What are the cultural diffences when looking to buy Real Estate in South America ?
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I was recently asked what did I consider the main differences when building a real estate business in New Zealand where I had come from against building one in South America. Moving from a country that has a very formal, highly trained and strictly controlled real estate industry to a region where still much of the business is done in part by informal part-time salespeople or in some case lawyers and property administrators who had little or no sales experience or training was always going to be a challenge. I have been here now over 10 years so I have seen a lot and made a few mistakes along the way. However learning what is possible and along side that introducing new marketing concepts to a receptive market has had its rewards.
Amongst the most important differences are the following.
The largest one would have to be the informality of the market. Potential vendors are often speculators who own many properties and will sell any if an above market price is offered. They can easily be identified by finding out the properties time in the market and whether they have increased the price at any time if and when they think the market is getting stronger. The other give away is their refusal to sign an authority to sell. In many cases they can’t sell, as they are only part owners in a legal sense or the property has legal title issues.
A variation of this is informal sales persons scalping licensed brokers listings for their own websites and adding a profit margin for themselves. This is again is` very common in some regions. This is why you see the same property listed at different prices on different websites.
Of course this drives inexperienced foreign and local purchasers crazy. However some vendors do it because they can and occasionally they get lucky and capture an above market price. Sadly the buyer is struck with an overpriced property for a very long time.
The reason they can do this is that there is no publicly available sale price information, which would guide both vendors and buyers as to what relevant sale price might be.
Because of the above GTSA became licensed in the different regions we specialize and in many cases are able to offer licensed valuations to vendors and buyers.
The other major difference is in all the South America markets we operate in except Brazil the selling fee is spilt between vendor and buyer. These fees vary from 6% plus sales tax in Brazil to between 3% and 4% plus sales tax paid by each side elsewhere.
This is why licensed brokers are reluctant to show properties without written authorities from both the vendor and buyer.
Last and not least is the language differences. Outside the major cities little English is spoken. There is no short cut to this, you just have to learn. Is it easy ? For me it was hard but I note many younger English-speaking immigrants are picking it up much easier. Learn a second language whilst you are young is the key to living and investing in a Global world.
Geoffrey W McRae
Founder of Gateway to South America
Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.
Post available in: English