Are you looking for real estate in Ecuador?
How can you sort out all the variables and choose an agent who will represent your interests?
In this post, I share tips and observations from five years in Ecuador – and from running the largest English language travel and expat site in the country.
10 Steps to Choosing a Great Agent
While you can always choose based on an online ad, it is better to make an informed decision based on the following suggestions:
- Meet at an open house
- Take a recommendation of a close friend
- Check their references
- Hire a real estate lawyer
- Interview multiple agents
- Don’t hire on language alone
- Don’t hire on their fee alone
- Choose a full time agent
- Check their business registration
- Look at their current listings
8 Questions to Ask A Prospective Agent
Make sure you really interview the agent before you hire them. Here are some questions to get you started:
- How long have you been in the business? Real estate careers are surprisingly short among expat agents. Make sure that they have been selling real estate in Ecuador for a while before hiring them.
- Will you provide references? Every good agent has references. Confirm that they are unbiased.
- What documents will I be asked to sign? Can I see them now? Make sure of what you are getting into before you begin the process. This applies to rentals and purchase.
- How will you search for my home? Find out if you will be offered options from their current list or if they will go looking for properties that meet your criteria.
- How much do you charge? Some agents charge a flat fee ($300) while others charge a percentage of purchase price. Be careful of agents that sell on agent markup. More on this below.
- Will you help me find other professionals? An established agent should have contacts with bankers, lawyers, notaries, translators, repairmen and home inspectors.
- What area do you live in? Make sure that they know the area and city that you are planning on living in.
- Watch this video. Then quiz them about specific legal issues and see if they know more than you do.
The Necessary Disclaimer
Please note: I am not an agent, nor do I have any financial relationship with the sites we are recommending. We are not promoting any specific real estate service. There is no hidden agenda in this post (or any other that we publish). This post is not meant to harm individuals reputations or businesses. If you feel that our point of view is mistaken, please share your comments below. Also, if you have a bilingual real estate site (English/Spanish) or a Spanish site with some English, please share it below.
Language can be a barrier, as can legal issues – but people are people. People are dishonest in every country, but people are generally reasonable and honest. Rely on your lawyer not your real estate agent. This stands true in your home country and it’s true here.
Be aware of the legal issues when buying real estate in Ecuador.
I recently spent some time looking for a furnished rental for some friends. A Google search returned a number of the English sites along with many Spanish ones. The local English agents that I spoke with were unhelpful and unprofessional. Obviously, I didn’t speak with every agent and I’m confident that there are good, honest agents that are also foreigners. But the premise is a bit unusual.
Why Many Expats Become Real Estate Agents
In every area with a developing expat community, there are English real estate agents. Why would these expats choose to sell real estate – when there are so many other fields they could go into?
- English as a skill set. Back in your home state or province, would you consider hiring an agent just because he spoke the same language as you? Absurd, isn’t it? There are so many other factors, like experience, credentials, and reputation. When new expats are looking for real estate abroad, often speaking English is the only requirement for hiring an agent. It seems like weak criteria for a six digit investment.
- Niche exploitation. In many expat areas, expats tend to congregate for “gringos nights” and other events. And Cuenca is no different. I haven’t attended these events (I also don’t find “speaking the same language” as a reason for friendship) but we’ve heard from many who have attended. According to them, these events are little more than an opportunity for expat-targeted businesses to pitch their services.
English Listings? Yay! Wait… What?! Only in English!?
Remember where you are looking for real estate. It is a SPANISH country. Latin America doesn’t have bilingual countries (like Canada: English & French). While there are a few countries that speak Portuguese (Brazil) or English (Belize, Guyana) almost all of them are Spanish (Costa Rica, Panama, Ecuador, Columbia, etc). Not Spanish with English sectors – all Spanish. Central and South America are Spanish. So when looking for real estate, expect to do so in Spanish.
When you find a real estate site with English listings, a good question to ask is:
“Who are these properties being marketed to?”
If the company’s site is only in English (and they are in a Spanish country) the question should be: “Why?”.
Obviously, they could move more inventory if they marketed in Spanish as well. Could it be that they only market in English, because the local Spanish-speaking population would never pay their prices? If that is the case, why should an expat pay their asking prices?
