Cultural Differences in Real Estate  - Mexican and American Expectations

For Sale
It begins when the sign goes up on a property. John, the American or Canadian, calls to ask "How many bedrooms and baths are in that house? How's the kitchen? If he even thinks to ask about the lot, he will ask if there is a "nice yard."

When John's Mexican counterpart Juan calls about the same sign, his first, and often only question is, "How many meters of land are in the property." He may never ask any questions about the house. When he does ask about the house, it will be only to inquire about the size—the number of meters of construction.

Here's probably the most important cultural differenc when looking at "For Sale" homes (and properties) for when you are North and SOUTH of the border!


Finding Properties for Sale by Owner
Newcomers are even more frustrated when they try to find fixer-upper properties and lots. It's then they realize that most Mexican property owners don't deal with strangers, have little experience with real estate companies, don't want to pay a sales agent's commission, and often won't share information they may have about neighborhood houses for sale.

A gringo viewing property asks, "How much is that lot?" When told that piece of land is Mexican owned and not on the market, our gringo buddy winks and nudges us and says, "Well, we both know everything is for sale, it's always just a matter of money." It's as hard to get him to understand that many Mexican houses or lots will never be for sale, for any amount of money.  Most of the property owned by Mexicans are considered by the Mexican people to be their legicacy to their children and families.   It is almost impossible to “talk” a Mexican into selling land if they want to hold the property.  They think of it as their bank account statement balance when they die.  A way to pass on their life’s work to their children.



But, remember, as a foreigner, unless you have intimate knowledge of the laws and faux pauxs in real estate, you are taking a big risk.  Even the Mexican sellers may not be aware of the intricacies involved, and as you will see below, the chain of title may be more than a novice can or will handle successfully.

Buying Mexican Owned Property
North of the border, couples purchase a starter home. Once they establish equity, they sell it and buy a larger house. In Mexico 's cash market, young couples can seldom afford to buy a house. If they can buy a second house, they keep and rent the first.

Mexicans in small villages and towns don't sell their houses unless they must. Even when in severe financial trouble, families keep properties as long as possible. For many years, Mexicans have had little faith in their own currency and choose to buy land, the most stable of investments, instead of putting money into bank accounts. Their view of property ownership is more like that of the Native Americans. They don't believe in owning land; they are only allowed to hold it in sacred trust for the next generation.

Mexican extended families still live in very small geographical areas within their villages. Originally the people in Mexican towns had small parcels, some with farms or other agricultural uses—near the center of town. The towns have grown to surround the little farms, which were sometimes only one or two city blocks. As time passed, family members built houses around the edges of the property.

Today some heirs to these homes have sold their properties, giving foreigners and other Mexicans opportunities to purchase and remodel houses on "normal" size lots in town. In many villages and towns, families still own most of their property.



Private Sale Closings
A North American buyer expects his good faith money—that initial payment will be held in an escrow account, or at least by a third party. A Mexican seller plans to have that 10% in his hand, on the day it's received. He may need it to pay off family members who own a small portion of the property or to pay off liens he's incurred.

When you get in to the world of buying property privately from a Mexican national, not within the MLS or AMPI systems, it's not unusual to discover that the person you are dealing with does not have a deed for the property in his name. He may have claim to a major portion of the property, or he may represent a large group of family members.

Remember those parcels we were talking about? All too often when he grandparents died, they left the property in equal parts to their six or eight children. Some of those heirs have often died, and left their portion to their three or four children. Unfortunately even some of that third generation of heir's portions may have passed to their children.

Your contact may need to round up from 30 to 75 or 80 valid partial owners to agree to sign in front of the notary before the property can close, free and clear. If just one heir refuses to sign the paperwork, your deal is over, and your contact may no longer have your good faith money to return to you. And if one of these parties is missed, they can challenge your new ownership.

If you think that sounds like a nightmare, you are exactly right. Not a task for someone new to the world of Mexican real estate and an excellent argument to use a professional real estate agent with association to NAR, AMPI or the Los Cabos MLS.  These members are bound to have the property titles clearly delineated and being sold by the rightful owners, or those with a LEGAL Power of Attorney from the parties involved.


Remember that sales between Mexicans are different, often face to face deals between relatives or neighbors. The seller and buyer meet at the notary's office, where the good faith payment is turned over to the seller and a contract to sell is signed and witnessed. The remainder of the money (often in cash) changes hands often months later, when the notary has all the paperwork in order and the new deed has been prepared—sometimes years later.

You can avoid these closing nightmares and most of the other cultural barriers by using an honorable real estate company and agent to broker your deal. They won't allow you to get involved in purchasing a property without a current, registered deed, paid taxes and the identity of the owners documented..


Pricing  a Property for Sale

Many Americans and Canadians do not realize the price structure here in Mexico .  They come here assuming there is a system for active comparable SOLD prices in the area.  Nothing could be further from reality here in Baja California Sur!  In Los Cabos County , even though there is now a great system for paying your property taxes online, nothing similar to that exists in La Paz County .  In addition, there is no publically available system to look up current sold properties and the value they were sold for.  Even the online systems in the MLS and AMPI, although they ask their agents to record the sales price, there is no enforcement, so not even this market has been accurately recorded within the agents themselves.  It is not unusual to see a similar size and finished home on the same block listed for a large difference in sales price.  Why is this?  More often than not, the sales price is established by the Seller themselves.  What they actually want in their pocket, as opposed to actual comparable values.  We have heard such arguments as “My mother-in-law says I should get $XXX”  OR  “My neighbor got $YYY two years ago.”  Neither of these type statements have any bearing on the today’s market price, but it is the rule in list prices, rather than the exception here.  Working with an experienced realtor in your area, who has had sales in the past, as well as the present, can help you weed out the well priced properties and assist you in placing an offer at a real price on those that may be overpriced.  Baja Realty and Investment can assist you!


Staging and Readying a Property for Sale
In the United States and Canada , a new business has emerged and is thriving.  Staging for Sale .  A service and term where a professional decorator or realtor, readies a property for sale, upgrading amenities, remodeling, painting, removing or changing furniture or landscaping, sometimes to the tune of several thousands of dollars, all to make the house as attractive as humanly possible to the field of buyers and all done PRIOR to the listing going live.



In Mexico , we discussed the difference in priorities for a Mexican, inquiring  about the land, rather than the house above.  The same philosophy, is in place for the readying of a property for sale here in Mexico .  Many sellers, do not realize the impact of even cleaning the trash from their yards, much less than repainting or fixing that roof leak BEFORE they place the home on the market.  They are more than willing to do so once they have an offer in place, but before hand?  No, they have a different mindset.  Unfortunately, many foreign sellers of Mexican property have adopted the Mexican attitude as well, and many realtors spend many hours talking to and educating their clients as to the benefit of putting the property’s best foot forward.  Most of the time to deaf ears.  Funny thing is that when Mexicans sell their cars, they wash them, polish them and BEFORE putting the $ sign in the rear window with their phone number!  But this philosophy has not yet come to the conscience of the majority when it comes to real estate.  If you are a buyer, you really need to look past this superficial stuff to really see the value in Mexican real estate.