Ecuador Checklist – Real Estate ”Do’s and Don’ts”
I have been involved in Ecuador real estate transactions for 25 years and have been a current full-time resident of Ecuador for the last 4 years. As a global real estate investment consultant professional, there is very little I have not yet seen or experienced. In an effort to have you avoid the pitfalls, stress and all-around headache of the real estate process here, I offer you our Ecuador Checklist of Real Estate ”Do’s and Dont’s” .
1. Do not assume that anything here should or does work the same as in your real estate market back home, wherever home may be. When in Rome…and this includes the whole of the real estate process, length of time, stipulations of transactions and legal remedies should anything go wrong. If you can’t accept “different” a global relocation, or even just a vacation home, might not be right for you.
2. Do not expect anything even vaguely resembling a Multiple Listing System (MLS), if you happen to reside in one of the few global markets that offer an MLS. Ecuador, like most of the world, has no MLS.
3. Hand-in-hand with number 2 above, do not expect the Internet to be a reliable barometer of real estate availability, options and facts. Sadly, the Internet and real estate websites are more often used to disseminate disinformation, than information. I am a “technophile”, so that hurt to write. Examples include, but are not limited to, dated real estate offerings that are no longer truly available; pilfered and altered real estate listings from other agents; inaccurate or dated photos and property descriptions; and distortions on actual locations where properties reside.
4. Do not assume that “household name” real estate companies offer any exceptions to numbers 2 and 3 above. There is a reason why in every franchise contract for the national/international real estate industry “giants”, the clause exists stating “Each franchise independently owned and operated.” They are only as good, experienced and ethical as the local talent that runs them. Do not assume that any equivalent sense of professionalism exists between your local franchise and its Ecuadorian counterpart. Truthfully, in my neck of the woods, two of the firms with the worst local reputation are internationally recognized household names. Caveat Emptor.
5. Do not even remotely consider buying real estate sight unseen. I had a recent new client state to me…”Don´t worry, we will buy from photos.” Not through me they won’t.
6. Do not assume that when buying land, the condition you view it is actually its permanent condition. This is especially true, but not limited to, oceanfront land. There is a parcel of land in my neck of the woods that some unscrupulous types continue to market. Looks like a beautiful beach front parcel…during low tide. During high tide, your living room experience will require scuba gear.
7. Do not assume that personal checks will ever be accepted as part of any real estate transaction. You will require cash via electronic bank transfer, or you will require a certified bank check, which if drawn from a foreign bank will still even require a significant amount of time to clear.
8. Do not assume that you have any chance to acquire a mortgage for an Ecuadorian real estate transaction. Even the domestic buyer has a hard time qualifying for a mortgage, and is a fairly new process even for Ecuadorian nationals. This is a cash/cash equivalent market.
9. Do not base your opinions of Ecuador and the value/feasibility of investing in its real estate markets, from what you read in your local press. I have seen domestic events here in Ecuador absolutely distorted beyond recognition in the foreign press. I am talking even events of which I have first-hand, personal knowledge. Sadly, the worst culprits tend to be USA press organs. Take everything with a grain of salt and do extensive personal research from a variety of global sources, many which can be had for free on the Internet.
10. Do not listen to the “local folklore” when choosing what to buy, where to live and whom to work with in the Ecuadorian real estate marketplace. As food for thought, would you ask your car mechanic for advice on a brain surgeon to operate on a loved one? Would you ask your local florist for “hot” stock tips? Then why, just because you are in a foreign land, would you accept real estate advice from your local bartender or taxi driver?
1. Do expect the entire real estate process here to feel extremely foreign. It is, after all, for any Expat, a foreign country. Adjust to the local process and do not expect it to adjust to you, no matter how rational your position seems.
