Retirement in Puerto Vallarta - Why an Exclusive Buyers' Agent in Mexico?

[vobpem...@yahoo.com]

So, you've reached a point in your life where you think that you've
learned a little about business, finance, contract negotiating, real
estate, etc. and have at least a layman's knowledge of law pertaining
to each. Being that savvy, you might even be aware of the incredible
retirement locations and values south of the border; furthermore, you
might even be considering Mexico as your retirement destination. If
so, you might as well forget everything you've learned and leave your
law degree at home! Mexico, as beautiful as it is, has a somewhat
different way of doing business and a completely different set of
laws. Additionally, all legal transactions, including real estate
transactions, are done in Spanish.
Therefore, for those of you that may be considering locations in
Mexico as possible retirement destinations, the following information
should give you some insight as to how the Mexican real estate
industry works, list some of the possible pitfalls, and most
importantly, give you the guidance required to assure a pleasant and
safe experience. Our introduction to the Mexican real estate industry
was in 1997, when during one of our many trips to our condo in Puerto
Vallarta, Mexico, we noticed an ad in one of the local papers. It was
of a recently completed magnificent villa located in the "Beverly
Hills" of Vallarta. We contacted a realtor friend here in PV and asked
him to represent us and at the same time, give him an opportunity to
earn the buyer's side commission. He of course was pleased and anxious
to show us the property. The following day he picked us up and took us
to another neighborhood and showed us a half a dozen beautiful new
houses. We liked what we saw but requested we go look at the villa in
the ad. He then took us to another area in Vallarta and introduced us
to a builder and showed us some beautiful lots where we could build
the house of our dreams. We once again suggested we go visit the villa
in the ad but he had just a couple more places that he wanted us to
see first. Finally, around 4:00PM, we insisted he take us to the villa
in the ad or we would just take a cab over to see it the next day. He
reluctantly agreed, we instantly fell in love with it, and bought it.
We have thoroughly enjoyed the beautiful villa for the past ten years.
Now, we ask, why was our friend the realtor so reluctant to show us
the villa in the ad? The answer was that the villa was listed by
another realtor and our friend was trying to sell us a home or lot
listed by his company in order to earn the seller's side commission as
well as the buyer's side commission. Not only did he miss out on the
seller's side commission, but the listing agent was only willing to
pay 10% commission to any agent representing the buyer. The listing
agent figured that with proper advertising, they didn't need a buyers'
agent because in all probability, the buyer would contact them
directly. So, instead of receiving 100% of the commission on one of
his own listings or 50% of the commission as would occur in the States
representing the buyer, he received a mere 10% commission because that
is all the listing agent was willing to pay. This experience revealed
the tip of the iceberg and after living here for ten years, we've
finally been able to expose the entire iceberg and share some of the
details below.
To begin with, there are no licensed real estate brokers or agents in
Mexico! In fact, there is no mandatory licensing for real estate
agents in Mexico because the Federal legislation process has yet to
accomplish it and therefore it remains in limbo. So, exactly what are
the qualifications for being a broker or agent in Mexico? They are
essentially the same; one must know how to read and write, have free
time and the ability to put a "For Sale" sign in the front yard or
show a listed property, and should have access to a car and be able to
drive. In Mexico, the term "broker" refers to the boss or the owner of
the agency and the term "agent" refers to the employee. With the
booming real estate market and economy in PV that exists today and the
qualifications listed above, it's quite obvious why we have such a
diverse group of agents and brokers in Vallarta. The off-the-cuff
babbling by many of the agents is so often inaccurate or misleading
that it can easily result in placing the buyer or seller in
intolerable predicaments.