I’ve heard from many sources that real estate transactions don’t only work on percentage commission. They also work on agent markup. Let me explain:
Beware of Agent Markup
Lets say that a home owner has a nice house that they want to sell for $85,000. The agent promises that price, with anything above that price going to the agent. Imagine the agent adding a healthy $35,000 to the price, listing at $120,000. This gives the agent more than 29% of the sale price as a fee or commission. In Canada, the standard rate was 6% – often split between buying and selling agents. Things seem much less regulated here. In fact, I’ve seen the identical property listed on English real estate sites and Spanish ones. Well, identical except for the price…
But If You Have The Money…
For some new expats, the ease of purchase is obviously worth the higher price. When basic condos might go for $300,000+ in your home city, the difference between $100,000 and $140,000 might seem negligible – especially when located in a brand-new luxury building.
Alternatives to Expat Real Estate Agents
Even if you choose to purchase with an English speaking expat agent, you do well to confirm similar property values before you purchase. And you need to do that by looking at locally marketed properties. You can check with one or both of the following:
- an agency that markets primarily to Ecuadorian buyers, in Spanish
- a classified sites that market properties, primarily in Spanish
Now I know what you’re thinking: What use is a Spanish site, if I don’t speak Spanish?
There are two reasons to use Spanish classifieds and real estate listings:
- Many Spanish sites contain English listings: It isn’t uncommon to find postings both in English and Spanish or just in English although the majority of the listings will be just in Spanish
- Hire a translator: In many cases, it is cheaper to hire a translator who you pay by the hour to help you find a rental or even a property to purchase than to pay for an overpriced property. I recently spoke with a gringo who had signed contracts with Ecuadorian property owners to rent their properties. He would get them the price they wanted and he would get whatever the overage was. One two bedroom apartment was going to rent to gringos at $900 per month. It might have been worth $300-400. If you hired a translator at $15/hr to help work out the specifics on your rental, you could hire them for more than 30 hours and still come out ahead on your first months rental!
There is a lot said about gringo inflation on some blogs. From our perspective, the inflation is primarily caused by foreigners taking advantage of fellow foreigners, and specifically in regards to higher priced real estate.
There is another issue that needs to be address.
Why Buy a Property in a Place You’ve Never Lived?
While there is a certain romantic flare to owning property abroad, you should ask: Why?
If you haven’t lived there, how do you know you will want to live there? Visiting for a few weeks/months doesn’t properly define a place. There isn’t a better anchor than a piece of real estate (especially an overpriced one).
Are You Buying For Ecuadorian Residency? The current investment rules for permanent residency are $25,000 for the principal and $500 for each dependent. In our family’s case, we had to invest $26,000.
What we recommend. Buying a property is a great idea – but why not move to your new town and rent for 6 months to 2 years? If you still love it after that time frame, start looking to buy. After that time frame you will speak Spanish (at least to some degree) and you’ll know the area better. You’ll know if you want to live in the center or out of town. You’ll have contacts that you can evaluate based on criteria other than the language that they speak. As a result of all of this, not only will you pay less for your property, you’ll likely make a better decision because:
- you can be confident that you actually want to live in that city
- you can choose both the area of the city and the type of housing (apartment, condo, house with land) that will make you happy
Be Careful of Scare Tactics
Likely you have found the set of English real estate sites – some of which use scare tactics to try to push you into their services. Renting or buying? “Neither is safe without a skillful guide”, according to some agents. “While they appear kind and friendly, the typical Ecuadorian will try to rip you off at every opportunity”, some claim. These are actual quotes from English agencies in Cuenca.
These are outright lies with the sole purpose of pushing new expats straight into often-overpriced properties.
While an experienced, full time agent can be a solid asset to buying real estate, be careful of the high number of first-time expat-agents who are just experimenting with a new career and marketing English as their top skill.
You would do better with a translator and a local Spanish agent. Or maybe just a translator and a good lawyer.
What has been your experience with Ecuador real estate? Success or horror stories?
Disagree with my opinions? Great! Please share your comments below.