How to Buy Real Estate in Puerto Vallarta – The Development
In recent posts I have been describing the process for buying real estate in Puerto Vallarta, Mexico and I have been giving a lot of information about buying resale properties from private sellers. I thought this would be a good time to give a little more information about buying new properties from the developer in Puerto Vallarta.
Puerto Vallarta Real Estate
The process is very similar to buying from a private party, except the developer will usually have a lot more control over the process. Developers tend to be less negotiable on price and terms (depending on the market) and they carry their own offer sheets (letters of intent) and contracts. They will usually ask for a 30% down payment, and will often have various financing plans available offering differing levels of discounts depending on how quickly you pay. Developers will also often insist on using their own notaries. This is because as a development, they have a great deal of paperwork involved for many different units on the same property. Putting all that paper work with one notary saves a lot of time and labor spent reinventing the wheel. This is all well and good, but it is not a bad idea to see if they will match another notary’s rate, to help ensure you are not being overcharged for their services.
One advantage to buying new from a developer is the warranty. New developments usually have 1 year warranties, which allow you to find any defects that inevitably go along with a newly built building. How good the warranty is really depends on how good the developer is. Your real estate agent will be able to help you find the better developers.
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How to Buy Real Estate in Puerto Vallarta – Making the Offer
OK, so you’ve been looking high and low and have finally found that perfect place by the sea in Puerto Vallarta.
Now what?
Hopefully by this time you have found a Real Estate agent you are comfortable with. You will have seen the value of their knowledge and experience in the local market in sifting through all the options available, and now all that knowledge and experience will help guide you through the sometimes muddy waters of the Mexican real estate buying process. Real estate transactions are, by nature, complicated; this is true anywhere and Mexico is no exception.
There are many exciting opportunities in Puerto Vallarta
Your first step in buying real estate in Puerto Vallarta is to make an offer. This may seem obvious, but should be handled properly, to avoid confusion or misunderstandings later. When we make an offer, we typically submit it in writing in the form of a letter of intent. This letter specifies the price you want to offer for the property and outlines the general terms of purchase (specific terms are defined later in a formal purchase and sale contract). If the seller of the property likes your offer, he or she will sign the letter of intent, and we are off and running. Often times, however, the seller will want to counter offer, which starts the negotiation process. Negotiations are typically carried out by the real estate agents involved in the transaction (usually one for the buyer and one for the seller), who would each confer with their respective clients until a deal is reached.
Once a deal is reached, the real estate agents will draw up the formal purchase and sale agreement, which is then signed by both the buyer and the seller. At this time the buyer usually makes a down payment to secure the property and the closing process begins. In most private sales, the down payment is 10% of the negotiated purchase price, for new construction bought from the developer, this is usually higher… about 30% in most cases. Typically the remaining balance is due at closing, although all terms may be negotiable.
We recommend using an escrow account to hold all funds – including the down payment – until closing has completed. Escrow does not formally exist in Mexico at this time, but in areas like Puerto Vallarta where we are used to dealing with international transactions, escrow has become a common tool to help ensure the closing goes smoothly. Companies like Stewart Title and First American Title have a strong presence here in the Puerto Vallarta Real Estate community. Both offer escrow services as well as title insurance.
Now that the closing process is underway, you can relax. Your real estate agent will work closely with the notary who is handling the closing to provide documentation, manage the escrow, and prepare for the closing.
More on all of that later…
Meanwhile, I’d like to hear your thoughts, please leave a comment below.
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So you Want to Buy Real Estate in Puerto Vallarta…
So you’ve decided to take the plunge and invest in your own piece of Puerto Vallarta Real Estate. So what now? How do you make that dream a reality? Here is a quick overview of the buying process, later I’ll go into more detail on each step.
The first step is to determine your needs and set a budget. The kind of property you choose may vary dramatically depending on how you plan to use it. You might prefer an incoming producing Beachfront condo in Nuevo Vallarta if you are interested primarily in an investment property, or you might want a small home in Bucerias if you plan to retire in Puerto Vallarta. Either way, Knowing what you want from the outset will make your search much easier. Things you should consider are:
- Number of Bedrooms
- Number of Bathrooms
- Construction Area (how many square feet of living area do you want?)
- Lot Size
- Location
- View
- Price
For most people, price is going to be the main determining factor. You’ll need to figure out how much you can afford based on your savings, assets, ability to get a loan, how much you are comfortable investing, etc. (loans are now available for US and Canadian citizens wishing to buy in Mexico).
Once you have an idea of how much you want to invest and what your requirements are, your next step should be to talk to an AMPI or APIVAC certified Real Estate Agent in Puerto Vallarta. They will present you with options to help you narrow your search. Once you have found a handful of possibilities your realtor will schedule viewings to go out and see the properties. If you are not in Vallarta, most of the searching will be handled by email and internet, but of course you will need to be here for the physical property inspections.
Assuming you find the property you like, the next step will be to make an offer. Your agent will help you with this aspect and should be your representative in the negotiation process. Usually an informal offer is made in writing and the negotiations begin. once terms have been settled, a formal purchase contract is drawn up and signed before a notary. The notary adds formality to the process and ensures that all legal requirements are met before the property is transferred at the closing.
If you are not a citizen of Mexico, then you cannot legally own a property in the Restricted Zone of Mexico, which is comprised of a band 50 kilometers wide at the ocean and 100 kilometers wide at the national borders. To get around this limitation, the Mexican government created a systems of Trusts to allow foreigners to invest in Mexico. These trusts are called Fideicomisos in Spanish.
I will elaborate on each step in the process in future posts. Meanwhile I’d like to hear your feedback; if you have any questions or comments please leave a comment!
