Buying Mexico Real Estate can be an exciting experience, and one of the most important decisions you will make. For this reason it is very important to know the ins and outs of buying real estate in Mexico, being familiar with the laws and the processes. A key factor to consider is that in Mexico, the law does not offer the same regulations to protect buyers as in other countries. This having been said, buying Mexico Real Estate can be done safely, if the right steps are followed.
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“Buying property in ANY country can be stressful,” observes Linda Neil, real estate expert from La Paz, Baja California, “A property investment in Mexico can be just as safe and secure as in the U.S. or Canada, if it is done correctly!”
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A panel of experts from the TOPMexicoRealEstate NETWORK, “Your Expert    Property-Finders,” agrees that the most important step in avoiding the risks is selecting the right agent – an agent with experience and knowledge.
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“The most important key player is an agent or broker with many years of experience,” says Thomas Lloyd, founder and president of TOPMexicoRealEstate. “You are not looking for someone who knows where the best restaurants or bars are located, you want someone who has been on the ropes, someone who has witnessed problems or obstacles in previous transactions so he knows what to look out for.”
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In the following interview, some members of TOPMexicoRealEstate’s panel of experts discuss the main risks involved, which they have seen during years of experience, and give advice on how to select an agent who can help you avoid these risks.
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What kind of risks can buying real estate in Mexico involve?Â
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Here the brokers highlight several points in the purchasing process which buyers should watch, including property types which can pose higher risks if proper research is not done. These risks are tied to, and made more significant, by the fact that regulations in the Mexico Real Estate industry are not as well defined as in other countries.
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Mitch Keenan – Merida Real Estate
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The largest risk is to NOT use reputable professionals. Interview several real estate agents and notary publics. Ask for references and check them. Raw land or raw beach is a more risky purchase than a home that has other homes on all sides of it. To mitigate that risk, use a title company. Additionally, when a fideicomiso is issued by the bank to hold title, it does provide another layer of protection to the Buyer.
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Jim Scherrer – Puerto Vallarta Real Estate
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The risks are minimal when the economy is booming. During those times, the main risk is just paying too much. However, during periods of recession the risks are numerous. The greatest risk would probably be in buying pre-construction developments with no assurance of completion.
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Linda Neil – La Paz Real Estate
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Mexico Real Estate agents are not obligated by the same regulations in Mexico. They do not have the responsibility to disclose all problems or defects to buyers or sellers. The fact that the government does not regulate real estate to the same extent as in other countries poses higher risk to buyers.
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Thomas Lloyd – Playa del Carmen Real Estate
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The regulations in Mexico are not as sophisticated in protecting the real estate buyer as compared to our home countries. For example, there are no disclosure laws regulating what information needs to be revealed to a buyer of real estate.
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What does a buyer need in terms of information in order to avoid/reduce these risks?
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Each of the brokers mention some specific steps to be taken to avoid specific risks. However, as Lloyd mentions, “There are so many areas and risks that need managing it would be impossible for a new buyer to understand or remember to address each of these items.” The key factor here is finding an experienced, knowledgeable professional who is very familiar with the details of these issues, and can guide the buyer through the process.
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Jim Scherrer – Puerto Vallarta Real Estate
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The buyer needs an agent that knows how to write purchase contracts that protect the buyer’s initial deposit and progress payments. They should be prepared with payment schedules based on construction milestones, delivery dates, closing date with “escritura”, etc. as opposed to calender dates. They should also have construction delay penalty charges, contingencies for 100% refunding upon failure to perform, and escrow protection.
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Linda Neil – La Paz Real Estate
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To avoid the risks involved in the lack of regulations is finding a buyer’s agent who adheres to principals and ethics. One way to do this is to work with a agent who is a member of AMPI, the Mexican Real Estate Association; AMPI is connected with NAR (USA) and CREA (Canada), and its members follow a Code of Ethics.
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Thomas Lloyd – Playa del Carmen Real Estate
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Basically, I believe that it is very important that the buyer retains the services of an experienced broker. There are so many areas and risks that need managing it would be impossible for a new buyer to understand or remember to address each of these items. But, if you associate yourself with a person who is dedicated to such activities, a person who has years of experience and has witnessed and participated in hundreds of Mexico real estate transactions, such a person is an invaluable person to have on your team, taking care of your interests and monies.
