Please help the animals of Mazatlan

Mazatlan Online Properties is a searchable database of properties for sale in the greater Mazatlan area. This is a free public service provided by your hosts, Nadine and Henry. We hope you find it useful. Note! These listings may be out of date, and it is up to the sellers and their agents to keep them current. Be sure to contact the seller or agent before making a trip down here! A statistical summary of the listings is available.
There are 163 houses, 98 condos, 22 lots, and 9 businesses currently online

Questions to ask before you buy

If you are considering a house in El Cid, El Dorado, or any of the nicer neighborhoods, you may not need to worry about these things, but it never hurts to ask. Don't assume that things are similar to what you are used to back in the US or Canada, the rules and customs are a little different here. You will find most Mazatlecos to be warm, friendly, and courteous people, but you can also run into real jerks who don't care about your comfort or anyone else's but themselves. Calling the police at 3AM and complaining that your next door neighbor's live band is causing the plaster in your walls to fly through the air like shrapnel will not elicit a lot of sympathy or action. It is very much in your best interest to find out who your neighbors are, and what kind of people they are. Once you move in, you are pretty much stuck with them and the notion of lawsuits to enforce courteous behaviour is not an option. Ask your agent about the neighbors, and then ask the neighbors about each other, it may save a lot of grief later. One last comment, no matter where you live, you can expect to be up pretty late at night during Christmas and New Years listening to your neighbor's parties. Your best bet is to be on good terms with them and get yourself invited, since you aren't going to get much sleep anyway.

How to hold Title

There are really three ways to hold title in Mazatlan if you are a foreigner. The cleanest, in my opinion, is to use a bank trust, or fideicomisio. Here the property is held in trust for you by a commercial bank. Even though you don't have title to the property as you would in the US or Canada, for all practical purposes you do. You are allowed to live in, rent, or sell the property, just as if you did have title. The term of a new trust these days is 50 years, and they are renewable should you still own it after all that time. The only downside to this arrangement is that you have to pay a yearly ransom to the bank, usually around $1000 US.

Recently a new form of ownership has become available, called a foreign corporation. You can establish yourself as a foreign corporation, and you are allowed to own property in Mexico. I don't really know much about this at this point, and so I can't really tell you the pros and the cons. As I find out more, I'll let you know.

Finally, some people who have friends or family here who they really trust, purchase a property and put in the the name of a Mexican national. This avoids the trust fees, but exposes you to the possibility that the owner might decide to sell the property out from under you and tell you to have a nice day. You would have little recourse at that point. Along these lines is the technique of putting the property in the name of a child born in Mexico. This is not that uncommon, and generally the courts will allow you to petition to sell the property if you want to even if the child has not come of age. There is no guarantee however, and the judge may decide not to grant this permission. Personally, unless you have a lifelong friend that you are willing to trust with the price of your house, I wouldn't recommend this method of holding title.

Closing Costs

What follows here is an actual itemized closing statement for a home that recently sold here in Mazatlan. The property was appraised at about $462,000 pesos and the closing statement read as follows:

Closing costs in 1999 with 9.5 pesos to the US dollar
Item	Cost in Pesos
Plot map	$150
Appraisal	$1500
Certificate of no liens burdens and encumbrances	$130
Municipal certificate of of solvency	$101
Real Estate Aquisition Tax (2.2% of appraised value)	$10,160
Public Registry Fee	$3,810
Misc. expenses	$600
Legal fees	$6469
Total	$22,920
Total in US Dollars	$2,413

Some comments on this table. You will notice that the closing costs were about 4.96% of the appraised value. This is fairly typical and a good rule of thumb is to expect closing costs to run about 5% of the price. The largest expense is the transfer tax, or Real Estate Aquisition Tax. It is 2.2% of the appraised value, and there isn't anything you can do about it. The main item that is negotiable is the legal fees, which is what your notorio will charge you for doing the paperwork and providing you with title to your property. He can pretty much charge whatever he wants to, but anything more than $1000 US dollars should be talked about. For this particular property, his fee was around $700 US. If your closing statement contains other items, or you find the fees substantially higher (as a percentage of the property's value) you should definitely question what is going on. Most reputable notorios will give you a pro-forma closing statement which will be very close to the final numbers.

One other item that is worthy of note is the use of the appraisal price in the calculations above. The appraisal price doesn't really have anything to do with the purchase price, and is often substantially lower. In this particular case, the purchase price of the house was around $80,000 US, almost twice its appraised value. This is not uncommon. The city appraiser has a chart that lists values of land and construction per square meter. The value depends on location, and there is a formula that he uses to compute your appraised value. This may or may not be anywhere near your agreed upon purchase price. Your closing costs and future property taxes will be based upon this appraised value. This is one reason why it is extremely difficult to get a true feeling for the value of a property, since the only official numbers that are available are these appraised values, not the actual purchase prices.

A word about trusts

In addition to the above closings costs, the bank also charges fees to create a trust for you. The trust permit will cost around $1000 US, and the initiation fee (which includes IVA, a 15% sales tax) costs $400 US. Additionaly, you must pay your first years annual trust fee in advance, which is another $400 US. Thus the bank is going to whack you for about $1,800 dollars, and then about $400 per year thereafter. There isn't anything you can do about this, we call it paying the ransom. You can however choose which bank you are going to permit to collect the ransom, and it can make a difference. Probably the most important aspect of which bank you are going to use for your trust is continuity - that is that the people you are going to deal with at the bank have been there for a while. Second is that the bank have a local trust department, with a trust delegate who is authorized to sign the paperwork on behalf of the bank.

