Buyers should take time to prepare for their future purchase of their new dream home here in the Yucatan, but so many do not think about what they are getting themselves before making an offer. Not being prepared could be that dream home slips from your fingers. The buyer may not realize they can not finance the home or know about Fideicomisos.
Not being prepared can take a huge emotional toll on a buyer. Buyers do not realize how emotional a home purchase can be until they lost the home of their dreams. A prepped buyer can reduce the chances of having an bad experience in purchasing their next property in the Yucatan.
1. Foreign ownership
Yes, foreigners can own titled real estate in the Yucatan. You don’t need to be a Mexican citizen or resident to purchase property here. You just need a passport and money in a bank account. The most popular areas of the Yucatan fall into the restriction zone. This includes Merida and all of the coastal communities.
To buy in the restriction zone, you will need a Fideicomiso(Trust) for your property purchase. Fideicomisos are safe way to purchase property. They do have increased cost from direct purchase, but they also do have some benefits that come along with the extra cost.
2. Be ready!
You plan to travel to the Yucatan to look at properties and you are ready to buy, you should still be ready to make an offer. And most importantly, be ready to follow through on the offer.
If You need to sale a property before purchasing a property in the Yucatan. speak your local real estate agent about listing the property before your trip. If the house needs staged for the sale, know how long you need to prepare before listing. Know how long it will take to close on the property. Know how much you can expect to net from the sale.
Have funds in place. It is not uncommon for a buyer to realize after a offer is made that their money is not as accessible as they might have originally thought. Maybe, you have the funds in savings, investments, stock, or whatever the source, be sure this money can be accessed in a timely manner. Know your fees, taxes, commissions and the time it will take for the money to be available, before coming down to shop for a property. If you need to speak with a financial adviser, do that before the trip. It is good to speak with the bank about making international wire transfers. If you are planning an extended trip to the Yucatan, you do want to make sure the money can be accessed remotely.
Have a defined budget. You do not want to be disappointed with your search. It quite common for buyers to suddenly and drastically reduce their budget. A big mistake and upsetting to fall in love with that perfect 400,000 USD home to find out you can only afford 150,000 USD. Reducing the budget significantly can truly be a disheartening experience for buyers.
Time is not a buyer’s friend. Prices are not stagnant. It is very common for clients to visit the Yucatan to shop then a they quickly realizes they are months or years from being ready to purchase. This is a situation where a buyer can become disheartened with the process. This buyer returns after a significant amount of time has passed to realize they are getting less for their money. Their favorite home is sold and they can not afford something comparable.
Give notice to your agent. Do not just show up hoping to see homes without notice. Time is needed to set-up a list of properties to visit.
3. Maybe you are just not ready
There is no reason to shop for a home if you are not ready to buy. Prices and availability change. This is not a successful strategy, yet it is common for buyers to shop for years before they plan on buying. Coming back and forth. Each trip they make appointments with various agents, sellers and builders to just waste everyone’s time. Sellers do not appreciate having their home treated as a home tour. Effort goes into showings, therefore all showings should have the potential for an offer.
These chronic home shoppers typical become confused and hold on to old property pricing which makes pulling the trigger even harder for them.
“I am not ready, but if the right home…” This is also a common phase use by people who want access to a home, but have no intent to buy. If you are saying this to someone then it is probably still not a good idea to ask for an appointment to visit a home.
Wait until you are ready!
Not being ready to buy does not mean you can not come down to the Yucatan to do research for your future purchase.
What should take place in a exploration trip:
-Meet with an agent for a consultation. Start that relationship early in your search.
-Take a home tour.
-Visit different areas you may want to live.
-Explore the city
-Go window shopping for groceries, appliances and furniture
-Make contacts for your pending purchase and move
-Get invited into people’s homes
-Rent homes comparable to want you might buy
3. Have a wishlist
Buying a home in the Yucatan can be a much different strategy that why you bought your home in your current location. Typically people buy homes considering distance to work, school districts, property taxes and their budget.
What will be your priorities once you are living in the Yucatan?
What is the purpose of this purchase?
How much space do you really need?
What will be the main factors for choosing the location?
