We are experiencing a change in our lives through-out the globe. Those who have lived through wars or economic upheavals, have been in this situation before. Now we all are dealing with the world condition.
For us to survive in the real estate market, we have to endure the current uncertainty and help the recovery.
We Need a Buyer Market to Develop
Mexico is not being singled out as too volatile or unsafe, so we should be able to compete on an international level.
We have the basics which most people find appealing, and in some cases, even life changing: warm ocean with rich marine life, mountains, beaches, warm climate, kind people, slower lifestyle, less stress if we learn what is important in life.
An important way we can have a successful buyer market is for our sellers to be given good, sound advice.
If we cannot offer buyers what they are looking for in value and safety, we will find that our competitors in ocean-front sunny locations will receive more of a share of buyers then otherwise.
Selling in a Buyer’s Market
If a seller does not need to sell, there could be a downside to putting a home on the market in a buyer’s market. If there is little demand, pressure will be put on sales prices to push the prices downward. This downward momentum causes many buyers to make lowball offers, but with patience and persistence, we can begin to build up the number of sales and sales prices.
Sellers and their listing agents need to have a realistic strategy to deal with what the buyers will be asking for in discounts, allowances, conditions. This is to be expected in a buyer market coming out of a world-wide economic upheaval.
Homebuyers may ask sellers to pay for closing costs, or also make this sale contingent on the sale of other properties. Buyers know they are in the driver’s seat during a buyer’s market. They may demand the seller make upgrades or repairs as part of the purchase deal. All those little things sellers have put off repairing will pop up in the home inspection. And some buyers will tend to ask for “out” clauses which will let them walk away.
At the end of the day, if the buyer does not have money or access to it, the sale will not occur.
Seller and listing agent should talk about all of the requests and prices they should expect from the buyer. But having a genuine and capable buyer will be the best opportunity to sell the property. The new game has to be understood and the seller with his agent have to play it well or lose out to another seller.
Exchange Rate, Capital Gains & Sales Price
The seller in this market will also have to deal with the difference in the peso affecting his capital gains. If he bought at 19 and the peso is now 25, there will be more ISR or capital gains tax. So, it may be better to lower the sales price for the benefit of the buyer than pay more taxes. Look at what the net will be at a sales price the seller and his agent think will make them competitive.
The buyer agents are going to have strategies. They have the advantage of showing their buyers more properties than usual. A seller and his representative have to be competitive and anticipate what the market is doing.
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This article is based upon Flex MLS reporting, legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his own due diligence and review. If you have any other questions, contact me through my website.Harriet Murray