When you’re scouting for a property to buy in Mexico, and when you have a property you want to sell in Mexico, developing a good relationship with a local realty agent can help you get a wider understanding of the current market and their services can help you work through the stages of the transaction.
Buying property in Mexico using a realty agent
When you’re scouting for a property to buy in Mexico, developing a good relationship with a local realty agent can help you get a wider understanding of the current market and their services can help you work through the stages of the transaction.
Part of the professional team you need
The realty agent, and the agency they work with, is part of the professional team most people call upon when they want to buy a property in Mexico. A good agent will be well established locally and have experience and contacts that you probably don’t have and would find difficulty in acquiring in a short time scale.
By finding a reputable realty agent and investing time to cultivate a good working relationship with that person, you will be giving yourself access to local insights, experience, and market knowledge that you would find hard to come by without the help of an agent.
Local knowledge is key to a good investment
When you search for a realty professional who can help you find your ideal home or investment property in Mexico, look for an agent who has an excellent understanding of the local area you are buying in.
The agent should, ideally, have several years of experience in the business and live and work in the area they represent (the best ones always do). They should have an in-depth understanding of the locality and its neighborhoods and ideally should also own a home in the locality. Most agents who interface with foreign buyers in Mexico are bilingual (English and Spanish), and some are polylingual.
Your project manager and interpreter
As we mentioned in a related article about the work realty agents do, property transactions in Mexico inevitably involve liaison between the interested parties, and carry a substantial amount paperwork as well as specific legal processes to follow to bring the sale to an orderly completion.
Your realty agent will earn their commission by negotiating with the seller on your behalf, explaining key aspects of the process to you, interacting across series of complex liaisons, and undertaking the detailed project management needed to get your home purchase completed in the quickest possible time scale.
If you don’t speak enough Spanish, they will explain things to you in English, and they will interface with other parties in Spanish.
Long term local support
A good realty agent may become a long-term ally—and some become local friends. Getting to know your local agent and developing a relationship can be helpful as your lifestyle situations evolve.
- if you decide to rent your house, the agent might be able to help you find renters;
- if you have friends or family who want move to Mexico, the person may be able to help them in their search; and
- when you come to sell your home, they will be able to advise you again and help you find a buyer.
Thus, a good realty agent can be a potential long-term association that can provide support and counsel on an on-going basis while you’re living in Mexico.
Selling property in Mexico using a realty agent
If you already own property in Mexico, then at some point you may want or need to sell your home, and you may seek the services of a realty agency (and its agent) to market and sell the property for you.
Do you need an agent?
In Mexico, realty agents’ fees can add up to over 9% of the sales price of the property in some cases (but this is negotiable, see below) and so some sellers consider bypassing agents and try to sell their house on their own, dealing directly with the buyer.
If you decide to bypass the services of a realty agent, you will need to:
- assess the market value of your home on your own, or exclusively through the help of a property valuation surveyor
- do all of your own marketing and advertising and pay for this yourself;
- feel confident about dealing with potential buyers (and inevitable timewasters) and take phone calls and text messages (perhaps at unsociable hours, and also in Spanish), as well field emails and other correspondence;
- undertake all the liaisons and negotiations in regard to price bargaining and what is included, etc.;
- have a sales contract drawn up (in Spanish) and deal with all the liaisons and project management involved in the property transaction, likely in coordination with the buyer’s chosen Notary Public and other realty professionals;
- be able and confident to deal in Spanish and in English or some other language if your buyers don’t speak English.
Most sellers discover that the services of an experienced agent are worth the fees. Some sellers who want to save money on the sales commissions may try to come to an arrangement with the agency whereby they agree to do some of their own advertising and marketing on the understanding that if the seller refers a buyer to the agent to undertake the negotiations and project management, a lower selling fee percentage will apply.
Exclusive and non-exclusive sales contracts with agents
When you are contracting an agent to sell your property, your contract with the agent will either be sole, exclusive or non-exclusive.
Sole contract means that the agent you sign with is the only third party that can transact the sale, although it allows the seller to find a buyer and deal direct.
Non-exclusive contract means that the seller can make agreements with an indefinite number of third parties to transact the sale.
Exclusive contract means that the agent the seller signs with is the only third party who can transact the sale and that agent will be owed their commission even if someone else (that might include the seller) finds a buyer and sells the house.
Most agencies want to sign sellers into exclusive contracts, whereby the seller agrees to list the property with only one agency and that agency is contractually entitled to the commission regardless of who finds a buyer.
This means that all other agencies and their agents in that area need to refer to the agency with the exclusive listing to sell the home, and thus the agency earns a share of the sale, even if they don’t introduce the buyer to the transaction.
