Mexico’s Real Estate Secrets
Rediscovering a childhood pal via FaceBook that now sells real estate in Florida while hosting her own radio show, Patty’s Playhouse, we started talking about the differences in real estate here in Mexico. Patty motivated me to write an article on the aesthetics of home architecture and interior design here in town for her.
That piece made me realize she’d probably be equally interested in the some of the logistical and technical issues of buying real estate here if only to compare and contrast on her show. Consequently, here is a nice to know list for potential buyers in Mexico…
- Unless along the coast, you own the real estate outright. On the coast there is some sort of lease arrangement so foreigners didn’t own all the best views but, in reality, it works like any other real estate from what I’ve been told.
- No mortgages in Mexico. If you are a Mexican with a steady job (like a teacher) you can apply for a program at a bank when young and one day the bank calls to say you have a house, take or leave it. Then you’ve a loan to pay off over the coming decades. These homes are in neighborhoods of small, look-alike, inexpensive houses. As a teacher, you can have it paid off before you retire and may have rented it to cover the loan until then thereby padding your pension.
- With the bank program you choose nothing, not even the geographic area. Suffice to say Mexicans find HGTV home shows, with fussing over counter-tops and cabinet colors, fascinating if totally unrelatable.
- Many foreigners take a line of credit out against US property to pay for a home here outright. Same thing I did to pay for property in the US to avoid mortgages.
- Closing are costly, normally a percentage of the selling price. Plus they are long and dull as Mexicans track property ownership seriously. You’ll listen to hours of “Jennifer Lopez brought the property from Carmen Miranda in 1550. It measured…..” all the way up to the present day.
- In a deed you can put who inherits the property. Better to do so in a will though as those are cheaper to change and you don’t want to pay, nor sit, through another closing just to adjust who inherits the home. (I had to sit through the same closing twice once as two numbers were juxtaposed in the title and it was no less painful the second time around!)
- Closings are done by a notary. In the US a notary stamps your form. Here they are often an inherited position and wildly lucrative and powerful. Also best to plan to show up at the closing in person. Doing stuff by proxy rarely ever successfully happens.
- No liability insurance here. If a neighbor leaves her water hose on and floods your home, then suck it up (literally and figuratively). Also no fire insurance since homes are made of stone and concrete, not wood.
- POAs (Property, or Home, Owners’ Associations) are an odd duck. For example, in my town of San Miguel de Allende, the developer registers the development as such in the planning stages and turns over some land for public parks. To avoid donating land, many developers try to add a faux-POA afterwards always causing problems since legally that can’t be done and some property owners will sue. The situation is always ugly and best avoided so a buyer needs to research if the existing POA is legally real (i.e. the property is listed as condo in the deed even if a stand-alone home) and what they owe now and in the future.
- In the North, good fences make good neighbors. Here it is walls as lots are small and you’ll want to wall in your area. Even in the countryside with land, best to have walls around your home for protection. Mexico’s history is chaotic so best to have some homeland security.
- There aren’t home inspectors like we are used to up North. So before making your offer, take a moment to test that spigots actually are connected to water, refrigerators are cold, ghosts are the quiet sort and such.
- Also, as I always advise anywhere in the world but the advice normally falls on deaf ears, make the effort to meet the neighbors then and there when viewing a house that interests you. I’m floored how rarely buyers do this due diligence despite investing gobs of money.
- Often you’ll buy a vacation property with furniture and décor included. Realize items, as large as a piano, have a habit of disappearing between contract and closing anywhere in the world. Plan your battles accordingly and never pay extra for furnishings. It’s simply used furniture and of little effort to get replacement dishes, or a piano. (Truly, had that musical experience. Twice. ) Here I’ve seen homes worth 200K charge 300K to be furnished. Like any yard sale earns 100K or the seller is going to schlep their pleather couch all the way back to Alberta.
- To build or not to build, that is the question. I’ve always bought spec homes that have sat for a bit. The builder is anxious to unload and has zero emotional attachments. I’ve built once and it was fun at the time since I was 22 and stupid. As known the world over, the building process will take longer and cost more than ever anticipated by the buyer. Manana doesn’t mean tomorrow so much as it is the word the buyer wants to hear today.
Hope all the above advice helps both you and Patty’s Playhouse playmates enjoy buying real estate even more!