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The La Paz/Baja California Sur Multiple Listing Service

Thursday, 31. October 2013 10:00

A True Story for Sellers to Heed

It happened in La Paz just a few weeks ago, and it is about the Multiple Listing Service (MLS).

I have several nice properties in El Centenario and El Comitan. My colleagues make jokes about how I live in the desert, the boonies, or “way out there”. I invited them to see my properties and they said things like “some day”, “it’s a good idea” or “the next time I’m in your area I’ll make an appointment to see your properties.”

Others said if they had buyers for my properties they would be sure to show them. In other words, no one was going to make the effort to drive a mere 20 minutes even to see beach front and beach community homes, even though beachfront and beach view homes are in high demand even in this recovering market.
So, back to the true story. I uploaded one listing to the La Paz MLS and encountered Internet issues. All I had to show was one listing. The next morning my phone rang and a colleague from La Paz said he was looking for an easy care, one-floor home with a pool and a view. And my listing fit the bill.

The agent and client came out within the hour. She liked my house, but wasn’t in love. I suggested that since she was here, she see another listing next door. That house is two stories, is high-maintenance, and has a slightly smaller pool. The would-be buyer walked in and said: “This is it!” I want this house, I love it!” She made a full-price offer that day and the transaction closed without a hitch 45 days later.

What is my point? The agent said he was looking only for properties on the MLS. He did not have the time to search individual websites, even if he knew whose sites to visit. If my listing had not been on the MLS, he would never have known about it. The MLS allows agents to post as many photos and videos as they want. A buyer’s agent can preview the property and contact the listing agent to get more information. Then she can put together a list of properties and email them to her client. It’s efficient and, because of the strict rules of the MLS, it is accurate. This also means that when homes sell, the prices are listed so that agents will have comparable properties that will support the price of your home to the buyer.

The very next day, I uploaded three more properties. Almost immediately after hitting “submit” I received an email from an agent in Loreto saying that she had sent all of my listings to her client in the USA that is interested in La Paz, El Centenario, and El Comitan.

“How did you get hooked up with a La Paz buyer?” I asked.

“He was searching my IDX (MLS search function)pages,” she said.

Sellers, listen up! This is the key. Under the new IDX (Internet Data Exchange) system, buyers can type “La Paz homes for sale” into Google and La Paz real estate sites will pop up. They can click on the name of a page and those that are members of the MLS will have a search function on them that allows Susie Q. Homebuyer to search for homes in La Paz and the surrounding area. Now thousands of buyers back in the USA and Canada and anywhere in the world, can look at YOUR house long before they book their flight to come to La Paz. They can narrow their search to just a few homes or they can expand out to other areas.

The “Loreto man” was fiddling around, looking at everything on the market, when he found La Paz and decided on our lovely town for his retirement.

And how do you as a seller get to have your house visible 24/7 to the entire world? It’s easy:

  1. Contact an agent who is a member of AMPI (Mexican Association of Realtors) and the MLS.
  2. Sign an exclusive listing agreement, and they will upload your home with photos and a video.

You will now have one agent looking out for your best interests, and you will also have an entire sales force of other AMPI/MLS agents showing your home. Isn’t it a good feeling that your property is in the hands of professionals that subscribe to a high code of ethics and use the latest technology to sell your home?

All MLS-listed properties for sale in La Paz, and throughout the entire state of Baja California Sur, searched via Susan’s website: PrestigePropertyGroupLaPaz.

About Susan Fogel:

Susan ss the broker/owner of Prestige Property Group La Paz. Visit her website and receive a FREE copy of her e-book Margarita Mind: How to Avoid It (A Guide to Buying Mexico Real Estate Safely and Sanely).

Connect with Susan:
Website: Prestige Property Group La Paz
Facebook: El Comitan Real Estate
Twitter: @BajaSusana
Email: Susan @ PrestigePropertyGroupLaPaz.com

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So What is the Fideicomiso Anyway?

Wednesday, 7. September 2011 20:17

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.

 

In most of the areas you will be looking for property (coastal areas), there is only one legal way for foreigners to hold title, which is through the fideicomiso (“fee day co mee so”). The fideicomiso is a legal instrument used by agencies and individuals to hold assets in a secure trust.

