Priority 1 – Comparables
Insist on a comparative market analysis of the “solds” and a list of the competition on the market for sale for any villa or condo you are considering buying. Don’t take no for an answer.
Historically there was a precedent of not recording true sales prices. You, as a buyer have the right to information before you spend your money. Until buyers start requiring this information, the normal process of looking and making offers will be problematic. Opinion is cheap and thought requires work.
Mexico does not require education or fiduciary standards for persons selling real estate. At the present time, anyone, national or foreigner can write up a sales contract for you to sign and receive a commission whether their work is correct or not. “Buyers Beware,” still holds true.
Information on what has sold, when it sold, and whether or not there was financing by the seller or a third-party mortgage, is important. Traditionally, seller financing commands a higher sales price. Insist on comparisons of what features the sold properties have that are similar or dissimilar to the property you are considering buying.
Ask how much inventory is in the area where you are looking and what the price ranges are for similar properties. Some agents do no show you other available properties on the market. Some agencies do not show any properties for sale but their own. If you ask for the comparative market analysis and a list of what is available in the areas you like, you should ask which ones belong to the agency you are using, and which ones are not.
Priority 2 – Escrow
Insist upon the purchase funds being put into an escrow account. There is no reason for you to use an account of the broker (which is prohibited by our AMPI chapters in the Bay of Banderas.), or to use the notary or any private individual. Don’t be talked into the idea that the cost of an escrow account is too expensive or a waste of money. Reputable escrow companies provide a badly needed service at reasonable fees.
In the case of new construction projects, some builders use a master trust and your funds are put into that bank trust. In all cases, know where the money you are paying is being sent and what your rights are in case of seller default.
Priority 3 – Legal Advice
Unless you are a national and understand Mexican real estate law and taxes, or you are a foreigner who is fluent in the language and understand the Mexican real estate and tax law, do not proceed with any purchase until you obtain local professional advice. There are knowledgeable real estate agents, attorneys, and accountants available. However, if anyone trying to sell you something or acting as your agent tries to talk you out of professional advice, this is a red flag.
There are no formal approved real estate contracts, and no disclosure regulations for you to depend upon. You have to be aware and become good at asking questions and using good judgment.
You have a great opportunity right now to find a wonderful deal on a villa or condominium in our market of Puerto Vallarta, Bucerias and La Cruz, Punta Mita and many points in between. If you take sound steps in the process, you will be very fortunate and happy, for many reasons, to own a home here.
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