I still remember it like it happened yesterday. Sure didn’t. I had been in the real estate business less than 5 years. Been in the business now, as a global real estate investment consultant, for more than 30 years. Certainly wasn’t yesterday. Two lifelong friends together for an after business cocktail. Conversation turns to our careers. My friend ultimately lays it on the line, “I know you make good money in your business, but we are talking amongst friends. Admit it, you can’t give me even five good reasons why someone needs to use a real estate professional.” The challenge was on. In what seemed like merely an instant, I had rattled off a good 10-12 reasons as to why a professional real estate consultant was an excellent investment. My friend was silent. He bought the next round.
Still, what I most remember about that old story was my resolve. I couldn’t shake his challenge. Worse, I couldn’t help but wonder if secretly, or less than secretly, a sizable portion of the population also harbored those same thoughts, polite enough to leave them unspoken. It drove me…gnawed at me. I spent several hours that night and many more over the next week making a list, adding to it, deleting…and then adding some more. By the end, I wound up with 180 good reasons why someone should use a real estate professional. Honest, if anyone wants to see the list…ever…for any reason, I can provide it. Point then…and now…is that there is great value to using a real estate professional. Even more so, when you are purchasing in a foreign land.
Purchasing real estate in Ecuador is certainly no exception to the rule. Despite the fact that on a relative basis Ecuador provides a fairly recognizable and extremely safe purchasing environment, the benefit of a well-selected, experienced and professional real estate representative can be an invaluable advantage and strong asset, in concluding a satisfying real estate transaction. No worries, I won’t boar anyone with that 180 point list, but I will raise ten (10) key points of value, for any buyer looking to purchase real estate in Ecuador, which a good real estate professional should be able to provide.
Client consultation: A good real estate professional should provide you with a general market overview, defining the transactional process in Ecuador, as well as detailing the history, characteristics and advantages/disadvantages to various regions, cities and neighborhoods the buyer may be considering. The real estate professional should exhibit strong market knowledge, provide an initial inventory review and breakdown, as well as respond to any pre-appointment questions or concerns the buyer might offer.
Property guidance: A qualified real estate industry professional should offer gentle guidance towards the best properties meeting a buyer’s requisite criteria, while offering a comparable market analysis, which supports the conclusions and recommendations offered. This, however, should not be interpreted as the buyer abdicating their responsibility to provide input, direction and constant guidance to the real estate professional. A true industry professional is here to offer guidance, but not to steer you towards a given area or specific property. The choice always lies with the buyer.
Scheduling appointments: At first glance a simple task, until you’ve had to do it yourself. Even in an organized, “First World” setting like the USA, conflicts between busy client schedules, the considerations of any tenants occupying the property and often even the schedule of the property sellers, themselves, often can come together to conspire and make the simplest of showings a challenge. Now, try that here in Ecuador, with no Multiple Listing Service (MLS), in the land of mañana, where tenant rights take precedence, and where keeping an appointment commitment is less promise and more an option and, well, it can admittedly get downright frustrating. It is a job best left to an experienced professional, who likely has a qualified system for property previews and ready access. It will save you much inconvenience and even more time. As the saying goes…time is money.
Property valuations: An experienced and qualified real estate professional should provide a property valuation review for the buyer, detailing the projected fair market value of any asset under consideration. Such a review should include a checklist of specific property positive/negative factors relative to the existing pricing, to best qualify each property relative to the market. Keep in mind that in a market like Ecuador, with no MLS to speak of, it takes years of selling inventory, an extensive and meticulous database system, as well as a continuous refreshing of market data, in order to be able to provide accurate and usable valuation projections.
Land use review: A good real estate industry professional should provide the buyer specific land use data, review said data and analyze how that data, including any specific code or deed restrictions, might impact on the buyers desired use of the land, house or commercial space. This should not replace the opinion of a qualified real estate and/or land use attorney.
Negotiate on behalf of the buyer: A professional real estate representative should provide the market knowledge and negotiation skills to represent the best interests of the buyer, ensuring that the deal gets done in a manner which best suits the buyer, not the seller (In all cases where the real estate representative has primary fiduciary responsibility to the buyer. More on this shortly). Keep in mind that for those yearning to “go it alone”, without a real estate representative, you are likely to be up against an experienced selling agent or a direct owner, both likely to be extensively more knowledgeable about the specific property and the local market, than the buyer. The true meaning of “Caveat emptor”.