Unfortunately, at this time (summer 2005), there aren't any banks left in Mazatlan with an active local trust department. However, a lady named Marisol Osuna, worked at the Bancomer Trust department for about 20 years, and now is working for Banco Interacciones, S.A. which doesn't have a branch in Mazatlan, but does process trust documents through her. Here is her contact info:

Y. Marisol Osuna Manjarrez
Suites del Real Local A-Fidu..what?
Av. del Mar  #1020
Mazatlán, Sinaloa, México.  C.p. 82140
Tel/Fax (011-52) 669-9920355
cell 044-669-1201888
fiduwhat_mzt@hotmail.com
osunamarisol@hotmail.com

All of the other banks in Mazatlan must send your trust papers to the main office in Mexico city, where it can languish, sometimes for weeks or months.

Attention other banks in Mazatlan. Please let me know if what I have said in the previous paragraph is untrue. To the best of my knowledge only Bancomer maintains an fully staffed trust department in Mazatlan. If you do also, send me a message and give me the details, and I'll be happy to include your information on this page.

Choosing a Notary

The right notary can make the difference between receiving your title papers in one month or six months. Your main concerns are cost and time. Start by asking your agent who he or she recommends, and then ask other agents who they recommend and what they think about the one your agent recommended. Unfortunately, it is not uncommon for the agent to collect a "commision" (also known as a kickback) for using a particular notary. Once you've got one in mind, find someone who has used this notary and find out how long it took to complete the transaction. The notary's job is very important. He is responsible for making sure that the title you receive for the property is clean, and that there are no liens, encumbrances, or unpaid taxes. He must get a letter from the public registry and a certificate from the municipal government to this effect. One piece of advice to keep your sanity: Remember that you are in Mexico and things take a little longer. After you have signed the closing papers and written the big check, it can still take a month or six weeks for your fideicomisio to be completed. This is not unreasonable, though six months would be unreasonable.

Property Taxes

Once again, property taxes are based on the assessed value of your property, not the purchase price. Furthermore, you may be eligible for several discounts. These discounts are 50% off if you live in the property, an additional 10% off if your pay early, and another 10% off if you can show that your are retired. One way of showing you are retired is if your FM3 documents says you are. Look for the word jubilado on it somewhere, and show it to the person you pay the property taxes to.

Why use an agent?

Many buyers and sellers are tempted to bypass the agent and deal directly with each other. This can work, but it can also be very risky. The seller can pocket your deposit, and start changing the terms of the deal, and there isn't a whole lot that you are going to be able to do about it. If you are a first time buyer or seller, I would highly recommend using an agent to help you with the pitfalls. A good agent can save you a lot of time, trouble, and money. They can make sure you are paying a fair price for the property, and that the other party doesn't try to get away with anything. Even though their responsibilities offically end at the closing event, it is not uncommon for agents to go the extra mile and help the buyers and sellers even after they collect their commissions. Some of the services that I have witnessed include:

• Holding a garage sale for the seller
• Helping to convert the utilities into the new owner's name
• Keeping backup copies of all the important documents
• Being and "escrow service" and holding uncashed checks
• Helping the purchaser with buying furniture
• Finding property management people and renters

As I said, your agent isn't required to do any of these things, but the better agents that I have dealt with routinely go the extra mile so that their clients are happy. It doesn't hurt to ask your agent as you are selecting them, and getting a feel for what kind of service you can expect.

Disclosures

If you've bought or sold a house recently in the US, you've undoubtably filled out pages and pages of purchase agreements and disclosure forms. Since the US is run by lawyers, and there is a lot of recreational suing going around, this may seem normal to you. Here in Mexico lawsuits are almost unheard of, and in all of my buying and selling I've never filled out or received a disclosure form. You are basically on your own. It wouldn't be a bad idea to make several visits to the property you want to purchase and check things out for yourself. Turn on the faucets and make sure the plumbing is in working order. It also wouldn't be a bad idea to hire a pest control expert to come and look for termites. We humans are under the mistaken impression that we own this planet, when in fact it belongs to the insects, and nowhere is their ownership asserted more frequently than here in Mazatlan, which is basically one giant anthill. Don't think that just because the houses are built out of bricks and concrete that termites aren't a problem. Apparently the variety of termites they have down here find brick and mortar yummy, and pine cabinetry is a special treat. There are measures you can take to combat these pests, but it would be worth your while to know what you are getting yourself into.

Tricks of the Trade

Here are a few ideas that might help you out. First bring a hair dryer along and check the electrical outlets yourself. Just because there are plugs, doesn't mean there is wiring. Also bring a marble and let it roll along the floor so that you can see how much and in which direction the floors are sloping. Finally, ask to look at the owner's most recent water bill. This is the most reliable way to detect leaks in the plumbing.

Have I scared you enough yet? Believe me that isn't my intention. As I've said, we've lived here since 1992 and we love it. We had termites in one of our houses and $500 US of pest control work took care of the problem. Also, all of our dealings with buyers and sellers have been pleasant affairs, and we think very highly of our agent and our notary. (They are both now family friends.) So please, don't be frightened, just be cautious. It isn't uncommon for gringos to leave their brains at the border. Don't be one of them.

More, You want more?

If you've read this far, you must be really serious about buying property in Mazatlan. Well, Nadine and I have prepared a sample purchase agreement and more for you if you are interested.