What features are most important?
5. Merida is affordable, but be realistic
Merida has the same price points similar to an affordable midwestern city. Properties in the Yucatan are not dirt cheap and people are not desperate to sell.
Have realistic expectations of the price points and what you can afford.
6. Find an agent
Buying a home in a foreign country is one of the biggest financial decisions you’ll ever make, so working with an experienced agent is an essential part of buying real estate in the Yucatan. A dedicated agent representing you means they are looking for the best deals tailored to your needs.
One of the best ways to find a reputable realtor in Yucatan is to see what other property owners have to say about their experiences, so be sure to ask for referrals. Check the agent’s client testimonials. Use an agent who will go assist after the closing.
An experienced real estate agent will make the entire process go smoothly and can even give the buyer access to properties that are not yet publicly listed, and therefore offers incredible value with their experience and services.
Use and take advantage of your agent’s time and services wisely. Keep focused and only ask to visit homes that fit your needs and budget. Respect their time and give them priority over tours, the beach and other tourist activities. Make sure your agent has all the information they need to fully assist you with finding you a home.
7. Get an early start
You are just thinking about what is the possibility of living in the Yucatan, this is the time to start that relationship with a reputable real estate agent. What you are looking for will evolve, and it is always good to have professional advice while deciding on what type of property is right for you. It is also important to know early in your search what your budget will allow you to buy. You do not want to spend year fantasize about a colonial mansion when your budget is more on the modest side. Get your expectations set early on. Decide the purpose of the property: Investment or pleasure? What are your priorities: Location, amenities, size and budget
Discussing properties over email with an agent can help you do your initial research before arriving. It is impossible to assess the value of a property over the internet. The nature of the market causes there to be outdated listings to be publicized. So it is crucial to have an agent that can help you find out what is current.
8. Make the most of your trip
When you finally take that trip to the Yucatan for purchasing a property, make the most of your trip with these few suggestions:
Don’t stay in a hotel. You are here in the Yucatan to buy a home. So why not rent something comparable to what you may buy? This is no time to be cheap now. If you plan on buying a high end colonial, then rent a high end colonial. Vacation rentals can be found anywhere in the Yucatan. Ask your agent to help find some comparables to your property search.
Do not visit during the hottest month. Many suggest to people(on Facebook), who are exploring the idea to live in the Yucatan, to visit the Yucatan in the hottest time of the year. But this could not be a worst idea . Why? Because it is hot! Many places in the world have a period of undesirable weather, no one decides to vacation during times when the weather is the worst and for good reason.
While you are in the Yucatan shopping for a home, you will not be here living as a full time resident, you will be here exploring as a tourist when you are not with your agent. You will be behaving much like any tourist. Out all day, walking, enjoying, exploring the city, etc… Plus you will be out visiting home after home, many with the A/C off, getting into a hot car, walking in the sun. This is not normal behavior of a full time resident.
Once the heat has set in for the day, a full time resident has already done what they wanted to do for the day and are waiting for the evening to go back out.
9. Prioritize your time while in the Yucatan
Also to make the most out of your trip you need to focus on the real reason you are here, to purchase a property!
Are you here on vacation, or is this a business trip for purchasing a property? The trip can be for only one purpose.
Therefore, you must prioritize. Uxmal has been standing for a 1,000 years, but that house you are interested in will not be on the market forever. A common mistake, buyers frequently miss showings to go on a tour. It is also very common for buyers not give themselves enough time to shop and make a decision.
Keep in mind, appointments have to be made for every property. Sellers do not always prioritize the needs of a buyer. Actually it is a rare quality in a seller to do so. You must be flexible in your schedule to get into the homes.
You will need some unplanned time to do your due diligence in the home. Possible meet the Notario, inspections, explore the neighborhood, second showings, meet with contractor, etc… Do not plan excursions ahead of time. Wait until business is complete with your property purchase.
Make sure the trip is long enough to complete the purchase. 2 or 3 days is not enough. A week is enough time to purchase a property. That is enough time to spend a few days looking at properties, exploring areas, revisiting homes of interested and meet with contractors, attorneys and whoever else you need to make an offer.
