Avoid Paying 'Foreigner' Pricing
If you’ve ever been to a vender market in a tourist destination, you know that the first price you’re told isn’t the same as the price you end up paying. This same principle applies when purchasing a home or property in Latin America.
When buying and selling homes and property in North America, there are online sources and the MLS (multiple listing system). It’s possible to see what a comparable property sold for, what your current purchase sold for 3 years ago and what your neighbors paid for their home. Using these details, you can typically purchase a home and feel comfortable that you got the best value possible.
Enter Latin America… where finding comparables and selling history is pretty much impossible. Sure, there are well-known real estate companies located in Latin America, and they will show listings of what they have, but it is specific to their company and may still not show accurate pricing, as buyers regularly register their homes as costing less to avoid higher property taxes.
Here are some tips to ensure you pay a fair price for your home or property, as opposed to paying an inflated foreigner price:
Work with only one seller, as opposed to a group of sellers. You may get conflicting information and one may end up increasing the price to make the others go along with the sale.
Be wary of online advertising. Because the regulations are very lax, or non-existent, brokers and agents will publish extremely low pricing for properties or homes they don’t own, or may not even have a listing agreement for.
Get out there and talk with people, do your research. If you already have a local attorney, ask them about other sales in similar areas. Talk to the locals, talk to your potential neighbors, check out hand-written “for sale” signs and visit with numerous brokers.
Look for sellers who want to sell. If you’re focused on a home or property that’s currently owned, but they don’t really want to sell, they will likely inflate the price significantly. Alternatively, those that are actually looking to sell will more often be offering fair and realistic pricing.
Tour the areas and/or type of home you’re looking to buy. It’s important to see as many similar homes/properties as possible, to get a good gauge of the pricing. Most often, when a home is listed for private sale, the amount is pulled out of thin air. Seeing several homes or lots in the area you’re hoping to buy in will give you an idea of what the average price is.
Because of the lack of regulation and licensing, it’s not a bad idea to use more then one broker. It’s difficult to tell if the price you’re being told includes a hefty commission for the broker, or if the seller is leveraging one broker off another. If you choose to use only one broker, you could end up paying much more for your home or property.
Proceed with caution if you are told that there’s another foreign buyer interested in the same home or property as you are. It’s not uncommon for brokers or sellers to create a false buyer to increase property value and instill a sense of urgency.
Overall, if you’re on the hunt for a home or property in Latin America and not working with a reputable developer, move forward with care and vigilance. Your best bet is to immerse yourself in the local community for a period of time. Not only does this allow you to learn about the area, network with other expatriates and get to know the locals, but it does the same for them. You’re always going to be a foreigner, but there’s a big difference with being a visiting foreigner that no one knows and being a local foreigner whom people have learned to trust and build friendships with.
To make your Latin American property purchase easier, we've done the legwork in search of reputable, trustworthy and affordable developers. Go HERE to see how you can visit on a Discovery Weekend!