Exclusive contracts will usually carry a lower sales commission rate but may limit your exposure and are rarely a good idea unless the property is in some way exceptional, or if the agency undertakes to invest a specific amount of money in additional marketing efforts to sell the property.
Setting time limits on listing contracts
Regardless of whether the contract to sell your property is sole, non-exclusive, or exclusive, reasonable time limits should always be set on sales contracts with realty agencies.
In buoyant markets across Mexico, for example, big cities and affluent tourist towns passing through a spate of high popularity, this time limit could be as short as three months.
In smaller or more niche markets, for example smaller towns, islands, and seasonal tourist spots the sales cycle can take considerably longer so you should expect to negotiate an exclusivity arrangement to allow for this, perhaps at least 6-12 months with set review dates.
Some agencies might insist on an exclusive contract and if they do, it ought not to be more than six months, and the commission rate ought also to be lower than that offered for non-exclusive listings.
Your sales price
One of the first things you have to do when you decide to sell is to make a reasonable assessment of your property’s value.
Be realistic with your pricing when you are selling. Agents sometimes over-assess a property’s value to build a seller’s confidence and gain an exclusive representation contract.
It’s a mistake to choose an agent solely on the “highest valuation,” or sign a contract with an agent because they tell you that they “know motivated sellers.”
Some agents might try to gain your confidence by promising unrealistic sales time scales and prices. If a property won’t sell because of the price, that same agent will be the first to advise you to lower the asking price; and when the “motivated sellers” show themselves to be something less, all you will have gained is a need to find a more reliable sales agent.
Realty agent selling fees in Mexico
Most realty agents in Mexico charge fees of between 4% and 8% to sell your property.
The rate is always negotiable, but we don’t know of any realty agencies in Mexico who will work to actively market and sell a property for much less than 4% —unless it’s a very expensive property— and most charge in the range of 5%-6%.
Sales tax on sales commissions
In addition to the agent’s fee, you will need to pay Mexican sales tax —known as Impuesto al Valor Agregado, IVA— on the commission. The IVA rate is currently 16%, and the table below illustrates the effect of this sales tax on your commission payment.
|Sales Commission with Tax (16% IVA)
|Commission on a
|Commission on a
Factors that can influence the agent’s sales fee
The sales commission rate an agency will agree on with sellers will be influenced by a range of factors that can include:
The value of the property. Sellers of higher value properties might be able to negotiate a lower rate, but lower value properties always pay the higher rates as the project management costs involved to complete the transaction are similar regardless of the home’s sale price.
The current state of the market. If the market is very buoyant and competition among agents for listings is fierce, agencies might lower their rates as they will make up the difference in volume. However, in slower markets agencies will likely need to charge a higher percentage to reflect the additional marketing costs, longer sales cycles, and lower volume of sales.
The condition of the property being marketed. If the property you are selling is in particularly good shape, attractive, and readily marketable, the agency may determine that it will be easier (less expensive) for them to market than a more plain, less attractive property. All agencies like to have some ‘eye candy’ in the showcase, and they might negotiate a lower percentage with you if the home you’re selling qualifies in that way.
The contract terms. Agencies will usually (but not always) offer a lower rate for an exclusive contract, especially if they consider the property to be attractive and highly marketable. This is because the agency will earn the full commission on the sale if they find the buyer and share the sales commission with the other agency even if they don’t introduce the buyer.
Be reasonable with your agency negotiations
When negotiating terms on the percentage commission for the marketing and sale of your home in Mexico, keep in mind that it costs a considerable amount of money to operate an agency and actively market a property for sale, and then significant time, effort, and expertise to manage through a property transaction to successful completion of transfer.
Some agencies might offer you a lower rate if you introduce the buyer to them; this leaves them to manage the negotiations and project manage the transaction to completion. In this scenario, you will need to spend time and money upfront on advertising or other promotions in order to attract potential buyers and benefit from the lower percentage sales commission.
As you negotiate with the agency or agencies you choose to approach, try to find an equitable commission level that gives you, the seller, a competitive rate, and provides the agency you have signed with reasonable compensation for actively marketing and managing through the sale of your home in Mexico. Remember that you don’t pay the agency if they don’t sell your property.
Learn more about property in Mexico
Mexperience offers detailed insights about property in Mexico for buyers, owners, renters, and sellers.
- Latest articles about working with realty agents in Mexico
- Latest articles and insights about real estate in Mexico
- The value of Mexican real estate
- Tell-tale signs of a good realty agent
- The costs and taxes of buying a home in Mexico
- The costs and taxes of selling a home in Mexico
- Insuring your Mexican home
- Enjoying your home and home life in Mexico