you are canceling escrow. It is rare for a buyer to make a bogus offer where an escrow company is involved. There is too much work involved and, of course, the funds must be wired—no checks, no cash.
How does an escrow company protect your funds? Easy! Once the seller accepts your written offer, you are expected to wire 10% of the price to escrow. You must complete “escrow instructions”. This is a set of forms that instructs the escrow holder to act as a neutral third party and to hold your money until closing. If something occurs that is the fault of the seller, you will receive all of your money back, less $550, which is the escrow fee. The escrow funds are held in dollars in a US FDIC bank.
“Neutral Third Party” is a very important term. This is the definition of an escrow agent. This means that a shifty agent or powerful seller cannot bribe or threaten the escrow holder to release your funds without your permission and without meeting all of the requirements of the transaction. The escrow agent only acts on the instructions of buyer and seller and all instructions are signed by both parties. And the escrow agent has copies of the passports of both parties to compare signatures.
Costs of escrow services are borne by the buyer. If you are the seller, you have security and no escrow fees. If everything is going according to plan and the house meets your expectations, the closing attorney at the escrow company starts the process of moving the papers: permits and fideicomiso through the system.
This brings us to the second reason for using an escrow company and their closing and title services: Security of title, otherwise known as title insurance. This is available in Mexico and is worth the money (about US$5.00 per thousand of value). On a $200,000 home, the cost of title insurance is $1,000. This is a small price to pay to sleep well at night, knowing that your title is clear even if someone shows up claiming to be a long-lost relative of the original owner seven generations back and demanding that you vacate “their” property.
The title arm of the company searches the public records to ensure that there is no cloud on the chain of title to your property. When they issue the title policy to you, they are assuming the risk and, if someone does try to steal your property, the title company’s lawyers go to work on your behalf.
Do not be dissuaded from buying title insurance. Sometimes the title search can slow down the transaction. This is rare, but it has happened because somewhere in the transfer of title, someone did not pay close attention and something was missed. The title insurance company needs to be sure that all previous owners have had their interests in your property terminated. Wouldn’t you rather pay a little money and spend the time now then pay dearly later? As a seller, wouldn’t you want to walk away with a clear conscience?
Do not believe that the “certificate of no liens”, a required form, is as good as title insurance. The certificate of no liens states that, as of a certain date, no one has made claims on this property. This form has a short shelf life of 30 days. When a transaction takes longer than expected, this certificate must be renewed. The notaria will expect to see a current certificate of no liens. You can see that if it expires in a month, that on day 32, someone can lay a claim on your property. Title insurance insures your property for as long as you own it.
And the third reason: Disbursement of funds. In Mexico, there is a saying, “Paper Talks” and nowhere is it more talkative than in a real estate transaction involving at least one foreigner. The buyer and seller complete a disbursement instruction form. This tells the escrow agent how much money to expect to receive and how much money to send to each person involved in the transaction. A seller can instruct the escrow agent to pay off credit cards, send some funds to the Cayman Islands and some to a US account, and the remainder to a Mexican account. The Realtor’s commissions and the notario fees will be paid via the disbursement instructions.
There are several title/escrow companies offering services in Mexico but only Stewart Title Latin America has offices here. Also, there are some closing attorneys offering escrow services. If you use them, be sure that they are holding the funds in a US account and that escrow and disbursement instructions are used.
Escrow services in Mexico are fast and efficient and most forms can be handled electronically. Unlike the US or Canada, buyer and seller will sign at the notario’s office, not the escrow office, so it does not matter that Stewart Title Latin America is located in Cabos San Lucas. They know all of the notarios, Realtors, and bank fiduciarios.
Susan Fogel is the broker/owner of Prestige Property Group La Paz.
She is the author of the e-book: Margarita Mind: How to Avoid It: A Guide to Buying Mexico

You are not 007 or How to Be a Good Buyer
By Susan Fogel
susan@prestigepropertygrouplapaz.com
reprinted from Baja Pulse

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, “I’ll wait for my price.” 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 “Buyers’ Market” 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. Be fair in your offer. That is part of her job.
You have a job as well. Yes, you are the hero; you have the cash; and you are about to take someone’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 agent’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.
Let’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. Don’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.
Don’t be blinded by “house love”. 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 anyone’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 “as-is”. An as-is listing means just that. So don’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. Don’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 “barstool experts”. There is no “better way” or easier way to buy property in Mexico than using a professional. Your agent is a professional and can guide you.

