Key costs to consider
It’s easy to focus only on the price of a home, but there are other costs involved in buying a home in the Yucatan. Here are the main costs you’ll need to save up for.
Travel cost is something people do not consider as part of the cost to purchase a home. But if you decide to take 5 short trips instead of one long trip to buy a property, you are going to overlook a large amount of money invested before even making an offer.
I meet many buyers who have been traveling back and forth for years looking for a property with the hopes they are going to find that deal of a lifetime. Normally bouncing around from one agent to another. Each trip they are more disappointed as prices are only increasing. Not even considering the cost to travel back and forth, hotel cost, and other miscellaneous cost involved when traveling compared to being a homeowner.
Renting a home can be 10% to 15% of the value of a home a year. And even high percentage when renting during peak seasons for short term vacation rentals. Being a homeowner can mean you are spending a huge some on someone else’s home.
Also known as a Good Faith Deposit, it is standard practice for the buyer pay an earnest money deposit within 5 days after the signing of the contract of purchase. The contract of purchase is known as a Promesa in Spanish..
Earnest money is typically 10% of the final sale price, and is applied to the purchase price of your property. Pre-sales and developments can have a higher deposit.
Traditionally the earnest money is held by the seller here in the Yucatan. It is becoming the new standard for the earnest money to be held by the escrow agent until the closing process is completed. This is commonly known as escrow service.
Properties in the Yucatan are typically are cash offers. There are not many options to finance in the Yucatan and even less options for a foreign buyer. A foreign buyer should expect to have the final payment ready within 45 to 60 days after the signing of the contract of sale.
Closing costs for buyers
Closing costs come in three parts for a buyer in the Yucatan.
The buyer’s closing costs usually total 5%–10% of the final sale price, which includes:
- Fideicomiso: A foreign buyer will need to form a Fideicomiso to hold the deed of the property on their behalf. This cost is around $50,000 pesos to form. A $25,000 pesos retainer fee is paid to the notario office to begin the process. This $25,000 pesos goes towards the total closing cost.
- Acquisition tax: Acquisition tax is paid one time at the time of closing. The acquisition tax is also known as the transfer tax. In Merida and most of the state of the Yucatan, the acquisition tax is 2.5%. Along the coastline acquisition tax and range from 3% to 4%. The tax is based on the recorded amount on the deed of the sale.
- Legal and Notario fees: Buyer will need to pay the Notario fees for the various services associated with purchasing the property. These fees normally total between $45,000 to $65,000 pesos
All the extras
In addition to the above costs, ask yourself, “What do I need to buy a house?” Consider maintenance and remodeling, movers, new furniture and appliances, utilities, home security systems, etc. You’ll pay for these after the home is yours, but you should still factor them into your home-buying budget or create a separate post-move budget.