In 1973, to protect and reassure foreign buyers of Mexican real estate, the Mexican government changed the constitution to allow foreigners to buy properties using the fideicomiso. In 1994, the life of the trust was increased to 50 years with a 50-year renewal. Holders of older fideicomisos are allowed to apply to the office of the Secretary of Foreign Affairs to have their trust extended to the 50-year term with 50-year renewal. Actually, the fideicomiso may be renewed in 50 year chunks ad infinitum.

The areas that are within 31 miles of a coastline or 62 miles of an international border are called the restricted zone. The majority of Realtors selling property in Mexico are selling property in the restricted zone. The entire Baja Peninsula is in the restricted zone. In the old days, and the practice still persists today (illegal though it is), you would hire a presta nombre, a Mexican citizen that you trust who would “own” your property. I really should not put “own” in quotes because, in fact, they do own the property. So in the old days, you would identify the property, find a trustworthy Mexican, pay the seller her price, and the new title would be drawn up in your presta nombre’s name. You would then execute a contract with the presta nombre stating that you were in fact the owner. Since the contract is based on an illegal action, it has no validity. Nowhere in the eyes of Mexican law are you listed as the owner. And Mexican law is the only law that applies to your Mexican property. Uncle Sam cannot help you.

Would you do anything like this in the USA? Never! Why would you knowingly break the law in a foreign country when your government cannot help you? But people do this. Lots of good, hard-working people like you. You know why? Because their agent told them: “That’s the way we do it here.” Or: “It will cost you a lot of money to get a fideicomiso. You know what I say to that? Pay me now or may me BIG TIME later!

So what is a fideicomiso?

Well, as I said, it is an instrument that is used by Mexicans like a trust. In the case of foreigners, when buying in the restricted zone, it is the only legal way you can own property.

The fideicomiso names you as the beneficiary and you can name heirs or substitute beneficiaries. The trust is held by a bank and the trustee is called a fiduciaria. BANORTE is a major Mexican bank that offers very nice rates and good service on a fideicomiso. As stated earlier, the fideicomiso runs for 50 years and can be renewed in chunks of 50 years. During that time you have these rights:

  • You may improve the property
  • Sell the property
  • Mortgage the property
  • Bequeath the property, and
  • No probate

Let me explain “no probate.” Since the fideicomiso is a trust, when you die; your heirs (substitute beneficiaries) receive ownership immediately. And all of the rights of the trust go to them.

There is a one-time setup fee of US$400–500 and an annual renewal fee of the same amount. The fiduciaria does not send you a notice to pay; you must remember to renew it each year.

The upfront costs of a fideicomiso are very small and the annual renewal is the cost of having the privilege of owning your dream home in paradise.

Keep in mind that your property taxes are very low, so this fee is small, as well. The fideicomiso is like your deed. Former owners and beneficiaries are listed, as are the metes and bounds of the land itself, and the price you paid for the property. You can have the purchase price of your home listed in dollars. This is the best practice.

When it comes time to sell, the notaria must calculate capital gains tax. The value of the peso will have changed; these are time-consuming calculations. If the value of the peso is low at purchase and then increases, you can be in for a capital gains tax. Since the dollar is stable, the value at any given time does not become an issue.

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Dress Your House for Success: 12 Steps to Staging Your Home to Sell

Wednesday, 7. September 2011 20:01

If you were around in the late 80s-early 90s, you have seen or heard “Dressing for Success”. It became a mantra and seminars were held to teach people how to get their dream job by dressing the part. Well, the same holds true for selling your home. It needs to be staged–dressed up to make it appealing to the critical eye of today’s consumers.

Armed with the knowledge that cash is king, (even if they do use a mortgage) and that there are plenty of houses on the market, a prospective buyer doesn’t have to settle for your home, when the “one next door” has colors and accessories that make their heart sing.

So, what do you do to make your home stand out? You need to be a critic. Imagine that you are plunking down several hundred thousand dollars for a property in a foreign country. What do you see?

Start at the front entry. Is your exterior wall crisp and clean with no pock marks, chips, cracks, or worse–graffiti? Even though you like to keep beach chairs, an array of flip-flops, and your surfboard at hand, your buyers will just see junk.

Are there weeds growing where some bright, colorful bougainvillea should be? If you don’t have a gardener, or even if you do, buy some nice pots and plant some bougainvillea. They are exotic, colorful, and eye-catching.

Is the pool crystal clear? There is no bigger turn-off then a green, grimy swimming pool. Is the lawn furniture in good repair? If you cannot afford to replace it, remove it. Stage your patio. Just before buyers are due to arrive, sweep it. Throw a few bougainvillea petals in the pool (romance, remember romance?). Roll up some colorful beach towels; put them on the foot of a lounge chair or in a basket near the pool. Make sure table tops are dust free. Entice your buyers to want to stay for the day at poolside.