Ten Ways to be a Good Buyer
1. Become informed about Mexican real estate practices
2. Do a lot of online home shopping before you come to Mexico
3. Choose one agent per area and be loyal
4. Get your loan approved before you get on the plane
5. Make fair offers
6. Keep your eyes wide open when you visit the property
7. Inform your bank before you leave that you may be wiring money to Mexico
8. Get it in writing
9. Put it in writing
10. Ignore the barstool experts

Online Resources:
Informative Real Estate and General Mexico Living Sites:
www.bajainsider.com
www.mexconnect.com
www.mexonline.com
Escrow and Loan services:
Stewart Title Latin America www.stewarttitlelatinamerica.com
One-Stop Loan, Escrow and title Insurance Services:
Stewart title Latin America/Los Cabos
Marty Ochoa Mortgage Specialist mochoa@stewartlc.com
US Phone: (713) 429-4837 MX Cell: (624)-129-6916
Iris Cristiani Closing Attorney icristiani@stewartlc.com
(624)130-7122
Mortgage Services Only:
ConfiCasa Mortgage International www.conficasamortgage.com
Tina Rebello, Loan Officer
(624) 157-5475 MX Cell

Susan Fogel is a real estate broker in La Paz and the author of an ebook for buyers “Margarita Mind: How to Avoid It; A Guide to Buying Mexico Real Estate Safely & Sanely”
www.margaritamind.com susan@prestigepropertygrouplapaz.com

So why do I need a fideicomiso, when this nice real estate agent told me there are other ways to own property in Mexico?
Well my first answer to that is another question. Why would you consider anything but the safe, sane and legal way to own your Mexican dream property?

First let me explain, the fideicomiso or ” bank trust” is an instrument used in Mexico to hold assets in a trust and administered by the bank, for safety and security and accountability for that asset.

The Mexican government changed their constitution in 1973 to make it safe for you to own property in Mexico. The fideicomiso was adapted for use by the foreign buyer to hold their Mexican property.

Not all areas of Mexico require fideicomisos for cash transactions. But in areas 31 miles from a coastline or 61 miles from an international border, foreigners can only own their personal residence or vacation property in a fideicomiso. This is called the Restricted Zone. All of the Baja Peninsula is in the restricted zone.

Take note: The Mexican government CHANGED their constitution and adopted the fideicomiso so the foreign investor (you) would be 100% protected when buying your Mexican dream home. It is SAFE to buy property in Mexico. If you do it right!

If you are getting a mortgage for your Mexican dream home, then no matter where your property is located in Mexico you will need a guarantee fideicomiso that names the lender, and gives them the right to foreclose.
The fideicomiso costs between $400 and $600 depending on the bank. There is also an annual renewal fee of the same amount of money. This is a small fee to ensure that your property is yours, legally and safely.
And the fideicomiso gives you the same rights over the property as if you had a fee simple title:

1. You can mortgage it
2. You can rent it
3. You can bequeath it
4. You can sell it
5. You can make improvements to it

The fideicomiso is valid for 50 years and you or your heirs can renew it time and again in 50 year chunks forever. When you die, just like in a living trust in the US, your heirs receive the keys and ownership of the property, there is no probate.

There are always people trying to circumvent the system, and there seems to be no earthly reason why you would do this. To save a few thousand dollars upfront when you purchase? This can come back to bite you later and cost you hundreds of thousands or the loss of the property.

As you have read in my book, or will find out if you haven’t read it, if you cannot get a fideicomiso on the property you are looking at, stop looking at it, and move on to another property.
Repeat after me: there is no legal, safe way to own a residential property in the restricted zones of Mexico other than with a fideicomiso! Make this your mantra.

In case you are still not convinced go to these links and read about Punta Banda:
Punta Banda Story

Punta Banda ll

I go into a lot of detail about Punta Banda in my book.

There are many gorgeous beach communities throughout Mexico, and most of them are safe for you to buy. But even in the safe areas, there could be properties that cannot be put into a fideicomiso…walk away. I know it may hurt, but there are other homes or lots that you can buy with a fideicomiso.

My manta: do it right the first time, pay a little now, or pay BIG TIME later.

Watch for updated posts every Monday afternoon,.
And hey, leave me a comment!

Margarita Mind, it really is not a joke. I almost succumbed while looking for property, and have seen friends, neighbors and clients fall under its spell.

When we pulled up stakes and headed south to La Paz, I was filled with dreams of writing about my new life, my old life and making gorgeous quilts!

