The Ecuador Insider

$6000?

“Whew, that’s steep man.” I said as we sat down to negotiate the 475m2 (5112 ft2) beachfront lot I found for sale in Ecuador this week.

“Look, I’ve got another opportunity available, whats the minimum you’d accept?” (Mire, tengo otra opcion, digame cual es lo ultimo?) I asked.

“OK, OK, $5000, but that’s if you pay in cash.” The seller rebuttled.

“Well, I would pay that, but the lot has title issues, and I’m going to have to pay extra to fix that, and there’s a certain risk I’m taking on in that the title issues may not even be correctable, so because of that, I’ll pay maximum $4000.” I responded using the title problems as a bargaining chip.

And the bargaining went on…

Here’s 8 tips I have when bargaining with Ecuadorians.

8. Ecuadorians almost always will be willing to round off asking prices. For instance, if they’re asking $28k, they’ll almost always accept at least $25k, but don’t let that be your first offer. In my case, the seller was asking $6k so I knew he’d at least accept $5k.

7. A “no” is never a “hard no” in Ecuador, it just means “no right now”. Be slow, keep calling and be persistent, once they get a comfort level with you they might start lowering the price when initially they didn’t want to.

6. Learn a few key common very Ecuadorian phrases like “Cual es lo ultimo?” (Whats your lowest price?) and “Mira, tengo el efectivo, uno tras otro.” (I’ve got cash and I’ll lay down the bills, one after the other.) “Es mucho.” (That’s too much.)

5. Don’t be afraid to throw out a ridiculously low bid, at maybe half the asking price, they may not say yes but they won’t get offended and it gives you a good starting point for negotiating.

4. Be patient and don’t be afraid to throw a number out there and let it marinate while the seller thinks about it, they just may come around with time.

3. Caution, they may try to change the end asking price or terms on you after they’ve already been settled on if they feel they are selling to cheap. And generally, the spoken word isn’t a binder in Ecuador so once you got a deal it’s best to work fast before they have sellers remorse.

2. Don’t show money. You don’t have to, they’ll take you serious even though you’re dressed like a dirty bum simply because you are a foreigner. If you show money they may be more reluctant to bargain price.

1. Stay out of the picture as long as possible. As I did early on in this post series, try to have a local friend talk for you at least until you get an asking price to be sure you’re getting quoted a price a local would offer to another local, then you can come into the picture.

We’ll see what happens from here, stay tuned!

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Jeeze, why can’t this ever be easy? I thought earlier today.

I was checking out the cheap beachfront house I told you about in the last update of this series where I walk you through every step of a real, live property deal I’m currently making in Ecuador, you’ll come with me as we go from start to finish or from the buy all the way to the re-sell.

I was a little down cause the house I told you about 2 days ago, and the one I was looking at was “technically” beachfront, but not really, it was kind of far away from the beach although the land separating the house from the ocean was un-buildable do to an estuary or bay area just to the side of the house.

It kind of looked like the house, along with the ones next to it were in a flood plain that may have problems sooner or later.

But the house itself was pretty nice for the low price and you could see the ocean from the front windows.

But I still decided against it.

It doesn’t matter how cheap something is if you’re going to have a tough time finding someone else to buy it.

But I kind of liked the area near Salinas.

So after the sellers of the $21k house left, as I walked out sure enough I found another lot for sale on higher ground, right in front of the ocean I did like.

I called and met with the owner and he said the lot, a beautiful, flat 475 m2 (5112 ft2) lot right on the ocean… beachfront… beachfront… with no busy street in between it and the ocean while also protected by an elevated pitch, was for sale for $6k.

Why so cheap?

Because that’s where it got tricky.

It was “Comuna” land.

And all he had was a “Right of Possession” (Derecho de Posesion).

Remember those 3 key papers I told you to ask any property owner and check out before buying? The Escritura, Predios and Certificado del Registro.

Yea, he didn’t have any of that.

Let me explain. If this sounds complicated its because it is!

“Comuna” or “Communal” land in Ecuador is common on the coast of Ecuador, especially in the small towns, and its when there are lots that have not been registered in the Municipality that are instead “owned and administred” by the local Comunas which serve like Town Councils and to me are quite socialistic.

While Ecuador is divided into Provinces and each province into “Cantones” where each “Canton” has there own Municipal. Within each Canton in the more rural areas you may have several dozen local Comunas.

Comunas will often gift the land to members of the local Comuna but they can’t give out Titles (Escrituras) while instead they give something called an indefinite “Derecho de Posesion” (Right of Possession).

You probably can own for a long time without problems but remember, you are still not regarded as the legal free hold title owner of the land with only a right of possession.

And for a quick buy-resell it definitely wouldn’t work.

I researched this thoroughly 2 years back on a visit to Ecuador I considered buying a lot right in the center of Montanita which only had a right of possession from the local Comuna.

Some will tell you that you can’t legally attain the Title (Escritura) nor sell Comuna land.

They’re wrong.

I know several people who have, in Montanita. But it can be a difficult, costly (and lengthy!) process to legalize the property and attain proper Free-Hold-Title (Escritura) as recognized by the banks and everyone else in Ecuador.

You’ll need a document from the Comuna releasing the property to the Municipality which sometimes the more troublesome Comunas (like the one in Montanita) isn’t always willing to give.

Because once you have a free hold Title (A Municipal-registered Escritura) its yours and not theirs. While its still theres whenever there is a change in ownership you must do it through them having the Comuna board of directors sign off on the sale and they charge a hefty fee (usually around 20-30% of the purchase price) but few buyers tell them the honest amount they paid.

I, like most foreigners and locals in Ecuador, will advise you to only buy property that has proper title (Escritura) as described in my last email.

But as one local told me once, sometimes the price is low enough that you might want to risk it.

What’s the worst that could happen?

Easy, the Comuna could make some excuse to take the property back from you. But its not common.

What will I do?

You’ll find out soon in the next email of this series.

Stay tuned.

And for more helpful, useful info try my weekly newsletter on Ecuador living and investing, you can unsubscribe at any time:

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