When looking to purchase property here in Baja, you want the best team working for you! Choosing to work with a Licensed Buyer´s representative will make sure you don’t overpay for a property; they will make sure the title is clean and clear and more importantly they will protect your hard-earned money. The closing process is very different to that of the US and Canada and more importantly all the paperwork is in Spanish!
This article will explain what your Baja Buyer´s Agent should be doing for you and everything you need to know to make sure you have anticipated every angle of the purchase BEFORE you write up an offer with your agent!
Wishlist and Towns: In Baja California Sur there are many charming and beautiful towns each offering its own unique Baja experience! Small rustic beach towns such as Todos Santos & La Ventana offer a lot of adventure and outdoor activities, while La Paz offers a unique “life by the sea” experience, Cabo offers luxury resort-style living and “no bad days”!
The first step is choosing which beach town to call home, this may not be as easy as you think! Your realtor should understand what you are looking for and should help you decide which town works best for you and which neighbourhood you will enjoy the most. This is often overlooked by realtors who most often only specialize in one neighborhood. Working with an agent or brokerage who has teams in each town is the best way to get objective information on where you want to live.
Once you have decided on which beach town you like the most, the next step is to visit the neighborhoods and see some real estate!
Explaining the buying process. Understanding the buying process and having constant and clear communication with your realtor is very important. This can be the difference between a quick and efficient closing or a long painful closing. Your realtor should be able to provide a step-by-step of the closing process and all the entities involved such as the Notary, Escrow, Bank holding the Fideicomiso, ISABI Tax and the roles that they play in a purchase. For further information please reach out and request the article “The Buying Process” It explains the purchase process from A to Z.
Financial Disclosures:
There is almost no financing for foreigners in Mexico, all sales are paid in cash (wire transfers).
When buying pre-construction properties, make sure you have an agreed-upon set of deliverables, finishings and square footage as well as a payment plan and delivery time with penalties for the developer. It is common for delays in construction, but you want to make sure the building contract anticipates delays and incentives for the developer to finish on time.
U.S.-Based Escrow accounts, all funds are to be sent to a third-party U.S.-based Escrow account where the money is held and cannot be released without both Buyer's and Seller's signatures. The most common escrow company is Global Escrow Solutions, it has a cost of $650 USD for the use of its account, and it also provides insurance on the transactions which ensures your money safely gets to where it needs to go.
The Closing Costs should be given to you before you make an offer on a property so that you are aware of all the associated costs for closing, such as the 2% acquisition tax (ISABI) and the Notary fees. A strong realtor should be able to efficiently provide closing cost estimates from a couple of different closing attorneys for you to review. For an itemized example of a closing cost estimate please request and I can send an example.
Due Diligence Costs, there are some associated costs for the due diligence process, for example, a professional inspector will have a cost of around $400 to $600 USD or more depending on the size of the property, the engineer that surveys the land has a cost of about $300 to $500 USD depending on the size of the land. These are smaller costs but are often overlooked and not accounted for during a purchase.
Legal Disclosures:
Purchasing with a Fideicomiso, there are a lot of benefits of purchasing with a fideicomiso. The main benefit is the extra layer of protection as the Bank holding the fideicomiso does its own due diligence to make sure the property is clean and clear before it allows the Buyer to transfer the title into their name. The second benefit is that you can name an inheritor directly in the fideicomiso, should anything happen. In the case of death, the inheritor will automatically receive ownership of the property without any legal repercussions, or a will and testament legalized here in Mexico.
Purchasing with a Mexican Corporation, there are limited benefits for a corporation when purchasing a vacation home, and in the long run, it is more expensive than owning a Fideicomiso. Setting up a corporation takes about 4 to 8 months, and there can be delays. Another factor that needs to be considered is that here in Mexico, income tax is registered every month so you will need to hire an accountant to record and file all your taxes monthly. Should you be purchasing multiple properties for development and/or renovations then I suggest we get a meeting with a top-tier attorney to discuss the details.
Certificate of No-Liens, by law it is required that a property have no liens or outstanding payments, everything from the electric bill to property taxes and lawyer fees is checked and signed off on before the Buyer can transfer title into their name.
The above legal and financial disclosures are just a few of the most common things that we see in a transaction, but each transaction is different and it’s important to make sure that your Buyer´s agent is introducing you to top-tier, third-party professionals such as closing attorneys, accountants, engineers, builders, rental agents and property managers, etc. By having access to multiple different professionals, you can have all the possible information that you need to make an informed decision on your purchase.
We at Diamante Realtors offer free, no-pressure consultations with multiple professionals to help cover any questions you may have about; the purchase and closing process, the building process and costs, accounting, U.S. & Mexican tax information, we navigate municipal, state, and federal offices and much more. Feel free to inquire should you have any questions pertaining to real estate in Baja, we are happy to share our 25 years and over 1,800+ sales experience with you!
When you consider buying a home in this beautiful part of the world, it is important to make sure that aside from getting a great deal, you receive clean and clear ownership titles in a timely manner.
Gregory C. Bórquez, Investment Strategist & Licensed Realtor with Diamante Realtors
+52 612 228 0361 gregory@diamanterealtors.com
