Purchasing your dream home in Puerto Vallarta is a simple and safe process. Let our experienced team guide you through the process from searching for properties, writing the offer and then closing the deal. And once the sale is done we don’t go away. Take advantage of our 5 star concierge service helping with items such as changing names on utilities, setting up bank accounts, finding contractors or maids – and the list goes on. Below is an explanation of the buying process.
Here are some suggestions to help you with the process and to understand what to expect as you make your dream come true. Choose a reputable company and realtor that you feel comfortable working with.
In Mexico there is an association of realtors called AMPI (Association of Mexican Professional Real Estate Agents). This association holds agents to high ethical standards and ensures agents are trained in the process and laws of buying a property. Not all Agents are AMPI certified so it is worth asking before starting your process with them. We are an AMPI certified office.
Before you start looking with your agent, sit down and figure out your budget for the new place. Will this be a cash purchase or will you need to finance some of the purchase price? If financing is required, it is best that you get the financing in place, if possible, prior to looking at places. This ensures that you aren’t disappointed when you look at places and find your dream home, only to find out that your financing plans hit a snag. It also allows you to submit a stronger offer as there won’t be any conditions with regards to securing a loan.
Options for financing are several, but the best and cheapest is to secure financing in your home country either through a line of credit or by refinancing your current residence. Financing is available in Mexico and we can assist with this, although currently interest rates for foreigners buying here are significantly higher than in the U.S. and Canada and down payments required are usually in the 30-50% range.
Now the fun begins. Go out and see some potential dream homes with your agent. Provide feedback as to what you like and don’t like about the properties you view. This honest feedback will allow your agent to understand more about you and to further refine your search. And be realistic; there will almost always be trade-offs to consider.
So you have found your dream home. Now it’s time to make an offer. The process of making an offer in Puerto Vallarta is very similar to the process you will find north of the border. An offer contract, in Spanish with English translation, is drawn up generally with conditions. Conditions, depending on the type of property, could be that the offer is subject to a building inspection, confirmation of no lawsuits, review of financial statements of the condominium corporation etc. Generally we allow a few days for the owner to respond, as many are living outside of Mexico. You may experience several counter offers until you come to a mutually agreeable offer.
Once you have an accepted offer and all conditions have been fulfilled to everyone’s satisfaction we start the closing process. The closing process in Mexico is similar to the process you may have experienced north of the border.
If you have an accepted offer you can expect to be required to send a deposit to show your commitment to the deal. Generally, the deposit will be about 10% of the purchase price. This deposit will be sent to an Escrow account (through companies such as Stewart Title or Fidelity). This amount will not be released to the seller until the transaction closes. Currently closing costs in Mexico range from approximately 5-6% of the purchase price. This includes your land transfer taxes of about 2% of the purchase price as well as all other government fees, appraisals, lawyers and notary fees. While generally higher than you may be used to, remember that while up front fees are a little higher, your ongoing property taxes (at about 0.1% of property value per year or about $100 per $100,000 of property value) are very low.
Also included in the costs for foreigners is the cost of the set-up or transfer of the trust to your name. All foreigners purchasing within 50 kilometers of the coastline or the Mexican borders are required to hold the property in a Bank Trust which you own. Your lawyer/closing coordinator will provide a detailed estimate of closing costs after the offer is accepted.
Your lawyer and agent will work together to get all the required documents for the closing. Generally closings take about 4-6 weeks from the date of the accepted offer. Once these documents are in place they will be sent to the Notary, an independent party, for review and to finalize the registration of the deed in your name.
The final step is to transfer the property into your name. Before you can sign the deed you will need to send the rest of the purchase price to the escrow account a few days before the closing date. This money will not be released until you and the seller sign off that all conditions have been met. You will also need to sign the deed to finalize the transaction; however if you cannot attend the closing in person, a Power of Attorney can be completed that will give someone else the ability to sign on your behalf.