| 000054 Visit since
Anatomy
of a Real Estate Purchase - Part 1
 |
| Photo by Jesus de Avila |
The couple e-mailing me had decided
that they loved Mexico, particularly the Banderas Bay area. They wanted to plan
a trip to buy a property. They are teachers, and their budget was under $100,000US,
including closing costs. We corresponded
back and forth for a few weeks via the Internet. Several properties were located
on various websites, including the multi-list website of the local AMPI chapter. Then
Susan wrote that she would be down with a friend to look and wanted, within the
10-day visit, to find a property and make an offer. This was great, as this couple
was at the stage where they wanted to make a commitment if they could find what
they wanted and could afford. Time was set aside to search through my choices
and line up some condos and homes to show to Susan on our first appointment. By
now Susan knew some important points: real estate agents are not licensed in Mexico
so choosing a professional with experience was important to her. She asked questions
in her e-mails to determine my experience and ability to show her a variety of
properties. Susan knew that the closing costs for a buyer
of a purchase would average 5-8% of the price. The custom here is for the buyer
to pay the transfer property tax; the notary fees and the bank trust cost. A seller
typically pays his capital gains tax, if applicable, a trust cancellation fee
if his trust is ending with the sale, and a sales commission. The
first day we looked at 5 properties, even though I could tell that Susan wanted
to see more. We were covering the entire bay in order to see what Susan could
afford and the distances we were going to travel were from Mismaloya to Punta
Mita. We met the agents at the properties or were given keys at the condo front
desks. Some agents gave us profile sheets and some did not. In all cases, we had
some description of the size, price and basic amenities, from either the website
or MLS book. It took more time to see these condos and homes, as we had to meet
or find people to open the properties. There are no electronic lock boxes with
keys, or precise communication with offices for appointments or good sets of directions
or detailed maps to some of the properties. I prepared Susan and her friend by
humorously describing the adventure we were about to start. I had several goals
on this first outing: not to wear Susan and her friend out so that they couldn't
concentrate, and to limit the viewings so that she would remember the properties
when she returned to her hotel room. I was also learning more about Susan and
what she wanted and how she accepted the information of buying in a country with
different customs and rules. We took several days, in
between Susan's sightseeing excursions, to travel to the different areas of the
bay to see her price range. Some of the real estate I showed her was about 10%
above her price range, in the expectation that a motivated seller would agree
to a lower price. It was important that Susan see what her dollars could purchase
in this market. The real experience of going to the properties was far better
than "shopping" in the glossy magazines and newspapers promoting local
real estate. Susan had received and read beforehand articles
on the purpose of the notary in a transfer of property in Mexico, the purpose
of a bank trust, and had an idea of the yearly cost of owning a property here.
She knew she needed to earn a rental income when she was not using the property.
Her plan with her husband, Robert, is to make it available to friends and family
who want to get away from the cold a few days each winter. So, each property we
kept under consideration, had to have some information about its rental potential
and pricing. Susan was determined and we worked together
to meet her goals. She knew not to fall totally in love with one property, but
be flexible and keep her options open. Near the end of
the 10- day visit, we compiled a short list of 4 properties that Susan considered
worth making an offer. She had gotten quicker at summing up each property we saw
and eliminating down to a few. It wasn't that we saw better properties the last
few days, but that the big picture was clearer to Susan and she could put each
property into a perspective, based on her body of knowledge of her price range
and the areas of the bay. We prepared a letter of intent
on a one-bedroom penthouse in a small building, with a superb view of Vallarta
and the bay. The price was higher than the budget, but we became creative and
asked for financing of a portion of the price at an attractive interest rate.
To sweeten the offer, we even offered the use of the condo one week a year for
the next 5 years. Susan and Robert are not going to be able to retire soon and
they can only come to Mexico during their teacher vacations. We hoped that offering
the use of the condo in high season was attractive to the seller.
I wish that I could say that the seller accepted this creative offer, but she
didn't. She had other places she could stay in Mexico, and was not of the mind
to take a sales price close to what she had accepted a few months before. The
listing agent had given the details of a former accepted offer by the seller.
In retrospect, I don't think this was information that helped us. It set us up
to expect that our offer had a better chance than it did. Susan
was doing her homework, though; she was disappointed that our offer and counters
did not effect an acceptance from Seller #1. We moved on to Choice No. 2. Susan
and I knew that a buyer was looking at offering a package price to buy 5 condos
from one owner in a well -located building. We knew that we may be maneuvered
out, but Susan opted to offer a price for one condo, a little bit higher than
the asking price. After several days of waiting, we were told that the letter
of intent was accepted, subject to the formal sales contract being acceptable.
The listing agent was able to keep the other buyer in the picture with purchase
of the remaining units in a package. We were lucky that the second buyer didn't
make an "all or none" condition to his offer. I also think that the
listing agent helped us. Well, at this point we have a
formal offer signed by both parties, with conditions to be met by the seller prior
to closing. These conditions include that the seller has the proper paper work
required by the notary to show that she is the rightful owner, the condo fees
are current, and the taxes are paid. This large property
has a number of owners who are not paying their fees, so the majority owner has
started a lawsuit to take over the ownership of those units in default, or force
the delinquent owners to become current in their financial obligations. Susan
and Robert have decided that the majority owner will be an asset to their small
ownership share of the building. They have agreed and signed the Disclosure Form
describing this circumstance. It is unusual that a Disclosure Statement is available.
It was the right step for the listing agent to take. I am fortunate to have buyers
who can see the value of the property and believe in it's future. The
best feature of the property is that is has what Susan wanted all along: a great
view and a sandy beach in front. Susan and Robert realize that to have a chance
to have this location at this price is rare. The closing
is to take place within the next 30 days. To be continued…. Harriet
Murray, Broker For additional information
on properties for sale or lease within the bay, please call or e-mail me at: harriet@pvmirror.com
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