2. Do allow yourself, a bare bones minimum, of 2 weeks to explore any real estate market – and I mean even a cursory, general exploration. I know…I know…”We do not have that kind of time.” Save up the time…come down then. Cut down on the numbers of places, cities, towns you wish to explore. Do what it takes, but do not think there is any market that you can even remotely get to know in 2-3 days. Folks that make rushed decisions, based on limited observations, have an infinitely higher dissatisfaction rate than those that take their time to do proper research and get to know their locale of choice.
3. Do understand…and I mean really understand…that no real, legitimate and professional real estate broker/agent will ever…and I do mean ever ask you to pay a fee to preview real estate. The legitimate agents do this for free, as a matter of fact cost of business. Can you imagine pulling up to your BMW dealership and having the guy at the desk say, “Sure, we will be glad to show you that car. That will be $50, please”? Why would you do the same to preview real estate? Yet, literally, not a day goes by that I do not find some poor soul that has been hoodwinked into paying a “tour fee”, “gas fee”, “refundable showing fee” in this marketplace. Ecuador is no different than the USA or the UK, or pretty much anywhere else in the world. Professional real estate representatives do not charge showing fees.
4. Do personally interview a minimum of three (3) real estate professionals, before selecting an option as to who you should work with and find someone that meets your comfort zone. Impressed by the first guy/gal? So, what? Interview at least two (2) others and preferably more. Real estate is generally the most expensive transaction most folks will ever make…do not entrust it to the first guy you meet…even if that guy is me.
5. Do ask your real estate representative to elaborate on their credentials, years of experience, areas of specialization and time conducting real estate transactions in the Ecuadorian market. You will be astounded by the diversity of responses.
6. Do ask your real estate professionals to discuss their personal experience when purchasing real estate here in Ecuador. You will be surprised by how many so-called “real estate experts”, who you will be entrusting your own real estate transaction with, do not even own real estate here in Ecuador. Yes…that’s right. The “expert” representing your real estate transaction, may never have even done one of their own here in Ecuador. Happens all the time, even from those who profess to having 3, 4…5 years of experience in the local market. What kind of long-term commitment, and follow-up client service care is suggested, when a real estate agent does not believe enough in the very market they wish you to buy into, to buy themselves? It is a legitimate question. Ask it.
7. Do hire a local attorney to represent your real estate interests, no matter how often the “nice” real estate agent tells you that you do not need this service, or that the local Notario will take care of it for you. I have been doing real estate transactions for 25 years here in Ecuador. I ask of every client that they hire a local attorney to represent them. No exceptions…ever!
8. Do strongly consider using an Escrow Account to handle your real estate transaction funds. Yes…it will cost you some money. Yes…most Ecuadorian sellers will look at you like you have three heads when you raise the issue. A professional real estate representative will be able to smooth the waters and convince all parties that an Escrow Account is in everyone’s best interest.
9. If you decide to ignore my suggestion number 8 above, at least speak with your local bank first, so that you fully understand exactly what their regulations, requirements and process steps will be in order to electronically wire funds internationally. Not the same as domestic wire transfer policies. Avoid what happened to one poor buyer, who was forced to fly back to the USA, just so they could sign a form and enter a PIN in front of a bank agent, before their international bank wire transfer would be approved.
10. Do understand that real estate inventory is rather in limited supply, pretty much outside of Guayaquil, Quito and, well, maybe Cuenca. This is not a mature market, where you will ask for “x” and your real estate agent will instantly produce 100s of “x” options. Not the way it works here, no matter how often the “nice newsletter” says so. Bargains are not falling off trees and, even worse, the market segment which interests you may not even have much to offer at any snapshot moment in time. Professional real estate agents will tell you this candidly up front. The others will keep promising to show you “dozens of deals”, only to mysteriously discover a new reason every day why the showings could not take place. Good buying opportunities exist. Product you seek is likely available. However, you have to be realistic in your expectations, in terms of market scope, breadth and the relative availability of “super deals”. Such promises sell newsletters…as well as pipe dreams, but they will only spell disappointment for those unwilling to consider the significantly more sobering truth.
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