Let’s go inside. Make the sniff test. Does your home smell like dog, bug spray, or last night’s broccoli? Since you may be de-sensitized to the smells in your home, ask a friend or neighbor to come by and make the sniff test. Tell them to be honest; you need their help; and you do not want to lose a buyer because your house has B.O. When you know buyers are coming, open all the windows, turn on the ceiling fans, let the house air out.

Look at each room. Do you have too much furniture and too many knickknacks? Removing clutter and even some furniture to make your home look more spacious and encourages the potential buyer to envision themselves in the house. Make sure all surfaces are dust free and gleaming. Same goes for the floors.

One of the quickest ways to freshen a room is to add some brightly colored throw pillows. Add or remove color. Color has an effect on people even when they are not aware of it. Have you been in houses that feel happy? It is the colors that did it, not a friendly ghost. Here in Mexico, we can use bolder colors, people expect it, and are drawn to the hot colors of Baja. A word of caution: It is the judicious use of color that matters here. Don’t rush out and paint every room yellow and orange. Take a look around; is there an accent wall that would look nice painted a bright color? Can you accent the inside of an arch with the same apple green in your pottery? Pick up a few magazines or a design book. A good one is Casa Mexicana. It shows all kinds of Mexican home interiors. You can get good ideas there, but, get some expert advice. There are “values” to colors; one yellow can be harsh, while another can feel like a sunny day.

Repair chipped tile; make sure all the switches and outlets have covers. Wash the curtains or remove them completely. Finish the projects you “saved for later”. You know–the unpainted cupboard doors, the new awning, or the purging of the junk in the bodega. Repair broken screens or remove them. Remove rust on doors and other metal surfaces.

Confine your pet. If your doggie is an energetic greeter, tie it up or send it to the neighbor. No one likes a yapping dog or one that jumps on them. Fido is part of YOUR family, not part of the house.

When I list a house, I walk through it with the seller. They have a clipboard and pen and take notes on what to repair, take away, or add to make their home more appealing.

Some quick fixes: a bowl of tropical fruit on a kitchen counter or in the center of the dining table. It can be real or the gorgeous faux fruit available in the shops. Some fluffy towels rolled and stacked on the side of the bathtub or on a bathroom shelf. Some shells placed here and there. Remember: you are selling paradise. Have a set of “show towels” you can put out in the bathrooms. These are never used, so they always look fresh when buyers come to snoop. Add a potted palm to delineate a space or fill a corner. Again, potted plants do not have to be real.

Buying a home is both objective and subjective. Some buyers will see garbage, dust, and clutter and feel that the plumbing and other systems may have been neglected, as well. Others will love or hate a house and say “It was just my gut reaction, I don’t know why, but I hate this house.”

The idea behind staging is to have nothing in the way to stop a buyer from saying: “I love this house; I want to buy it.”

 

Twelve Steps to Staging Your Home To Sell

 

  1. Do the dishes. If you don’t have time to be thorough, stack them in the dishwasher. No dishwasher? Wash the dishes; there is no way around it. The kitchen must sparkle.
  2. The entire house, patio, and yard must be neat and clean. Pick up the doggie-poo.
  3. Wash the windows. If you have a great view, the potential buyers will head straight to the window or sliding door that frames the view. They don’t want to look through doggie drool or dirty handprints.
  4. Make the beds. Mexican blankets and crisp white pillow cases can make the worst bed look good.
  5. Remove all the toiletries, shavers, draped towels, etc from the bathroom. Stow toiletries in a cupboard. Toss the wet towels in the dryer. Flush the toilets and put the lids down.
  6. Remove clutter. Be ruthless. Get rid of things you don’t use. Empty the ashtrays. Better yet remove ashtrays. Get some attractive baskets and stow the bills, magazines, and other clutter of daily life.
  7. Play some peaceful music at a low volume.
  8.  Turn on all the lights and light a few candles.
  9. Empty the trash.
  10. Prepare a list of items you will leave with the house.
  11. Freshen faded paint or repaint if your agent says the colors need to be changed.
  12. Go away. Let your agent do her job. If you insist on being there, sit on the patio and keep your lips zipped.

