# Buying Real Estate in Mexico



## Guategringo (Nov 9, 2012)

GARYJ65 said:


> Guategringo, one question, the rent with purchasing option, wich were the rules on that deal?


Twenty-five percent of my rent goes towards a down payment, while 75% is just pure rent. If I decide to purchase the home I have to put down 20% after the first year of renting and pay the homeowner in full withingsix months after that. Otherwise I lose the 20% down. At least I have one year to decide if I want to live here or not and the homeowner has the house rented. 

He also cannot show it to other buyers during the 12 months and for that I paid an additional US$500 up front, which also can be used toward the down payment but it gives me assurance he will not sell it while I am living in it......


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## GARYJ65 (Feb 9, 2013)

Guategringo said:


> Twenty-five percent of my rent goes towards a down payment, while 75% is just pure rent. If I decide to purchase the home I have to put down 20% after the first year of renting and pay the homeowner in full withingsix months after that. Otherwise I lose the 20% down. At least I have one year to decide if I want to live here or not and the homeowner has the house rented.
> 
> He also cannot show it to other buyers during the 12 months and for that I paid an additional US$500 up front, which also can be used toward the down payment but it gives me assurance he will not sell it while I am living in it......


That sounds like a good deal!


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## ellibelli (Apr 11, 2013)

oh i don't think they are desperate to leave mexico, as much as they may have suffered economic losses recently, and because of that, and the fact that fewer tourists are traveling to/renting their places in resort areas, it is easier to find a "deal" .... because they need to unload it, and cut their losses. it has little or nothing to do with a desire to leave mexico.


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## surfrider (Oct 4, 2011)

Every transaction involving anything having to do with real estate will be unique unto itself but / and because of that any words spoken and agreed upon need to be written down and signed by both parties. I have read many contracts in real estate written by truly good agents. All parties signed and agreed upon terms etc. However, when a third party read the contract it said something that no party in the transaction meant it to say. I would call the agent in my office and ask what this meant and when they read it - away from the heat of the moment - they would always be shocked at what was written and signed on. Words spoken in real estate mean zero - words written in real estate need to be very precise and clear. It can be very hard to make sure you write every detail so that there is no misunderstandings.

Here in Mexico there is no license or continued educational credits to sell property. A 14 year old kid could sell a house. Anyone can be a realtor and what I saw in Chapala are retired people who used up their 401's and had to go back to work. They are learning by trial and error and they have not studied what real estate is truly about. Most of the brokers who are guiding them are also learning and also do not truly study real estate law - the economics that influence pricing and market conditions. They could no more tell you what riparian rights are in regards to real estate than how to build a rocket.

I do not intend to bad mouth agents here but when you have a real estate transaction an agent should be knowledgeable about what the hell they are doing. A home is usually the highest financial purchase most people will make in their life time. They can financially be harmed = even to the degree that they would not be able to recover from the loss for the remaining time of their life.
Also the agents are not advising the sellers as to the realities of the market because they do not understand it themselves. The prices in Chapala are way out of range and so is San Miguel. The agents there that are so called experienced have not the knowledge to understand that they are about 20,000 to 50,000 too high for what the economics of the real estate market world wide as well as the local market is. They think that they can write a contract and yet they have not studied the law. A contract is a legal document that should be enforceable in a court of law - hence the term real estate law. The agents I have talked with only know the law because someone told them that they can or can not do this or that. Please understand that not all agents in Mexico are like that and some of them truly do understand what they are doing....but very few that I have seen.


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## AlanMexicali (Jun 1, 2011)

surfrider said:


> Every transaction involving anything having to do with real estate will be unique unto itself but / and because of that any words spoken and agreed upon need to be written down and signed by both parties. I have read many contracts in real estate written by truly good agents. All parties signed and agreed upon terms etc. However, when a third party read the contract it said something that no party in the transaction meant it to say. I would call the agent in my office and ask what this meant and when they read it - away from the heat of the moment - they would always be shocked at what was written and signed on. Words spoken in real estate mean zero - words written in real estate need to be very precise and clear. It can be very hard to make sure you write every detail so that there is no misunderstandings.
> 
> Here in Mexico there is no license or continued educational credits to sell property. A 14 year old kid could sell a house. Anyone can be a realtor and what I saw in Chapala are retired people who used up their 401's and had to go back to work. They are learning by trial and error and they have not studied what real estate is truly about. Most of the brokers who are guiding them are also learning and also do not truly study real estate law - the economics that influence pricing and market conditions. They could no more tell you what riparian rights are in regards to real estate than how to build a rocket.
> 
> ...


That is why you should go to a office called a Notaria and get the one time free consultation and not believe what an agent tells you before you sign anything. Then you will have the facts at no cost. Simple. Alan


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## Infidel_jack (Nov 23, 2012)

surfrider said:


> Every transaction involving anything having to do with real estate will be unique unto itself but / and because of that any words spoken and agreed upon need to be written down and signed by both parties. I have read many contracts in real estate written by truly good agents. All parties signed and agreed upon terms etc. However, when a third party read the contract it said something that no party in the transaction meant it to say. I would call the agent in my office and ask what this meant and when they read it - away from the heat of the moment - they would always be shocked at what was written and signed on. Words spoken in real estate mean zero - words written in real estate need to be very precise and clear. It can be very hard to make sure you write every detail so that there is no misunderstandings.
> 
> Here in Mexico there is no license or continued educational credits to sell property. A 14 year old kid could sell a house. Anyone can be a realtor and what I saw in Chapala are retired people who used up their 401's and had to go back to work. They are learning by trial and error and they have not studied what real estate is truly about. Most of the brokers who are guiding them are also learning and also do not truly study real estate law - the economics that influence pricing and market conditions. They could no more tell you what riparian rights are in regards to real estate than how to build a rocket.
> 
> ...


