Viewpoint 2008
Using Common Sense in Real Estate
September 1, 2008
The person giving you advice or counsel may assume that you understand how things are done.
Over time, I have come to believe that what we usually call common sense is an opinion based on cultural experience.
To show common sense when you are in a foreign country, I recommend the following:
- Assume you no nothing about how things are done. This includes procedures, customs, and habits.
- Use your senses of hearing and seeing. Use your sixth sense of intuition. Observe what people say, how they say it, how their body language plays into the scenario. Understand that their body language may mean the opposite of what you think. Observe without deciding on a conclusion.
- Think hard about the subtlety of language. If you do not understand or speak the local language well, translation into yours may not be what is truly meant.
- Do not ask questions meant to give answers you assume or desire.
- The person giving you advice or counsel is qualified to do so.
- The person giving you advice assumes you know.
- Market conditions are the same.
- Contracts and procedures are not different.
Carefully choose who will represent you. Do they have the knowledge and patience to guide you through the process?
Do you understand the documents you will sign? Are you or the seller asking for illegal or unenforceable conditions? How you legally binding yourself when you sign an offer?
My opinion is that the average agent you will work with in any country will not know all the answers. I believe strongly that you should have competent legal counsel when you are buying or selling property in a foreign country. You should hire a bilingual, bicultural attorney to be part of your team.
What is common to put down to “bind” the offer? How is safe title assured? What are your closing costs as a buyer or seller? What conditions are you agreeing to in case of default? Are properties bought “as is”? Can contingences be included?
Who is qualified to do an inspection? Are inspections the same as in your home market? Can you negotiate cost of repairs?
How do you take title to a property? Who is qualified to transfer the property and where is it done? Do you have to be present at closing?
How do you send money for a purchase in a foreign country? What currency will it be in, who holds the funds until the title is transferred into your name? When is the money sent? How long does an average closing take?
How do you make sure that the seller has paid his monthly expenses before you own the property? Who makes sure this is done? What is common for the market?
Can you obtain title insurance? Who can issue it and how much does it cost? What are the exceptions to title insurance?
Are there occupants in the property? What procedures will protect you against a problem with taking possession?
How will you maintain the property? Who will pay the expenses? Are you in a climate, which requires a certain system of maintenance and cleaning? What are the natural enemies to your asset? Humidity? Earthquake? Fire? High-water? Termites or other varmints? What benefits do you owe your employees?
Whom can you trust to oversee your property? What system for accountability have you worked out? What is a fair amount to pay for expenses and management?
What do you owe each year for the property…taxes... federal zone... income tax for rentals...trust payment?
What legal documents do you receive at closing, and when and how do you receive them?
Do you understand the difference in the culture where you now own? Do you know how the concept of time is treated? Do you have the patience and desire to learn a new set of rules? Have you located yourself?
Harriet Cochran Murray
This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller conduct his own due diligence and review.
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