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What should the buyer look for in terms of an agent?
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Having established that a good agent is the best way to avoid the risks involved in buying Mexico Real Estate, the brokers point out some elements to look for. Some of the common points are experience, honesty, loyalty, thorough knowledge of the market, knowledge of Spanish, and experience in Mexico. Most of these factors may not be measurable in a concrete way. Keenan, Scherrer, Lloyd and Neil point to some indicators of these traits, which include certifications, licenses, degrees – Mexico now offers a real estate degree with a professional identification number, and, of course, references and testimonials (for these to be used well, there should be several, and they should actually be checked!) .
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Mitch Keenan – Merida Real Estate
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References. Lots of them. Check them. Also years in the business. Reputation in the community. A license or career in real estate in the USA, Canada, Mexico or Europe. Choose an agent who has made a career out of marketing real estate. An agent who has taken the classes, received the certifications and has worked to stay on top of their field. Choose an agent that has lots of return clients. Find someone that you feel comfortable with on a gut level. If your gut is saying, “careful something stinks here!” Listen to your gut! Do your due diligence. Check references.
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Jim Scherrer – Puerto Vallarta Real Estate
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 A buyer’s agent exclusively representing buyers has “no axe to grind.” A true buyer’s agent has no listings and no biases toward one development over another, i.e., no fiduciary duty to any seller or developer. The buyer’s agent must be honest, loyal, fully knowledgeable of the market, familiar with all the key players in any real estate transaction, and an experienced business professional.
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Linda Neil – La Paz Real Estate
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A key step in avoiding various risks is finding a buyer’s agent, who represents only your interests. An agent who attempts to represent both the buyer and the seller (called “dual agency”) will have conflict of interest; while the buyer is looking for the lowest reasonable price and all the benefits possible in his interest, the seller is looking for the highest reasonable price, and as many benefits as possible in his interest. It’s not possible for one agent to represent both of these interests.  Besides reducing risks of not being informed of potential problems, hiring an exclusive buyer’s agent will ensure that the agent will search the entire market available, not just properties they are listing.
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Some characteristics you should look for in your agent are: professionalism, knowledge and experience – education can be one indication of this, punctuality, which is sign of commitment, someone who listens to your concerns and needs, someone who looks ahead and predicts complications, honesty and cooperation.
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Thomas Lloyd – Playa del Carmen Real Estate
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There are several items a new buyer should insist from an agent or broker who he hires to represent him. Remember, you want someone who is going to protect you and your interests.
How many years has he lived in Mexico? Does he speak Spanish? How many years has he been working in the Mexico real estate industry? How many real estate transactions has he administered or participated? What credentials does he have? Is he certified? Licensed? Or does he have a Mexico real estate degree? The more years and experience a person has been living and working in Mexico is the strongest asset you can find in your representative. Don’t forget to ask for testimonials, (the more the better).
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Who are the key players that will help you reduce your risk when buying in Mexico?
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The brokers name certain professionals needed to make the process go smoothly, including a title company, a mortgage company advisor, a notary public, and a Mexican attorney. Of course, just having these people around will not help. They must experienced, knowledgeable and reliable. As the panel points out, this points back to the choice of agent, who is THE key player; the right agent will also be able to help point you to other reliable professionals.
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Mitch Keenan – Merida Real Estate
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Notary Public. Title Company. Bank, for the fideicomiso. Broker or agent.
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Jim Scherrer – Puerto Vallarta Real Estate
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Of course, the main key player is the buyer’s agent. After the agent, a mortgage company adviser can be very important; after all, if the mortgage company won’t approve a loan, the purchase is probably too risky! Notary Publics will assure the paperwork and closing details are accurate, however they have no input into contract negotiations. Of course, the agent must be at least somewhat familiar with Spanish and should work closely with an experienced Mexican attorney since all contracts are written in Spanish
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Thomas Lloyd – Playa del Carmen Real Estate
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The most important key player is an agent or broker with many years of experience. You are not looking for someone who knows where the best restaurants or bars are located, you want someone who has been on the ropes, someone who has witnessed problems or obstacles in previous transactions so he knows what to look out for. A sharp lawyer is your second best ally. Again the more years of experience in real estate law the better.
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TOPMexicoRealEstate NETWORK; Mexico’s Leading Network of Specialists for Finding and Purchasing Mexican Properties Safely
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