You’re on vacation in Cabo! You’ve fallen in love with the climate, the environment and the lifestyle and begin to ponder the question, “Is it possible to actually live here?” You grab a few of the real estate magazines to take with you to the pool or the beach. Inside you see the beautiful, glossy photos. The condos, villas and houses are incredible. Some appear quite affordable. Why not take a quick look? You reach for your phone to call up one of the real estate agents and ask to see some of these amazing properties?
BUT WAIT! Before you dial you should consider a few things about local real estate practices.
Property Tours Require Two Agents and an Appointment
In the U.S. and Canada, it is common to call up a friendly Realtor and ask to see a particular listing in a few hours. Potential buyers are accustomed to seeing property right away. Things are not the same here in Los Cabos. First, lockboxes are not used to access properties for sale. In order to arrange a tour of a particular property, the agent must contact the listing agent and request a showing. Local custom and practice requires 24 hours’ prior notice but earlier times can sometimes be accommodated.
Many properties are within a gated community and arrangements must be made in advance to gain access. Showing a property typically requires two agents each making a separate trip to the property location. Secondly, chances are while visiting here on vacation you are without transportation and will require the agent to pick you up at your hotel, condo or resort and return following the tour.
Mileage, gas, time. For the agents, it all adds up. Please have a sincere interest when contacting a real estate agent to tour property.
Properties Are Mostly Purchased With Cash
Potential buyers are surprised to discover the very limited financing options when purchasing real estate in Cabo. Most purchases require cash at closing. Here, it’s not a question of lender qualification, interest rates or monthly payments. The question to ask yourself before you look is, “Do I have the money to purchase the property?” Two financing options that are sometimes available are seller or developer financing. At times, the seller will finance the purchase for a short period of time. This option typically requires a 35% to 50% down payment and periodic payments for no more than five years. An interest rate of 6-8% is the norm. This type of financing allows the buyer to liquidate another asset to pay off the purchase or obtain other third-party financing. Likewise, many developers offer various financing options both during and after the construction period. The myriad of options are too numerous to detail, but provide the potential buyer with incentives to purchase within the new development.
The Buyer Pays Most of the Closing Costs
In addition to the purchase price, the buyer typically pays most of the closing expenses. These costs average around 4-6%* of the purchase price and includes a 2% acquisition tax paid to the Mexican government. The closing costs fluctuate according to the sale price and are typically higher for lesser priced transactions. Non-resident owners should also anticipate monthly expenses of property management and tax liability on the rental income. (*The lower the cost of the purchase price, the higher the closing costs, as some fees are fixed, such as fideicomiso fees.)
Most Agents Are Not Licensed
Selling real estate in Mexico doesn't require a license, a particular education or training. Currently there are no laws that mandate licensure or other credentials.
However, there are numerous local agents who are licensed in other jurisdictions. In addition, The Association of Mexican Real Estate Professionals (AMPI) promotes an increased level of professionalism to property sales in Mexico and has established a voluntary code of laws and ethics for member agents to follow. This subsidiary of the National Association of Realtors, requires its members to adhere to a set of professional guidelines and standards of practice. MLS BCS Members are also regulated and have to follow specific rules and regulations that carry fines and penalties and possible expulsion, if they violate them.
They have the added benefit of using a statewide MLS system to service your needs better.
Strive to make your real estate buying experience positive and professional by insuring your agent is a member of the MLS BCS or AMPI or both.
Make Sure You Are Ready To Purchase
A good agent will want to meet with you prior to arranging tours of properties in order to pre-qualify your purchasing ability and interest in order to avoid misunderstandings. A friendly discussion about your family, personal interests, lifestyle and financial
strength allows the agent to focus on showing the right property to you.
Los Cabos real estate agents are here to assist you and will work harder to ensure your needs are met and interests protected. In return, we ask for your courtesy, honesty and loyalty. Together we can turn your dream of living in Los Cabos a reality.
By Jud Waggoman, agent currently working under 2 Seas Christies International Real Estate. Contact Jud at (624) 158-7764 or email him at email@example.com.