In order to have some degree of continuity from agent to agent, a
voluntary association for real estate personnel has been formed in
Mexico. The Associacion Mexicana de Profesionales Immobiliarios,A.C.,
known as AMPI, is quite active in Vallarta, although membership in
AMPI is not compulsory and has no bearing on the capabilities of the
agents representing the buyers or sellers. You'll notice the "P" in
AMPI stands for "Professionals", however it would be an extreme
stretch of the imagination to consider the majority of the real estate
agents or associates in PV as "Professionals". AMPI schedules periodic
conferences, conducts educational programs, and holds various meetings
where they attempt to keep their members and the public current on
activities in the area as well as changes in the Mexican law as it
pertains to real estate. AMPI does have a code of ethics and it does
attempt to establish a uniform set of operating procedures, some of
which are in writing, others understood but not documented. AMPI
brings real estate personnel together in a private, non-governmental
organization, where it's members voluntarily agree to abide by the
organization's statutes and code of ethics.
For sure, it's better than nothing but still not to be confused with
or even compared to associations such as the National Association of
Realtors or NAR in the US. As an example, the NAR provides it's member
agencies with standard listing forms, pre-qualification forms, escrow
account and earnest money forms, standard purchase agreement forms,
letters of intent, etc. The NAR has written and enforceable guidelines
regarding commissions and the sharing of commissions between the
selling and buying agents. In Vallarta, there are no such forms
provided by AMPI. Each real estate agency has it's own listing form,
which clearly depicts the listing agent as receiving 100% of the
commission upon sale of the property. Although there are guidelines
for commissions, they are still to some degree negotiable with the
seller. The listing agent can then negotiate commission sharing with
the buyers' agent. All other forms vary from agent to agent and are
not necessarily written in the best interest of the buyer.
Also, all forms and contracts for North Americans are in English;
however the Spanish version is the only document that has any legal
standing in Mexico. Therefore, regardless of what you read in English,
a Spanish speaking attorney should always represent you along with
your agent. Another major difference between AMPI and NAR has to do
with the Multiple Listing Service or MLS. In the States, the MLS is
controlled and monitored by the NAR and is available to all NAR
agents. In certain Mexican cities, including Vallarta, there is an MLS
however it is not affiliated with AMPI. Instead, it is privately owned
and operated by a local publisher and is available to the public at no
charge. Of course, all realtors, AMPI or not, desire to list their
properties on the Vallarta MLS.
Once you understand the inner workings of the real estate industry in
PV, you need to learn a little about Mexican real estate law. It is
very complex regarding trusts, escrows, mortgages, treatment of taxes,
etc. and is often open to interpretation by a federally appointed
attorney, known as a notario. A small percentage of the realtors in
Vallarta have a fair understanding of Mexican law as it pertains to
real estate transactions; however the vast majority of them are sorely
lacking in this field. Even with little or no knowledge of the law,
they will be anxious to advise you, right or wrong, thereby looking
like "Professionals". The best law for you to follow is caveat emptor,
buyer beware!
Because of the many pitfalls that a buyer can encounter while
purchasing real estate in PV, we learned a decade ago that it is wise
to interview realtors with scrutiny, keeping in mind that most all
will be promoting their own listings first and meeting your needs
second. It's just human nature and with virtually no control in
Mexico, it's pretty much assured. Also, because they have listing
agreements with the sellers, they are legally bound to act in the best
interest of the sellers, not in your best interest. Because the buyer
usually has no contractual agreement with the realtor, he will in all
probability get the "short end of the stick" in this conflict of
interest.
Of all places, in Mexico you should select an agent that is 100%
dedicated to helping you find the property that meets your needs and
satisfies your requirements; preferably, a contractual agreement with
an agent with no listings, no axe to grind, no ulterior motive, and is
exclusively representing buyers and their best interests. A true
buyers' agent in PV should have no property listings, should have
complete access to the Vallarta MLS, should know the areas and growth
trends in and around Vallarta, should be able to professionally
negotiate on the buyer's behalf, should have a decent understanding of
Mexican real estate law, should have a working relationship with the
local notarios, real estate attorneys, escrow and title agents,
mortgage agents, insurance agents, inspectors, appraisers, and lastly,
your representative must have a thorough working knowledge of the
local real estate industry and understand the idiosyncrasies
associated with it.
Buying your dream home or condo in Vallarta should be one of your best
experiences, however without due diligence, it can be a nightmare.
Obtaining an exclusive buyers' agent with 100% dedication to you is a
prerequisite for assuring a pleasant beginning of your retirement in
Paradise.
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