“Imagine yourself sitting on this veranda each afternoon, watching the sun sink into the horizon straight out there,” said my real estate agent. “The orientation of this unit couldn’t be better.”
I glanced down at my compass—something I always carry when looking at real estate—and saw we were facing south. That doesn’t bode well for sunsets in the southern hemisphere.
When buying real estate overseas, your primary interface with the market will be the real estate agent. While the certification requirements and rules of conduct are fairly rigid in North America, you’ll find a mixed bag overseas.
So it’s best to go into your real estate search with the proper expectations. Here are five ways that I’ve found real estate agents abroad to be different from what I was used to in the United States.
Training And Certification May Not Be What You Expect
Real estate agents in most countries are licensed, trained professionals. Some are better than others, but we can be pretty sure that anyone selling real estate is a genuine real estate agent.
But that’s not true everywhere. The developing world is full of fly-by-nighters.
I once met a real estate agent in Ecuador who came to pick up one of our readers at her hotel in a dilapidated, old taxi. He had no office, no landline phone, and no car. Thinking she was saving money, the reader eventually bought a house from him anyway.
As it turned out, he bought the house from the seller for US$105,000 and sold it to her for US$135,000. Not exactly the deal she had in mind. This is what can happen when agent licensing laws are nonexistent or not enforced.
On top of everything else, even a qualified, professional real estate agent may not speak English.
The fix: Only work with agents who have a genuine business or are employed by someone reputable. A good rule of thumb is that if the real estate agent doesn’t have an office, a website, or a car to drive you around in, he’s not a pro. Use extreme caution.
If the real estate agent doesn’t speak your language, I’ve found that people can usually get by if they know a few key phrases. To help out, I’ve made a few Spanish real estate dictionaries for Ecuador, Colombia, and Uruguay, as well as a Portuguese dictionary for Brazil.
There Is Usually No Multiple List Service
When buying in North America we’re spoiled by the MLS. We can search for the exact property we’re looking for and see every home on the market, no matter which real estate agent has it listed. You can work with a real estate agent whom you like and have access to the entire market.
And convenience is only part of the benefit of an MLS. The real value is that it establishes an official price for every property that’s on it. No one will try to charge you more.
In markets without MLS, you need to go to several different real estate agents to see everything that’s out there meeting your criteria. This is time consuming and can be tedious; you usually can’t just pick a good real estate agent and see everything. There are, of course, exceptions. In Colonia, Uruguay, for example, I worked with two real estate agents who would show anyone’s listing…but yet another who refused to show any listings except his own.
The fix: Don’t work with just one real estate agent, especially if they’re not showing you a good selection of properties that fit your criteria. Check the newspaper, private sales on the Internet, and as many real estate websites you can find. Eventually, you’ll see what’s out there…just be sure you remember to allow time for the extra work.
The Agents Often Pad The Asking Price
When I was house shopping in Punta del Este, Uruguay, I walked into a well-known realty office to get a price on a house I’d seen while driving around. But instead of one price, I got three different prices from three agents who worked there, within 30 minutes. The highest “asking” price was US$30,000 higher than the lowest (which was probably already inflated).
I had another agent add 30% to the asking price, and she had the nerve to tell me that she’d negotiated a great deal on my behalf. In Ecuador, I knew local agents who didn’t post prices at all, preferring to assess the client and then price the house according to what he believed the client could pay. All this is possible when there’s no MLS to keep everyone honest.
My first reaction was to call the real estate agents crooks (which they are). But as the years went by, I came to realize that this is simply how business is done in many markets.
The fix: Learn what properties are worth. I keep a record of the properties I’m going to see, and I break down their cost into dollars per square meter. After looking at a handful, I can quickly see the averages and the outliers.
In my experience, regardless of price padding, there are always some fairly priced (or even bargain) properties on the market. You’ll spot these if you look at enough properties, and then use them to bring down the overpriced properties.
They May Not Convey The Offer
I offered a low US$50,000 for an apartment in Montevideo a few years ago and was told the seller turned the offer down. So I raised the offer to US$55,000, and he took it. Later, I learned that he would have accepted US$50,000, but the real estate agent had not conveyed the offer.
I came to learn that this is common in markets where there’s no official requirement to present every offer. You have to get by the real estate agent first, and if they’re not happy, the owner will never hear your offer.
The fix: Determine what you’re willing to pay, and stick to your guns. Once you’ve gotten a feel for the market, you’ll know what the property is worth. If it’s a fair price, the agent will eventually pass the offer on. If not, move on.
They May Not Manage All Items Required For Closing
In the United States, our real estate agents will generally manage everything that needs to happen for closing, from termite inspections to title insurance. This is not always true outside the United States.
The fix: Familiarize yourself with the property purchase process before you buy and make sure all the bases are covered. You should be in good hands if you have an experienced local attorney. But, still, a smart buyer will understand the process and make sure everything stays on track.
My Experiences In Buying Properties Abroad Have Been Overwhelmingly Positive
The real estate agents I’ve bought properties from overseas have been honest and professional. And even the fly-by-night pseudo-agents have found me some good deals.
In fact, my overseas experience has generally been better than my U.S. experience, where I’ve been tricked, swindled, and lied to.
In retrospect, the reason I’ve had bad experiences in the United States was because I was depending on regulations and licensing to protect me…and that doesn’t work. Overseas, I knew I was responsible to look out for myself and did so.
Today, I realize that the real estate agent’s job is to find properties. My job is to know if I’m paying a fair price. Using that outlook, the difference between agents in the United States and abroad won’t really matter that much.
Editor, Overseas Property Alert
I was born in Uruguay, and after a lifetime around the world I would like to go back. We depend on Social Security from the United States and the UK. Is it possible to get a mortgage there and how is it done? Thank you for your help.
As a resident, it is indeed possible to get a mortgage in Uruguay.
At today’s interest rates, HSBC offers a 15-year loan at a rate of 7% with a minimum of 15% down. The government’s bank, BHU, will give you a 25-year loan at a rate of 6% with 20% down, resulting in a lower monthly payment.
The problem that most of us have is that you have to qualify for the loan using income they can verify. You can’t guarantee a loan with savings from abroad. Check with the bank to see if your Social Security checks will do the trick. I’d suggest an attorney’s help for this one.