10. Live in the present
The moment you begin interacting with the local expat community, tall tales of a time when locals were basically giving colonial mansions away for free will be told. Then the whole town showed up to help renovate the house. Birds and fairies installed the talavera tiles…. Like if Disney did their own version House Hunters International.
Myths and fairytales are based aways based on facts. Up until 2008, the Yucatan had a declining population. Declining population means one thing, stagnant and declining property values. Properties in the past sold for significantly less than in today’s markets and construction cost were far less. So at one time homes sold for a lot less. A story many cities can tell around the world.
This is 2020 and Merida is now a success story. A booming city that has been transformed into a international destination for investors and homeowners. Not only are foreigners flocking to the area, but so are Mexicans. Mexicans from all over the country are looking a the Yucatan as a safe place to live, work and raise a family. Merida is now a city with a diverse selection of restaurants, shops, museums, schools, colleges, hospitals, etc…. and increased infrastructure.
Along with the growth and increase quality of living comes increased real estate prices. These two concepts are inherently tied together. You can not expect a city to grow and expect real estate prices to be stagnant.
People are no longer moving to Merida because they can pick up an old colonial for next to nothing. The are moving here because this is an amazing place to live. Safe, diverse and still very affordable. Merida has been come a first class city to live in.
Know what you can afford in today’s market. There is no gringo pricing. There is only supply and demand. Some of the hot areas of centro now are high dollar areas. Santa Lucia and the surrounding area is a high demand/low supply area right now. If you are looking for a colonial on a budget, you are probably looking to buy 10 to 15 blocks out of this area.
Keep an open mind about where in Merida might be right for you.
Did you know that there are many unknown neighborhoods within the city that are wonderful places to buy, live and invest?
You do not have to live in the middle of centro to enjoy it. Santa Lucia, Plaza Grande and Paseo de Montejo will always be just a cheap Uber ride away.
Again, an experienced and knowledgeable real estate agent can help you find the perfect neighborhood to call home.
11. Social Media
The world of social media is complex, helpful yet full as misinformation, friendly yet full of negativity, and there is no filter nor liability.
Why are we talking about Social Media as a tip for real estate? Because social media is BIG in the Yucatan. Over 60 Facebook groups have been formed to discuss various topics solely focused on the Yucatan. Probably overly relied on by some and taken too seriously by others.
Social media can be a great place for getting basic recommendations. Where to eat, where to stay, where to go. And even recommendations for which professionals to work with and who to avoid. But be careful with freely given advice. Who are these people and should they be telling you how to spend 100,000´s of dollars after only a few minutes of interaction on Facebook? There is a lot of misinformation about Fideicomiso, taxes, laws and many other important matters when there are experienced professionals ready to assist. Everyone has an opinion, but not everyone is a dedicated professional trained to assist buyers and sellers with their real estate transaction. Remember, most are one time home buyers in the Yucatan and they are trying to regurgitate information about a home they purchased years ago. Not reliable information.
Social media should be taken with a grain of salt. If you allow, it can create serious confusion. How you word your question will dictate the tone of the responses. If you question is worded in a positive manner, responses will be overwhelming positive. If you questions shows concern, the responses overwhelming will be concerning and negative.
Many people who are on these social media groups themselves have never been to the Yucatan, nor do they live in the Yucatan nor do they own property in the Yucatan, yet they are contributing to serious content driven discussions about real estate, capital gains taxes, legal matters, etc… Who are these people? Would you walk down the street and ask a stranger on which treatment for cancer is best?
Keep the casual conversation to buenos dias and the weather and leave the serious discussions of real estate to the professionals.
Buyers are very familiar with contingencies in their home country, but the Mexican legal system does not support contingencies very well. And agents nor notarios do not have the power to enforce contingencies.
Concepts that are common in the U.S. such as a contingency based on the sale of a property do not exist here in the Yucatan.
And there is no “I will buy this house if the seller agrees to….”
The market here in the Yucatan is a “AS IS” market. Deals should be clean and simple. “You have a house and I want to buy it.”
Exceptions to this rule would be properties being offered by developers, builders and investors. A building contract can be devised to define the delivered product and a guarantee can be put into place.
