Tuesday, April 18, 2017

Finding a house

When we left Canada, we had a list of properties that we wanted to see. Once we got here, we scaled that back to two properties that we really liked, because it was getting difficult to get some of the agents to set up visits.

When we saw these two houses again, only one was what we wanted and since this was our second time seeing the property we made an offer. This offer was not accepted by the home owner, so I decided to visit a few more real estate sites.

Once I figured out the difference between searching for USD prices versus Mexican pesos, it became quite clear that when working with local sellers, making offers in Mexican currency works better. We found a local real estate agent who was very helpful last time when we visited Mérida and we found a second one this time. So far our experience with the real estate agents were either super responsive and helpful or not responsive at all. The agents were very informative about the properties and the process for non-citizens. Having different real estate agents give you the same summary of the process boosts your confidence that the information is accurate. It also helped a lot that they were fluent in English. Herman also had a good understanding of the process after all the research he had done, so all in all we didn`t feel too stupid.

Here is the process:

  • When you like a property, you make a verbal offer, then email or text that offer to the agent who then shares that with the seller. The seller either accepts or makes a counter offer. It is expected that the offer will come in slightly under the asking price.
  • When or if accepted, you sign a contract for promise of purchase, which your lawyer reviews once the seller has signed.
  • You then have 5 business days to pay a 10% deposit. This deposit can be held by your lawyer, but it is more likely that the owner gets the deposit directly.
  • The deed, title and plans of the property all have to be updated and submitted to the lawyer. Some delays in getting the plans reviewed by the municipality can be expected when you are not in a large city like Mérida, but in Mérida this takes about a week.
  • The lawyer sets up the fideicomiso (which is required for property within 50km of a border or the beach, purchased by non-citizens).
  • The purchaser pays a purchasing tax (dependent on the Municipality it is between 2 and 4%), the lawyer`s fee (around $1800 CDN) and the fideicomiso fee (around $2000 CDN).
  • There is an annual property tax (varies between municipalities but very little) and an annual fedeicomiso fee (around $600 CDN). 
  • All the paperwork is handled by the seller, realtor and the lawyer.
  • The realtor transfers the electrical and water ownership to the new owner`s name.
  • The buyer`s interests are covered by a very clear and understandable contract which makes the sale null and void if any of the documents are not accurate.

Keep this in mind as an expat: Similar to Canada, the house is evaluated for tax purposes. However, if you and your spouse both die and your heir(s) (if non-residents) decide to sell the property, they will have to pay 35% of the original purchase price in capital gains tax, which makes the offer price here much more important; especially in properties at higher prices.

We looked at several properties and found a few that we were really interested in. (There were quite a lot more in our price range once I altered my search methods.) I found one that was amazing and new and not in the middle of the busy city - you have to kiss a lot of frogs before you find your prince - or in this case our dream house. We are happy to say that we have signed an offer to purchase and will hopefully have our house by June. Our closing date is 60 days from date of offer and can be extended if any of the paperwork is delayed due to an outside party. If everything moves faster, the closing date can be earlier. (Once we have the house officially in our names, I will post some pictures.)

Things are falling into place and emotionally the roller coaster is continuing. BUT we are getting closer to our intent of living a simpler life and already I am so much more relaxed and have not once even lost my temper. Honestly I have had to tell Herman to relax a few times. Score!

Palm trees