The correct price of anything, is the amount a willing buyer and seller can agree. Just because the buyer and seller are both willing, does not guarantee that either is smart.


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## AlanMexicali (Jun 1, 2011)

Infidel_jack said:


> The correct price of anything, is the amount a willing buyer and seller can agree. Just because the buyer and seller are both willing, does not guarantee that either is smart.


The price anyone is willing to pay is the correct price and has emotional baggage attached to their decsion as does the seller have emotional baggage attached to their decision. No place has fixed prices and never will especially where needs outweigh the norn. 

Here in Mexico extremely low property taxes and the usual lack of mortages makes a property easily keep on the market for years. People from NOB might not be mortgage free and need to move the property and that also comes into the equation.

I find prices in SMA and Chapala acceptable in terms of "Where do you want to live?" 

The other people in situations outside these large English speaking zones are not to be compared to these 2 places in any respect in the interior of Mexico, apples to oranges. IMO. Alan


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## conklinwh (Dec 19, 2009)

Infidel_jack said:


> The correct price of anything, is the amount a willing buyer and seller can agree. Just because the buyer and seller are both willing, does not guarantee that either is smart.


I think that you are confusing agreed cost and correct cost.
The correct cost is what one can reasonably expect to sell at projected out with risk premium for lack of liquidity.


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## Isla Verde (Oct 19, 2011)

conklinwh said:


> The correct cost is what one can reasonably expect to sell at projected out with risk premium for lack of liquidity.


Maybe my brain has turned to mush because of the heat wave that has been pounding Mexico City the last few days, but this sentence makes no sense to me at all . Please explain!


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## circle110 (Jul 20, 2009)

Welcome to the new posters! I hope you keep posting and sharing your experiences as you get into living in Mexico.

I just wanted to add a comment to the discussion about real estate prices. I used to be under the impression that real estate was very expensive in San Miguel. On my first couple of trips there as a tourist before I actually lived in the area, I passed by the various ****** realty offices near the centro and my jaw dropped when I saw the prices.

Now that I live down the road in Guanajuato we have looked at houses in San Miguel - mostly out of simple curiosity - and we find that, in reality, the prices are very reasonable outside of the "****** to ******" market that is apparently perpetuated by some realtors there. For example, we looked at a beautiful, new, 2000 sq. ft., 3 bedroom house in a nice community that was selling for under $100k USD. We saw some other older homes of similar size selling for considerably less.

That just goes to show the wisdom of the "rent first" advice that many folks give. If you live in an area for a while, you begin to find the alternative channels for finding houses and can save yourself a small fortune over what you might have paid buying right away through the heavily marketed channels.


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## AlanMexicali (Jun 1, 2011)

conklinwh said:


> I think that you are confusing agreed cost and correct cost.
> The correct cost is what one can reasonably expect to sell at projected out with risk premium for lack of liquidity.


Yes, but a property that is the largest, usually, one time purchase, a consumer makes, not businesses, has much emotional baggaged attached, most times, that does not follow this formula. I have two friends who bought property that was, at the time, considered overpriced, but unique in ways other properties could not duplicate. They seem happy to have spend the extra money still.


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## pappabee (Jun 22, 2010)

One of the biggest problems with ANY negotiation is that both side can come away unsatisfied The seller can feel that if they had been more forceful they would have gotten more money and the buyer can feel that if they had waited a little more they would have got it for less. 

In negotiation the correct solution is that which both parties feel almost satisfied. In all my years I’ve never negotiated where both sides feel completely satisfied.


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## conklinwh (Dec 19, 2009)

Isla Verde said:


> Maybe my brain has turned to mush because of the heat wave that has been pounding Mexico City the last few days, but this sentence makes no sense to me at all . Please explain!


Sorry about that! I look at real estate purchases as an investment. As with any investment you need have a view as to what you could sell for and how long the sale transaction will take(liquidity). The longer the projected sale, the lower the liquidity and therefore the higher the premium(dollars) one should add to the sale to compensate for the loss of the ability to invest the cash elsewhere. As with any investment, one should think net dollars. In this case return minus commission and any applicable taxes.
Would think this a logic that anyone would go through either formally or informally before making an investment.


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## Isla Verde (Oct 19, 2011)

conklinwh said:


> Sorry about that! I look at real estate purchases as an investment. As with any investment you need have a view as to what you could sell for and how long the sale transaction will take(liquidity). The longer the projected sale, the lower the liquidity and therefore the higher the premium(dollars) one should add to the sale to compensate for the loss of the ability to invest the cash elsewhere. As with any investment, one should think net dollars. In this case return minus commission and any applicable taxes.
> Would think this a logic that anyone would go through either formally or informally before making an investment.


Thanks for the explanation.


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## mickisue1 (Mar 10, 2012)

pappabee said:


> One of the biggest problems with ANY negotiation is that both side can come away unsatisfied The seller can feel that if they had been more forceful they would have gotten more money and the buyer can feel that if they had waited a little more they would have got it for less.
> 
> In negotiation the correct solution is that which both parties feel almost satisfied. In all my years I’ve never negotiated where both sides feel completely satisfied.


Wise words, Pappabee. And it works for all sorts of situations where the parties interests are at odds. When I got divorced, back in 1988, my equally wise attorney told me that if either of us was completely satisfied, then she and my ex's attorney would not have done their jobs. 

Negotiations are not supposed to make one party feel like they won the lottery.


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