Category: Expat Lifestyle

This is part 8 of the not-so-commonly-seen look into a real, live Ecuador real estate transaction (of my own with my own money) as I reveal all the dirt as it happens in this rare, completely transparent property play.

After we agreed on price, the next step was to go visit the lot one more time and double check to be sure it was completely unoccupied and that there weren’t any 50 foot holes or some other deal killer.

It was fine so we proceeded in agreeing to payment terms.

In Ecuador, there is no “Escrow” service so each property transaction is a bit different.

Some use a third-party lawyers account but I trust them less than I do the seller.

Not an option.

Some sign a “Promise of Sale” (Promesa de Compra Venta) in a Notary and give a deposit to secure the sale but most for smaller transactions like this one are OK with skipping it and paying upon signing of the deed (Escritura) usually with a certified check from your Ecuadorian Bank or via a direct bank wire if the funds come from abroad.

Every property purchase in Ecuador is different in this regard.

One thing I do recommend is to “keep the seller in the loop” until the property is officially registered in the Property Registry office. If you pay them all at once upon deed signing they’ll disappear, and you may need them later for some requirement the Registrar asks.

I agreed to pay half via certified check upon signing of the deed (Escritura).

And paying the other half when the property has cleared title and is properly registered for the first time where it needs to be in the Property Registrar of Santa Elena (which covers the whole Salinas area).

Part of me still doubts this purchase will get that far.

Next we had to go to the local “Comuna” and transfer the “Right of Possession” (Derecho de Posesion) the seller had to my name and have the president of the Comuna sign off.

At first the Comuna asked $500 but then we found a friend of the seller with some contacts in the Comuna that did the name transfer for $200.

After the Comuna name transfer the next step was to solicit an inspector from the Municipal in Santa Elena to come and measure the property and give it an official tax ID number (Numero Catastral) which it never had before. This cost me $30.

After that on the same day they issued us a certificate with the offical measurements and new tax ID number of the property.

With that and the Right of Possession in my name from the local Comuna, we had the properties’ first ever Escrituras (Deed) drawn up by a notary in Guayaquil while I paid the Capital Gains Tax (Plusvalia), Transfer tax (Alcabas), and got the Certificate of not having any leins (Certificado de no ser deudor).

Total cost of drawing up the deed in the notary and paying all the transfer taxes mentioned above, $200 more.

Plus I paid a local lawyer in Guayaquil $120 to do a further title check and help me with the run around a bit do to the unique circumstances of this purchase.

As I write this the new title (Escritura) has now been signed and sealed by the Notary in Guayaquil, and is ready for registering in the Property Registrar, the final and most important step.

I’ve been told the registering will cost around $260 plus another $15 to “Catastrar” the property registering it with the local Municipal as well.

Tomorrow I hope to successfully submit the title to the registrar.

Total estimated closing costs of a property municipally valued at $4160: $725

Elapsed time: 1 week

Stay tuned to see what happens now. Wish me luck!

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This is part 7 of the not-so-commonly-seen look into a real, live Ecuador real estate transaction (of my own with my own money) as I reveal all the dirt as it happens in this rare, completely transparent property play.

OK, so today I came to agreement with the seller to buy his 475 m2 (5112 ft2) beachfront lot near Salinas, Ecuador with title issues for $4300.

What’s my plan?

The plan is to buy—> legalize the title issues—> and resell.

Hopefully all within 1-3 months.

That’s it.

Nothing fancy about it.

I know I’m taking a risk here. I may lose everything I’ve invested.

But the potential reward is really good, based on my experience, the lot, when legalized with clear title, is currently selling for at least 2-3 times what I’m paying for it.

Once when I was 20 I bought a car in San Diego for $350 with title issues.

I didn’t know what I was doing and new to the state.

No problems until I went to register the car.

And I found out I couldn’t register it unless I paid an unpaid tax lein that was worth more than the car itself.

So what did I do?

I tried to sell it to an ex-girlfriend.

But then the cops pulled her over and i felt bad and gave her her money back, then I junked the car, it was essentially non-transferable, no one would buy it with the lein it had against it worth almost double the car (it hummed like a helicopter).

A loss.

This time I did my homework, went to the Registry office beforehand and followed up with numerous “experts” I know down here and have concurred that in fact the title issues of this property as mentioned in the previous posts can in fact be cleared in a timely fashion.

Besides, I must get it right cause my ex-girlfriends in Ecuador probably can’t afford it.

Haha, just joking.

We’ll see.

So what price should I put on it?

Anyway, stay tuned, we’ll see how it goes.

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$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!

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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