The following inquiry came to me through my website: “Hi, i was hoping i could get more info on the buying process in mexico.” I had to think about how to answer – when compared to the property buying process in Arizona (and every state has similarities and differences), there are many similarities and a few significant differences.
In the Puerto Peñasco real estate market, you will select your real estate agent and property much as you would anywhere (you might want to see my other posts about selecting agents and property). Two significant differences from buying in Arizona are how closing costs and earnest money are handled.
Even though the approved Offer to Purchase form has an area to show closing costs, rarely does a real estate agent try to estimate those costs! Only a Mexican notario publico (not to be confused with a notary public in the USA) can give a reliable estimate of closing costs to be assessed to both seller and buyer for this exact transaction. Usually the offer includes a statement that seller and buyer will receive and approve closing costs after the deposit of the earnest money.
Earnest money is typically paid when the offer is written and signed by the buyer, who expects to submit the earnest money with the offer. This aspect of the purchase works differently here. Once the offer is accepted by the seller, that is, buyer and seller have come to a signed agreement in which the price and terms of the transaction are defined and agreed upon, THEN the buyer must deposit money into an escrow account. If no earnest money is deposited, the deal is dead.
The amount of the earnest money, the escrow agency, and who pays for the escrow service are among the details in the offer that have been agreed upon by seller and buyer. The escrow account is opened by the buyer, using instructions from the buyer’s real estate agent. Once the escrow account has been opened with the earnest money deposit, then the seller and buyer agents will deliver all necessary paperwork required from seller and buyer to the transaction coordinator. Earnest money secures the property for the buyer, and triggers the first and subsequent steps of the process that lead to closing the transaction.
Depending upon the agreed terms of the offer, the transaction coordinator will order an appraisal (for tax purposes, NOT for market value) of the property, usually at buyer expense, then will obtain from a notario publico the closing costs for the transaction, to which both parties generally agree before the transaction moves forward. Next may be a survey of the lot, paid by the buyer, and approved by buyer before the next step to closing.
Subsequent steps depend upon many variables, such as whether the purchase is cash or seller financing, whether the buyer is a foreigner to Mexico or a Mexican citizen, whether the buyer will take title to the property, or will own through a Mexican corporation or an LLC in the USA. Other variables that affect the closing is which bank holds the bank trust (if there is one) – some banks are more efficient and easier to work with than others, whether the seller had all his documents in order when the property was listed, and even the time of year! The transaction coordinator works with many different offices in Puerto Peñasco, and most of those offices go on vacation for 2 weeks in July, and about 3 weeks over the Christmas-New Year holidays.
For the actual closing, sellers and buyers will need to obtain visas, on the Mexican side of the border in order to verify that they are actually in Mexico to sign documents. If any parties are unable to be in Mexico for the signing, remote signing can be arranged, but must be planned for well before the closing date. Delivery of the deed to the seller comes weeks, or sometimes months, after the closing, depending upon how long the bank takes to do its work, and the public registry takes to register the deed.
I want to emphasize that this is a brief summary of “the buying process in Mexico,” and that every transaction is different in some way from every other one. I also want to emphasize that your choice of real estate agent is terribly important! I have been helping sellers sell and buyers buy Rocky Point real estate for nearly 14 years, and I am still surprised by never-seen wrinkles in transactions. The good news is that after all this time and all my experience, I have contacts who can guide us through nearly any situation. My first priority is to see that my clients, both buyers and sellers, are absolutely protected, and that should be the priority of every real estate agent. I hope this helps!