Transaction document review: A qualified real estate professional should initiate and perform an initial review of any/all transactional documents, including current property ownership, chain of title and deed registration. This review should serve as a starting to trap and discuss any potential issues, which may arise. However, at no time should this initial review be interpreted as a formal “legal review” and any buyer is strongly advised to seek appropriate real estate legal counsel to perform a final and decisive legal review of all transactional documents. I cannot stress enough the importance of this last statement and the distinction it is intended to provide. Candidly, there is at least one real estate agent in my local market, who routinely asks clients for documents to review, with such implied “authority” that it leaves the impression that the agent is performing a legal review. Please understand and be advised that in Ecuador, no real estate representative has a license to practice law, make legal judgements or offer legal opinion. The preceding is the sole purview of qualified, licensed, legal counsel. No matter how much you might hear differently, do not buy into the whole, “You really don’t need an attorney” message.
Tax records verification: A review of the corresponding tax roll records to verify that they are current to date should be a function for your real estate representative, on each and every property that you are considering for purchase. However, again, this should be an initial review to identify potential “red flags”. The final review should always be placed in the hands of a qualified attorney.
Settlement assistance: It can be a long and winding road between accepted offer and arrival at the settlement table. A good real estate professional should continue to provide settlement assistance services, up to and including closing date services. In fact, I have personally attended closings, where additional negotiations still took place at the closing table, where I had to assist my buyer client, in order to preserve his interests or provide additional advantage.
Post sale concierge services: A well qualified real estate professional will not end his services to the buyer, when they receive payment at closing. Client services will continue in the post closing era and should include a defined list of concierge services, which will be offered to facilitate the buyer’s transition from home purchaser, to home owner. Depending on the extent of these services, some may be performed free of charge, while others might be fee based. However, no buyer should feel abandoned by their real estate professional, once the closing date is done. Service is a lifelong commitment.
In closing, I went to present a topic too often ignored by my industry here in Ecuador. While it can be presented from a variety of perspectives, I will use a “buyer model” to illustrate the point. It is far more than semantics to say that in Ecuador, there exists a distinction between a Buyer’s Agent and a Buyer Representative. While both may perform functions that meet buyer expectations and requirements, the similarities stop right there. A Buyer Representative merely, as the name implies, “represents” the buyer through the functional aspects of a real estate transaction. However, this does not mean that their primary fiduciary responsibility is to the buyer. In fact, Ecuadorian law does not demand that a real estate professional clearly disclose Agency. However, the Ecuadorian law is very clear – the agent represents the party which pays them and must exercise primary fiduciary responsibility to that party. In short, that nice Buyer Rep, who has seemed so helpful, cheerful and friendly…well…they might have been working in the best interest of the seller all along. They wouldn’t even have to disclose that to you.
If you want to be sure you are truly being served and represented by the real estate professional of your choosing, then you must enter into a Buyer’s Agent relationship. How do you know in which relationship you are currently engaged? Simple. If you have not signed a Buyer’s Broker Agreement, then your Agency relationship is that of a Buyer Representative, only. In order for there to be a binding Buyer’s Broker Agency relationship, you must sign a Buyer’s Broker Agreement, which spells out the real estate professional’s allegiance solely to you, as a buyer, and their corresponding responsibilities to you, as well as the payment terms, conditions and amounts. Do not be misled. Our real estate firm practices full disclosure, though not mandated by current Ecuadorian law, and we urge you to ask your representative of choice for full disclosure, from the onset of your relationship.
Finally, I wish to leave any reader with one closing thought. Purchasing real estate, of any kind, is likely worth 8-10 times the cost of a car – your next likely most expensive lifelong purchase (unless you make the unwise decision of being a boat owner – whole different story, for someday). With real estate professional fees usually at 5%-6% of the purchase price of a property, it seems a worthwhile investment to protect the costliest purchase you will ever likely make, especially when said purchase is made in a foreign land, with foreign procedures, inclusive of documentation in a foreign language.
Believe me, I do “get it”. There is a certain pride, sense of accomplishment and a feeling of economic euphoria in being able to say, “I did it on my own. I didn’t even need to use a real estate professional.” Then again, I have a list of 180 reasons why you should. Oddly enough, before coming to Ecuador, one item not on that list: Sometimes a very nice looking property at low tide, can look very, very different at high tide…and the savvy real estate agents here know it. Maybe it is time to make that list 181…and counting.
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