Inclusions can be included in the purchase contract. Furnishings, appliances, etc…
As well as extra time for the closing.
To understand contingencies or the lack of, is an important issue for a homebuyer to prepare for before looking for a home in the Yucatan.
The available internet service should be considered when buying. Working online is becoming more common these days, so what internet service is provided is an very important issue that can be overlooked.
Many new areas of Merida still do not offer direct internet service. These areas are dependent on a tower service which offer limited speeds. I have observed that many in the industry do not understand the difference so buyers do need to be careful.
It is possible to confirm with the three main internet service providers if they offer internet to the address you are interested in.
14. Stick with your agent
Stick with one agent representing you as the buyer as this can be very beneficial to you.
You have one agent advocating for you. They understand what you are looking for and will make sure the closing process goes smoothly for you and will assist you after closing.
The market can be difficult to navigate. There are many sources to advertise and many many small agencies. It is very possible the buyer might be the one to find a home listed by another agent. It cost you nothing to send that listing to your agent and ask them to represent you. It really is a win win for everyone involved. You have your advocate representing you and your agent who has invested time in preparing you for a purchase gets paid.
Lots of time can be invested into a client by an agent getting them prepared to make an offer. Besides showing homes, agents should be explaining the market, the purchase process, renovation process, Fideicomisos, capital gains tax and much more. It would be unethical for another agent to benefit from a prepped buyer of a competitor.
A common story from agents “I showed my client X amount homes, they saw another agent’s listing, contacted them and made an offer”. Buyers should consider this, the buyer knew that was the correct house because they visited all the homes they visited that were not the correct one. In this scenario the listing agent benefited by the work of the buyer agent.
When you find a property of interest on the internet, send the link to your agent and ask them to investigate and set up an appointment instead of contacting the listing agent.
Even long time residents will tell you to switch agents. But this is really bad advice. Maybe that person had a bad experience with an agent, but not all agents can be judge by one stranger’s experience. Today’s industry there are many wonderful professionals striving to make the industry better and offering excellent professional services.
15. Common Mistakes
I’ll come back next year:
Waiting a whole year to continue the search. Prices again increase during that time frame.
Some become chronic buyers, returning year after year hoping to find a deal as good as their first trip.
It can be hard to pull the trigger in one trip. Very common to need to return on a second trip, but it is beneficial to return promptly.
Not being ready:
Too many variables still need worked out before making an offer. Once the buyer is ready, property is already under contract with a different buyer.
You are making a huge decision. Some excitement and urgency or even stress should be demonstrated by the buyer.
It is hard for an agent to advocate for a buyer if they say “eh, whatever”. This is a life changing decision. Indifference will cause you to not be taken seriously.
Making offers based on the budget and not the market value.
Over estimating a repairs. Asking 20,000 usd off the asking for a 5,000 peso repair.
Using other listings to determine the offer. Maps and locations online are unreliable. This mean of using the internet to compare value is impossible. Your agent can help determine comparables. Property value can be determined by the cost per sq meter along with the amenities offered.
Buyers believe that the time a property has been on the market should be factored in when making an offer. With very low property tax, low upkeep cost and no mortgages, time on market really does not matter to a seller. Many great homes take time to sell.
Not being upfront with the agent:
The agent is your ally. They are investing time and money to assist you. You should be upfront with them so they can assist you better. Provide you agent with all the relevant information needed for your property purchase. Let the ask you about your finances, future plans, lifestyle and other details that can help them find you the perfect home.
Shopping outside of their budget:
Shopping for homes outside of their budget with hopes that they can negotiate the property down enough to be able to afford it. Typically these types of buyers create justifications for their low offers.
This unrealistic approach waste time, homes that the buyer could afford are selling while visiting more expensive homes. Buyers should consider the closing cost and work the house may need after closing. So shop well within your budget with some room for extra cost.
Thank you for reading my blog!
Yucatan Beach and City Property is your trusted professional in real estate no matter if you have a house for sale or you are buying a house. We provide the top real estate services in the Yucatan including Merida and the surrounding coastal communities.
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