Well I did and do make gorgeous quilted pillows. Frankly making an entire quilt would bore me. And back in 2000 they did not have pre cut squares of all sizes in gorgeous color runs.
And my writing? Well I got caught up in renovating the first house we bought down here.
When that was done, I was tired, and wanted to be out and about and not only walking on the beach!I started writing for the local English language newspaper. I met lots of people, learned a lot, and had more than one “divorce” with the smart, but crabby publisher.
Then we sold our first house, and built one on the beach in the same neighborhood.
“I am going to experience the process, and not let the stress get to me” I said. Well that was a short lived attitude. Our builder took us to the cleaners, so the nice cushion I was going to have left over so I could finally write was gone, and then some.
So I went to work. I took a job with a cross-border mortgage company. I traded my time for money. We needed the money, they needed me. Talk about meeting a lot of people and learning a lot, this job opened doors, and piled on the work and stress.
I traveled to almost every resort in Mexico. From my beach house in La Paz, I worked with Realtors, escrow agents, buyers, sellers and notarios in every market in Mexico.
In September 2008 I left the mortgage company. Within weeks I was offered a writing assignment for a magazine I dreamed of writing for. I went back to writing for the newspaper, and had my final divorce from the publisher.
So with nothing left to do, I decided to get serious about writing.
And so my first book, Margarita Mind: How to Avoid It; A Guide to Buying Mexico Real Estate Safely & Sanely was born.
And now this blog is here to support you, my readers. I will update info about buying, renting and other issues .
When my next two books come out, I will announce them here.

When you are ready to enter the waters of home buying in real estate send your questions here. I’ll personally answer them.
And in the future I’ll have some webinars to talk to you about buying your dream home in Mexico.
Thanks for stopping.
Leave a message!

Hola! I have finally achieved a long-time goal of writing an ebook for you, the future buyers of real estate in Mexico.
Now my mind is full of ideas, and they are all aimed at you. You need to be informed, prepared and confident that when you come to Mexico to buy a vacation home, a retirement home, or an investment property, you are going to do it right and avoid the pitfalls, quicksand and other problems that could snare you. After all Mexico is a foreign country.
But it is a foreign country that CHANGED its CONSTITUTION to enable you to safely and securely buy your dream home in Mexico.

My first book is ready for you to buy, you can click on the “order now” button under the picture of the book and it can be yours instantly.

Not sure you are ready to buy? Well to whet your appetite, I have pasted in my first chapter.
Read on and enjoy:

Margarita Mind: Please leave home without it! What is Margarita Mind and why do you have to be inoculated, prepared, and ready to resist it?

Chapter 1―Margarita Mind Defined

Let me relate a conversation with a friend of mine, an insurance broker and Realtor that has lived in Mexico for over 20 years.

“I have a great idea for a business: I am going to set up a locker system at the border crossing in Tijuana. You know like they have at bus stations and train stations? Well, my lockers will be small, about the size of a melon, a cantaloupe or honeydew. Foreigners coming down to buy real estate can check their brains and then go happily south and muck around, listening to every Juan, Jose, and Maria about the “way around” the rules of buying property. When they have parted from their money and signed away their rights, if they can find the locker key, they can retrieve their brains just before returning back to the US or Canada.”

“What a great idea,” I said. “Those people can wander around in a daze, and since there are no brain waves and no lights on upstairs, we can identify them as fools and work with only those with their brains intact.”
That’s Margarita Mind―doing things in a foreign country you would never do at home. Buying a house when all indicators say it is a bad deal because you love it. Last I checked, you can’t bank love.
It makes me crazy!
People spend more time choosing a toaster or microwave, doing the research, and comparing prices than they spend on a property purchase of hundreds of thousands of dollars in Mexico.

And then, when they are on the verge of losing their money or already have, they come to me or my friend or others like us and ask for help. For free, of course!
This is not going to happen to you!
You are smart, savvy, and after reading this book, well prepared to buy property in Mexico.

No matter what the guy on the next bar stool or the sweet woman in the tropical print dress and straw hat tells you, there is only one way to buy real estate in Mexico, the right way.
So fasten your seat belts, we are on a ride. I am going to tell you how to do it, who to avoid, and what keywords should be warnings to run the other way.
Just remember, buying property in Mexico is safe and legal for foreigners to own their dream property on the beach, as long as they do it right. And of course, since you are reading this book, you will do it right.