There are many great resources out there about purchasing real-estate in Mexico but I thought it might be useful to talk about our personal experience as we navigate the process. Our case may be much different than most and this is not intended as advice! Hopefully it will be helpful but at the very least something for us to look back on. As a reminder, we decided to purchase pre-construction (i.e. before the ground is even cleared) and our place, “Blue House”, won’t be ready until Nov 2020 which is two years from now.
I’d like to start with a brief outline of the steps in our purchase process and then circle back and make comments on each. As of today we have completed the contract and have wire transferred a significant chunk of change down Mexico way! Please note there was much planning and research that happened well before these steps. I won’t go into that now but for us it took many years of scouring the web, speaking with ex-pats who live there and know the ropes, looking at places and many, “should we or shouldn’t we?” conversations over a glass (ehem or “two”) of wine that resulted in, “yes, lets go for it!!!”
Basic steps to our purchase:
- Initial deposit/hold
- Formal offer with payment terms
- Receive/review contract
- Sign/send contract
- Additional deposit(s)
- Final payment/take possession
Initial Deposit: After deciding on the property and while still in Mexico we were asked to put down $5,000US as a hold deposit. I must admit that even though we knew this is what we wanted, immediately after I handed my credit card over the reality hit me and it included equal doses of fear and excitement – we were really doing this!!! The initial deposit is similar to “earnest money” you’d put down on a purchase in the states to show you are serious. It was fully refundable if we had changed our minds. This also put a “hold” on the property until we either a.) changed our minds and got our money back, or, b.) fulfilled the agreed-to term(s).
Formal offer: As with most real-estate purchases the terms are all negotiable including purchase price and timing/amount of payments. We took a few days to figure out a budget that would work for us financially then sent our proposed plan to the broker. A few phone calls later we had an agreement in principal and this would become the basis of our contract. So, in our case the next step after the initial deposit was to negotiate a formal offer and payment terms. Our terms included a sizable advance payment in return for a significant discount on price. Not everyone would have the stomach to agree to put significant money down so far in advance of a pre-construction project but we did the homework and felt comfortable. Again, this is not advice.
Receive/review contract: As I mentioned in a previous post we are working with GMB, specifically “Karina” who has been truly great and although I’d like say more about her now I’ll stay focused on the topic, the contract! It took a few extra days for them to get us the draft contract due to Día de Muertos. This pushed us close to the agreed-to hold deadline not leaving much time for our review but we never got too worried about that. Without saying, we had made up our minds that if they pressured us or removed our hold because we needed a few extra days to review the contract, they’d lose our business simple as that. As you’ll see, due to our lack of preparedness the contract review took longer than expected.
We received the contract and it was written in both English and Spanish (left/right). That was nice but I immediately thought to myself, “if there’s ever a dispute I bet the Spanish version is all that really matters and our Spanish is, well, not great!” Hadn’t considered that before (duh!) but have since learned it is absolutely true. Fortunately, I had already researched Mexican law firms that specialized real-estate purchases for Americans. We decided on Mex-Law but there are many.
Due to the language barrier (still working on our Spanish!) it took a few days of back and forth with Mex-Law trying to explain that we only wanted a contract review and due diligence vs their standard closing service package (Luis our Realtor helped with this, thanks again!). The fee was around $1,000US and included a thorough contract review with over a dozen change requests to our favor, verification of title, liens and other items we would never had thought of. Our attorney worked with us and then on our behalf directly with GMB to facilitate changes. Hindsight being 20/20, we should have had a lawyer selected and ready for due diligence before we even put down the hold deposit. In our opinion this was money well spent and lesson learned! Our legal review pushed us well past the initial hold deadline but GMB had no issue working with our attorney and never pressured us about time, money or anything else – very easy to work with!
General summary of our contract:
- Large down payment in return for significant discount on price
- One additional small payment in three months
- Pay off remaining balance on delivery
Ok, that’s all I’ve got time for tonight. Will post “Part 2” soon. Thanks for reading!