Are you planning to buy property in Puerto Vallarta? Condos are the most popular choice for foreign buyers and there is a wide choice of both resale and pre-construction condo developments throughout the Bay area from the South Shore to Nayarit. So how to choose? Here’s a list of pros and cons for each option:
Buying a Resale Condo
This is the most straightforward way to buy a condo.
- You can see what you’re buying. You don’t have to imagine how it will look from a floor plan.
- There is no wait. You get to move in as soon as you close.
- You receive your trust deed and close at the notary.
- Your AMPI agent should have Flex comparables to help you offer and negotiate using current relevant sold information.
- If the unit has been lived in for more than a couple of years, you might need to set aside money for renovations.
- You can end up in a bidding war for a good unit in a popular building, and you may be outbid.
Buying a New Development Condo
- You are first owner of the unit and you get to customize certain things (such as appliances, cabinetry, flooring).
- Pre-construction condos tend to begin at a lower price because of a risk that the project will be delayed or even called off.
- You may be able to pay the builder a series of payments and have time to accumulate the entire purchase price. The initial deposit may be 20%-30% of the purchase price with negotiated installment payments. Builders generally do not charge interest on the unpaid portion of the purchase price if your payments are on time.
- You are buying based only on a floor plan without seeing the finishes, the layout or outside view of the building.
- You can occupy your unit when it’s ready, but other parts of the building may still be under construction.
- Until the building is completed and officially registered as a condominium regime, you cannot record the escritura to show you are the legal owner.
- At the time of closing with the notary, you will still have to pay your buying closing costs.
- Nothing is guaranteed. A condo building usually takes several years to complete. There is always a chance that the builder won’t sell enough units to proceed with construction, or can’t finish construction for some other reason, so you don’t get your condo. And sometimes the condo may look a bit different when it’s finished compared to what was initially proposed by the builder.
Assignment of a Pre-Construction Contract
These are the two main ways to buy a condo, but there is also a third:
- Buying a contract from someone who has bought a pre-construction unit, instead of directly from the builder.
- The law now requires the holder of the first contract to close with the builder at the same closing where you acquire the property as the second buyer.
- The developer has to agree to the transfer of the sales contract, and the first contract holder and seller have to pay their appropriate costs and taxes.
- You may want to pay a premium in order to get the condo you want. The seller and developer will both want their profit, so you decide how much you want to pay for the contract over the original price.
Both pre-construction and resale have their pros and cons. The outcome will depend upon your preference, your budget and the amount of risk you want to take.
Consult your AMPI Agent
Before you decide, it’s a good idea to consult a qualified bilingual real estate attorney and competent AMPI* real estate agent to guide you through the process.
*AMPI: Mexican Association of Real Estate Professionals A.C. was founded in 1956 and now has chapters all over Mexico. Member are natural (individuals not companies) persons who are dedicated to real estate activity.
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