We have already talked about the first three steps for buying a home in Mexico, finding a real estate agent, making an Offer to Purchase, and then a Promissory contract. Now we will discuss the closing costs involved in a real estate transaction.
Notary fees
When buying a property for sale in Mexico, there are four different items within the closing costs. The first one is the notary fees. These fees depend on the notary.
Traditionally, since the buyer pays the expenses, he can choose which notary he wants to work with. Notary fees can range from about .008 %. However, it does vary, and it could go up to about .025%.
Now, this percentage depends on the property value on most notary fees. Therefore, a high-priced property above $1,000,000 USD will be quoted at a tighter rate like a .008%, .010%, .012%.
As you start decreasing the property value, let’s say you are buying Playa del Carmen condo for sale at 200,000 USD, then that property will probably be closer to a .020% or a .021%.
Taxes and duties
The second kind of fee are the taxes and duties:
- Among the taxes and duties, there is the public registry which is a fixed amount in Quintana Roo. Currently, the public registry is $870 USD no matter if it’s a $1,000,000 USD property or a $100,000 USD property.
- The other tax that the buyer needs to pay is the transfer tax. This is a .03% tax on the property value.
- Additionally, there is a fee for extra documentation. It is not large, it’s about $21 USD, and that’s also fixed regardless of the property value.
And then we have the appraisal. When you do the registration, the government also wants to ensure an appraised value is assigned to the transaction. That is a .002%.
These quotes are mainly for Quintana Roo. There might be a little bit of variance in other states of Mexico. However, the structure should be very close to this same structure.
Trust fees and expenses
Bank trust fees. Any foreign buyer must register at the SRE (Secretaría de Relaciones Exteriores) that is the Foreign Affairs Registration. This fee is $1,750 USD, and this amount is also fixed, regardless of the property’s value. Every foreigner who comes to Mexico to buy or invest in real estate needs to be registered.
Bank Trust. After getting the foreign affairs registration, you can start working with the bank to set up a bank trust. The bank trust varies in cost from about $400, and they could go up to $700 or $800 for the initiation fee. The majority of the banks quote similar initiation fees and then charge an annual rate, which is usually the same amount.
The banks that we usually work with here in Quintana Roo charge a $450 initiation fee, and then every year after that, there’s a $450 administrative fee that the bank charges. That is also a fixed rate regardless of the value of the property.
Lawyer fees
Top Mexico Real Estate highly recommends working with a buyer’s lawyer. Many sellers and developers offer to work with their in-house lawyers. At Top Mexico, 97% of our deals are made with the buyer hiring his own lawyer to avoid a conflict of interest and represent the buyer with proper strategies.
The first part is the lawyer’s actual fees. They are usually a percentage, and it runs from .005% to about .010% of the property value. We highly recommend having your own lawyer deliver correct representation through consultation to you, the buyer.
Mexico real estate escrow services are pretty new in this southern country. Escrows are very common in the USA and Canada and are recently offered in Mexico.
Escrow is an essential tool for protecting both parties of a transaction (the buyer and the seller).
We use the escrow services for 90% of the transaction when purchasing individual sellers because of the transparency of the funds, the transparent distribution of the money based on the completion of defined conditions, and the efficiency of the wire transfer executions.
Another added value of an escrow is the ease of making the wire transfers towards purchasing a Mexican property. Most escrow companies have accounts in USA and Canada. This allows buyers and your banks to sidestep the sometimes tricky details and time required to make international deposits. Escrow companies with accounts in USA or Canada allow for simple national wire transfers.
The expense of escrows runs roughly from $500 up to about $750, and usually in escrow will allow for a variety of release instructions. You deposit the money that goes into the escrow account, and then you set up the instruction letter where it says where and when the payments are made.
Contact one of our representatives to know more about our properties. Remember that at Top Mexico Real Estate we make it happen!