Series #3 From the Flying Pan Into The Fire????????
So what could go wrong in a third world country giving power of attorney to a total stranger we’d known only three weeks to close our real estate transaction? Well in our case nothing. Our transaction went smooth as silk. No clouded title, no unexpected unpaid utility bills, no unpaid real estate back taxes. There were no unexpected surprises except for the condition of the property during our next visit. We attributed our good fortune to the conscientious work of our professional real estate team because such problems have happened to other gringos we know.
But in our case, as buyers—not sellers, we paid the full 6% real estate commission which we considered money well spent purchasing property in a foreign country, especially when English isn’t the primary language spoken here. Of course, 6% of $111,000 doesn’t amount to much and is good insurance, especially in areas like San Miguel where title insurance isn’t readily available. But for those of you who are braver than us, you can forgo paying real estate commissions altogether if you purchase a FSBO, referred to here as Trato Directo (Direct Deal). But it will be your job and responsibility to hire a translator if you aren’t fluent in Spanish and a lawyer/notario to research the title, negotiate the contract, handle the closing and transfer of funds. We have known friends to choose this route only to regret it later.
Okay, so I mentioned there were no surprises at our closing, but our walk through was quite another matter. If you purchase a true Mexican middle class home or fixer, expect the house to be devoid of light fixtures when you arrive and in some cases plumbing fixtures like faucets and towel racks. Even though the seller promised to leave a few lamps and light fixtures I’d chosen, what we encountered were bare bulbs in sockets if they had bulbs at all. There was also garbage and debris everywhere and no apparent concern for the new buyers or condition of the property. Fortunately for us, we hadn’t planned to stay there during our week long visit to begin working on our dream house. The mission of this trip was to hire an architect and builder, pay our property taxes and transfer all utilities. All mundane tasks made better when we learned our annual property tax bill was a mere $212.00. What’s more, if we paid our tax bill during the first two months of the year, we received an additional 17% discount. Of course the government of Mexico only provides public education until the 9th grade. Thereafter families are responsible for their children’s education in addition to the cost of uniforms. Nevertheless, the tax difference represents quite a savings over the $4,000 we paid in Napa property taxes each year.
At the top of our priority list was to secure the property. In Mexico, it is possible to loose your property after you’ve acquired it to squatters if it isn’t properly secured. That’s right, if you aren’t living there and squatters can easily enter and occupy your property, they can stake claim to your residence. So if you don’t have a door or gate to barricade, hire a night watchman, called a Velador or Candleman, who will sleep on the bare floor from the time the crew quits until they arrive again the next morning, as well as the weekend, day and night. Even after you begin remodeling or construction efforts, it is common to have a night watchman on the payroll to ensure against squatters or theft of construction materials. We happily paid the additional $1000 pesos (approx $75 USD) a week for the two years we lived in Napa while developing our property. Only during the last year of construction when we were living on site, did we forego this expense. But in hindsight, if we were to make this decision again, we would keep the night watchmen and rent a residence close by to live in during construction. We called that last year, our year of “pain and suffering” as we never had any privacy, had chronic allergies and respiratory infections living in a construction site and truly struggled to keep our marriage together. Not that we didn’t love each other; we were just ill equipped or prepared for the endless decisions that needed to be made each day with no respite from the noise that enveloped us from 7am-5pm, five days a week, all while still trying to make a living to pay for our dream home.
Our final decision this trip was to choose our architect and builder. If you don’t already have one in mind, I suggest touring homes in your community to determine what style of architecture you like best and then researching who was responsible. Many Mexican towns and cities offer home tours and it is a great way to discover your likes and dislikes…colonial or contemporary, rammed earth or adobe. There are also countless books on Mexican architecture to explore your unique tastes and desires.
In our case we chose a San Francisco architect, whose vacation home we rented and adored, and who split their time between Mexico and California. We also had to choose from a “fixed price builder” or one who charged based on “time and materials.” This will be the single most difficult decision you’ll make. With a fixed price bid, you know up front the cost—provided you don’t make any change orders–however the home will be constructed as quickly as possible with less concern for quality. With a time and materials contract, you’ll never know what the home will cost but it is generally better constructed. We opted for the latter and time will tell whether we made the right decision…………..!