Susan Fogel is the broker/owner of Prestige Property Group La Paz and the author of the ebook: Margarita Mind: How to Avoid It: A Guide to Buying Mexico Property Safely & Sanely.

 

 

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How to Price Your Home to Sell

Wednesday, 7. September 2011 19:51

On one of my first trips back to California after living in Mexico for several months, I was talking about life and the way foreigners behave in Mexico. I recounted how some gringos drive cars without wearing a seatbelt or ride motorcycles without helmets. My daughter-in-law, a mathematician, asked, “Do they think the laws of physics change when they cross the border?”

And so it goes with real estate in Mexico, especially when it comes to pricing your house for sale. While some aspects of the real estate transaction are different, such as the appraisal and closing process, the laws of the market, like the laws of physics, do not change at the border.

Pricing your house in the stratosphere has the same consequences in Mexico as pricing your home too high in the US or Canada; no buyers.

What makes a market anyway? Well, goods for sale and people to buy them, also known as “supply and demand.” Even when the supply gets short, people are wary about paying too much and will compare prices. These are the educated consumers.

The educated consumer of Mexican real estate has a pretty good idea of what a 3-bedroom, 2-bath home with a pool should sell for. They know that beachfront properties are worth more than those not on the beach. And they know that view properties have more value than those without a view. And they know that prices in Mexico are falling just as home prices in the US and Canada have dropped.

All of us have heard that the three most important words in real estate are “location, location, location.” Well, here in Southern Baja or any part of coastal Mexico, that translates into “beach, beach, beach.” If your house is on the beach with an unobstructed view and access, it is usually worth twice what the home behind it is worth. That is the way the market works worldwide.

So now you want to sell your home. You have decided to go back to the old country or move to another part of Mexico or the world. You have been shopping the Internet looking at homes and you found an area you like. The homes in that area are selling in the $200,000 range. The market is depressed, sellers are motivated. It is a bargain. Of course, you want to sell your Mexican home to buy the bargain property.

Wrong Way to Price a House #1:

To snap up that bargain for cash, buy a car, furnish the house, and have a cash cushion, you want to net $500,000 from your Mexican property. So you do some math and decide your house must sell for $600,000. So you call a real estate agent and invite her to look at your house. You tell the agent, “I want US$600,000 for my house. I have $300,000 invested in it, and I have a lot of rustico furniture, and I need to net $500,000 to move to my next place.”

Sounds reasonable doesn’t it? This is as far from the proper way to price a house as using butter to treat a burn.

The Right Way to Price a House:

A good real estate agent is going to stop you in your tracks, sit you down, and explain the market to you. What you have invested in the house, what you want for it, and what you need from it, are not valid market indicators. What sets market price is the price of similar properties in similar neighborhoods that have recently been sold or listed. This sets market price―nothing else. This is called comparative pricing. The other properties are called comparables or in real estate jargon “comps.”

In Mexico, getting good comps is difficult. There might be one or two houses in a neighborhood that have recently sold or are on the market. If these houses are of good quality and design, agents will use them as a basis to compare your house and others that are on the market. Your house may be higher or lower, based on the quality of the finishing or special amenities. But don’t put too much value on your furniture. If you are selling and leaving the country are you going to schlep all that stuff back with you? Most likely not. What could you get for it at a garage sale? Not much, right? So don’t think you can raise your house price much for the few pieces of furniture you prefer to leave behind. In fact, a buyer that will take the furniture off your hands is saving you the trouble of packing and moving or disposing of it.

Wrong Way to Price a House #2:

After the real estate agent has educated you and shown you what the market will bear for your home, you are still being stubborn, so you say, “Well, I hear what you are saying, but let’s price it high and let them make offers.” That’ll work, right? Wrong. If another agent is shopping for a house for their client, they are looking at properties within their buyer’s budget. If your $600,000 home should really sell for $400,000, the agent knows that. She may look at your house online and know it is over-priced. There are so many properties on the market she doesn’t need the hassle of dealing with an unrealistic seller. And that is exactly how you will look to experienced agents. An agent doesn’t know you are fishing for someone to make an offer.

If potential buyers are shopping online and compare your house to others, they will just move on. Very few will consider making an offer $200,000 less than the asking price. So now you have lost an agent and a buyer. Who knows how many other agents and sellers passed on your house?

If your house is worth $400,000, price it at $400,000. Remember, cash is king. And if you don’t have a mortgage on your home, then no matter what you put into the house, you are still walking away with almost 400,000 smackers. That is a nice chunk of change to start a new life. In today’s competitive market, which is flooded with inventory, merely slapping a sign on the property, posting it on a website, and waiting for a buyer, will not sell the house.

