Editor’s Note: Since revamping our Cuenca Property Platform, we’ve been humbled by the volume of inquiries from renters & buyers. We’re very grateful for the positive feedback we’ve received. A common theme is that expats can be quite confused and at times bemused by some of the differences they uncover whilst searching for Cuenca property to buy. This article from one of our key agents, Xavier Amoroso, digs into these differences with the hope that you’re better prepared when you are ready to purchase.
I’ve been selling real estate in Cuenca since 2004. During this time I’ve heard many of the same questions from expats from the US and other countries. I’m sharing some of these questions with you below to help in your property search.
1. What is the Ecuadorian equivalent of the MLS?
There is no MLS in Ecuador. This makes it hard for buyers to find prices of similar properties that recently sold & other helpful data. The real estate industry in Cuenca can be very competitive, which means that other agents are generally not willing to share their data with anyone – including with other agents or a centralized 3rd party.
This lack of transparency makes agent selection even more important. I always suggest that buyers look for an agent that:
- You feel comfortable with
- Has many connections with property owners, agents & other people in Cuenca
I find it difficult to overstate how important connections can be in getting real estate deals done in Cuenca. Not just where you’d expect it such as owners and other agents but it’s also important when conducting other tasks such as due diligence & closing. Also, many of the better deals are only surfaced through trusted partner networks that take time to develop.
This is the same reason why local Ecuadorian agents can generally outperform expat agents. Locals have been building these connections their entire lives & understand the cultural importance of maintaining them. It’s not reasonable to expect expat agents to have the same depth of experience and this can really show during the negotiation stages. Local agents have more levers to push and can have more influence on the owner and are more likely to be able to shift their price expectations.
2. Where are all the real estate websites?
Many agents are not technologically savvy and rely mainly on social media to advertise their properties. I think these agents are missing out because many of my sales and listings come from website inquiries. Buyers can also get frustrated when they want to find more information and they are limited to what can be posted on social media.
Even if an agent has a website, many times the listings are not up to date which results in a poor customer experience. In my opinion, many agents don’t care about the customer experience – they’d prefer to keep the old listings live to obtain inquiries for them and then show the customer different properties. I wouldn’t say it’s exactly a “bait and switch”, but ultimately the customer can feel the same way – let down by the experience.
My suggestion is to use agents that show enough care and attention to detail to keep their website listings updated. If the agent is willing to cut corners on this, then it’s a good indicator that they will also cut corners elsewhere.
However, the closed nature of Cuenca’s property market also means that I do recommend you choose an agent that has access to off-market properties and listings from other agents. These are where many of the better deals can be found. It can also be a more efficient way to search for a property.
For example, if a buyer inquires about one of my properties, then I immediately tap into my network to find similar properties that may be of interest so I can show these to the buyer too. This is a win-win. The buyer gets to see more properties and I have a greater chance of making the sale.
3. Do agents generally receive exclusivity from an owner when selling their property?
No. Exclusivity is quite rare in the Cuenca property market.
Sellers are generally reluctant to provide exclusivity because they believe that having more agents selling their property will result in a higher offer. In my experience, this isn’t necessarily the case. I’ve seen sellers using 10 agents and the property never sells because the agents don’t put any effort into selling it. They see the chances of selling it are slim (ie 10%) and so they never prioritize it.
I believe sellers would generally be better off by having one or two quality agents that they know are going to put the effort into selling their property.
As a buyer, having more agents can mean that you’re more likely to find the property being offered by your agent of choice, but there’s also the risk that it just gets skimmed over because the incentive to sell it is small compared to the listings that have fewer agents. For this reason, you’ll likely see these properties towards the bottom of the agents’ lists and you may also notice they’ve been on the market for longer.
4. Can I get finance from a bank or another entity?
Most likely you cannot as you are not in the Ecuadorian credit system. Sometimes the seller of the property will offer a loan but it’s rare.
This means that most of my expat buyers purchase with cash.
5. Hyper-local valuations
Adding to the difficulty in establishing price expectations is that valuations can often be very different within the suburb.
And, sometimes it can be hard for expats to understand the valuations themselves. For example, in Challuabamba you can find million-dollar properties right next door to a crumbling shack. Local buyers don’t care about this because they know the shack will eventually be removed. Expat buyers can be worried that the ‘shack next door’ will bring down their property price. But, this same scenario may certainly have an impact on price in other neighborhoods where the expectation of continued growth does not exist.
6. Notary vs Lawyer
For many Ecuadorian buyers, the use of a lawyer for property transactions is not seen as a necessary expense. Notaries are used a lot in Ecuador for a whole range of legal situations, including real estate transactions. This can be hard for foreign buyers to accept and many times they insist on using an attorney for the closing contracts.
My opinion is that many property deals in Cuenca don’t require the use of a lawyer. A knowledgeable agent and a good notary are normally more than adequate. It’s possible that when a lawyer gets involved, they can unnecessarily complicate the deal in an effort to “demonstrate their expertise” to the client. I’ve had several good deals that clients have missed out on because of this.
For complicated or unusual transactions, we do recommend using a lawyer. And of course, if the buyer decides to use a lawyer for their own peace of mind or other reasons, then I provide them with several options or they can choose their own.
If you do decide to use a lawyer, I suggest looking for one that has a deep specialty in property law rather than a general lawyer that dabbles in a bit of everything.
7. No Title Insurance
It’s not common to find title insurance in Ecuador. This makes doing your own due diligence even more important.
One item to look out for is property owned by numerous family members, but there is no unanimous agreement that the property should be sold. This can be a common scenario in the case of property that is being sold because the family member dies and the rest of the family has not reached a consensus on what to do with the property. Or, someone is trying to sell the property as a result of a divorce and the other party still has a legal interest in it.
8. Low holding costs
Ecuador has very low property taxes. Most properties don’t need to pay more than $200 – $300 in property taxes each year. One impact of this is that property owners may prefer to hold onto their property for longer in the hope of achieving more substantial appreciation.
Property is also seen as one of the safest investments – especially given our cultural tendency to distrust banks. This can translate to owners holding property for longer than you might be accustomed to.
The combined effect of the above is that owners are not necessarily in a hurry to sell and will happily wait for the right price to come along – even if their expectations are above the market rate.
9. Limited use of escrow
Escrow is very rarely used by the Ecuadorian market. As such, there are not many local options to provide it. Requesting to use escrow can result in the purchase falling through as it can be seen by the owner as an unnecessary process that can slow down the transaction.
If there are multiple offers on the table, which is often the case for well-priced properties in Cuenca, you will likely lose out to a local buyer that does not have the same escrow requirements as you.
These are just some of the differences in how the foreign and Cuenca real estate markets function. I hope it’s helped you gain some knowledge about what to expect if you do decide to buy property in Cuenca. If you want to increase your property education further, you can schedule a 1, 2 or 3 day Real Estate Trip with me. Of course, you can also find my Cuenca properties for sale on YapaTree or you can also email me at [email protected].