5 signs you’re making a good investment
By Carol S. Billups
It’s only natural. You’re buying your first foreign property. Your friends and family are all telling you that you’re crazy to be risking such a large portion of your assets on real estate in México. They tell you horror stories about people who have lost everything to unscrupulous developers. At some point, you start listening to them and tentatively begin to wonder, “What if I really am making a big mistake?” Are you really making a huge blunder? Probably not, and here are some reassuring signs that this investment will be not only safe but advantageous.
Make no mistake: No matter how familiar sounding the title of notario público is, it is by no means the same as a notary public up north. In fact, a closer equivalent would be a magistrate. Notarios públicos are government-appointed attorneys who have completed four additional years of study and who are charged by the government with overseeing your transaction and ensuring it is safe. It is their duty to make sure that every part of the transaction conforms to the laws of México and the state of Baja California Sur. As part of that project, they will research the title, verify there are no legal claims, and see to it that all of the necessary procedures have been done properly. The last two words of the trust will be Doy Fe: I give faith—his or her assurance to you that your investment is secure.
We’re Committed to You
Let’s face it: The most risk-averse organizations on Earth are insurance companies. Concurrent but separate from the notario público’s investigation of your purchase, you may elect to have a title insurance company evaluate the risk. Major U.S.-based title insurers also do business here in Los Cabos, Armor (formerly Fidelity) and Stewart Title among them. When they issue a letter committing to issuing a policy to you for this property, it is guaranteed they believe you will never have to file a claim. Although the actual policy is not issued until after the closing, the letter of commitment is another sign that an expert feels that you are making a good choice.
It’s in the Bank
In the United States or Canada, you would never consider giving a seller a large sum of money before he delivers the product, nor would you give the purchase price to a third-party individual to hold for you. Why would you do that in México? The aforementioned title insurance companies can also provide you and the seller with a safe, secure escrow account. In all but the rarest circumstances on the purchase of an existing home, you should insist on keeping your funds in the safety of a bank account in the United States. All parties will follow the same procedures you used when buying your primary home. You will become parties to a binding contract, or escrow agreement, which will stipulate that no monies will be released until the notario público assures the escrow company that the property has indeed been transferred into your name following all the appropriate legal steps. Should the seller fail to deliver on his promise, you will have the right to a refund. The use of third-party escrow is for your safety.
Do I Know You?
In most cases, you will work with a typical escrow account. The most common exception is when buying a yet-to-be-built home directly from a developer. In this situation, it is customary to pay an initial deposit, then an intermediate payment when certain milestones are met, and then a final payment or conversion to a private mortgage when the house or condo is complete and delivered. These days, with very little financing available for foreigners buying in México, this is an attractive option, with some builders offering very low interest rates on the balance owed at delivery. But, as would be the case anywhere, be sure you are giving that initial deposit to a reputable company with a solid track record. A good example would be the PORTUS group, whose wildly successful Ventanas projects, as well its beachfront Soleado and Cabo del Mar Ecopark attest to their commitment to the community. It is comforting when buying pre-construction to see other houses that have already been delivered and occupied in prior phases of construction.
Unlike in much of México, Los Cabos has a very organized real estate industry; in fact, we have the most advanced multiple-listing service in the country. In order to subscribe to that MLS, all agents and their brokers have agreed to abide by a strict set of operation policies and procedures that regulate how we do business. These rules specify the types of transactions agents conduct, and set up a rigorous system of safeguards that are designed to assure the safety of clients’ transactions. Just as in the United States and Canada, each subscribing agent has access to the properties represented by every other subscriber. So, as a buyer, you will only need to work with one person to find the perfect dream home anywhere in the state. A wise buyer will insist on working only with an MLS/BCS agent who is bound by these rules and regulations.
While no one knows the exact number of Americans and Canadians who own property in Los Cabos, Richard Kiy and Anne McEnany of the International Community Foundation conducted a 2010 study on housing trends among Americans living in México’s coastal communities. The study found that 77 percent of respondents owned their own homes. That astounding number demonstrates the great comfort most Americans and Canadians feel here. And you will too…when you’ve come home to Los Cabos.
Carol Billups is broker-owner of Cabo Realty Pros in Cabo San Lucas and has been helping clients find the perfect Los Cabos property for more than 15 years. You may reach her at firstname.lastname@example.org or on her cell at 044-624-147-7541. You can search the entire MLS on her website, www.caborealtypros.com.