The first step to a timely sale is properly pricing the house. The next step is an aggressive marketing plan. Before you list your house, ask your real estate agent to show you their marketing plan―in writing. And finally, clean up your act. Stage your house as if My Celebrity Home was coming to film your house. Sounds like we just set the stage for future columns…

 

 

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Escrow and Title Services In Mexico; Your Money is Safe!

Wednesday, 7. September 2011 19:45

What makes real estate transactions run so smoothly in the US and Canada?

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 Southern Baja, 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 Southern Baja 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.

 

 

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How to be a Good Buyer; You Are NOT 007

Wednesday, 7. September 2011 19:36

 

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. That is part of her job Be fair in your offer.

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.

Have Questions Or Comments? Leave Your Question Below and We will Get Right Back to You

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Mexico Real Estate Closing Costs

Wednesday, 7. September 2011 19:30

 

So What are the Closing Costs in Mexico?

Understanding the Good Faith Estimate

 This Good Faith Estimate (GFE) is just what the words say; in good faith we are estimating the closing costs for your loan and real estate transaction.  These estimates are as close to the real thing as can be obtained; some items may change during the transaction (for a cash purchase or for a loan purchase/refinance).

 

The GFE provided to you is a hybrid form using American and Mexican loan/real estate terms.

 

Most of the fees reflected on the GFE are standard Mexican real estate fees that would be charged regardless of whether the transaction is all cash or with a loan.

 

 

Fees regardless of whether the transaction is all cash or with a loan

 

–        Fideicomiso (trust), the legal instrument, like a living trust that allows foreigners to own property in the federal restricted zone (100 kilometers from any border and 50 miles from the coast). However all properties that have loans require a guarantee fideicomiso regardless of area. (Non-Mexicans only). $400-$600

–        The Notaria Publica is a real estate attorney and you will sign before him. All real estate transactions are completed by the Notaria.$2,500 and up

–        SRE permit for foreign registry $130

–        RNIE foreign investment permit, which allow the bank to issue the fideicomiso.$600

–        Fideicomiso (trust) initial setup fee and the first year fees which are collected upfront $400-$600

–        Public registry (like county recorder) of the fideicomiso and the guarantee (security for the loan)

–        Certificate of no liens fee under $100

–        Certificate of no tax debt fee Under $100

–        Certificate of no water debt fee Under $100

–        No debt / municipal and state fee (depending on the state where property is located)

–        Castastral certificate fee Under $100

–        Closing agent fee, to assist with the execution of the closing (ensures the property has good title, interfaces with all parties, order all permits, ensures all certificates and documents are ordered and received properly, may perform a title search and arrange for title insurance if you choose to obtain, provides a trusted person to sign on your behalf if you cannot return to Mexico for the closing). While a closing agent is not required for a cash purchases it is strongly recommended Varies by closer can be as low as $500 to many thousands depending on the work to be done.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees specifically related to the loan

 

–        Origination points 1-3%

–        Commercial appraisal fee (Avaluo Bancario) 1% of property value

–        Loan application fee (which includes a credit report fee) $0-$400

–        Loan processing and closing fee $0-$500

–        Underwriting and funding fees $400-$1000+

–        Registration fee for the GUARANTEE portion of the fideicomiso Varies

–        Lender’s title insurance opinion and policy fee Varies by  loan and property value

–        Escrow fee $500-$750+

–        Hazard insurance fee (varies for each loan program)

–        Loan servicing monthly fee

–        Refinance transactions will need an extinguishment of the existing fideicomiso and set up of a new fideicomiso with a guarantee trust that allows the lender to foreclose in the unlikely event that you do not pay your mortgage (similar to the rights that a lender has on a property in the U.S. or Canada)

 

Please feel free to contact your Loan Originator if you would like further explanation as to the fees in your GFE.
We will be happy to refer you to a reputable loan officer.

Have Questions Or Comments? Leave Your Question Below and We will Get Right Back to You

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Escrow, Title Insurance, & Closing Services in Mexico!

Sunday, 30. May 2010 14:59

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

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How To Be a Good Buyer

Tuesday, 19. January 2010 8:46

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

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Do I Really Need a Fideicomiso to Buy Real Estate in Mexico?

Tuesday, 17. November 2009 13:58

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!

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