Real
Estate in the U.S. and Mexico--Part I
By John Fleming
The purchase of real estate in Mexico is not the same as
in the U.S. Unfortunately many problems have arisen from the fact that Americans
don't realize this. Foreigners often naively expect that buying a property
in Mexico is just like buying one at home. Mexican sellers don't know what
Americans are used to and are puzzled by some of their expectations.
Licensing
In the U.S. real estate agents and brokers must be licensed.
Regulations differ in detail from state to state, but are similar in intent.
In Arizona each office has a designated broker who is legally responsible
for all transactions. Agents are responsible to the broker. To get a license,
agents must undergo a criminal check, take a prescribed
number of hours of course work, and pass an exam. To become a broker in
Arizona, an agent must have been active for at least three years, take more
required course work, and pass another, much more difficult, exam. Every
two years agents and brokers take more hours of required course work to
renew their licenses. Other states have similar educational requirements.
Brokers are audited regularly by the state Real Estate Commission, and those
found guilty of illegal or unethical practices can be fined substantial
amounts, have their licenses revoked or suspended, and have criminal charges
pressed against them.
In Mexico there is currently no specific government regulation
of the real estate industry and no licensing requirement. This is ironic
in a country that thrives on red tape and regulations. In Puerto Peñasco most of the people selling real estate are Americans, and their qualifications range from years of
experience as brokers or agents to the ability to nail two boards together
and put up a sign. The state of Sonora is currently working with the state
of Arizona and the Arizona-Mexico Commission to develop a licensing program
which will provide more accountability for clients and more protection for
the public.
In the U.S. the National Association of REALTORS® and affiliated
local REALTOR® Associations promote professional standards among their members
by offering courses, seminars, and printed materials to help the member
agents. Local Associations of REALTORS® cooperate to sell real estate. Realizing
that they can best serve their clients by advertising their properties to
as many other agents as possible, they operate a Multiple Listing Service
(MLS), which is an agreement among member real estate companies and agents
that they will cooperate with each other in listing properties for sale,
showing each other's properties, and sharing commissions. This organization,
because of its large membership, also has political influence.
Mexico has a national professional association, Asociación Mexicana de Profesionales Inmobiliarios (AMPI),
which promotes professional standards and ethical conduct. It is still quite
new and has few members among the local real estate community. I understand
that it is much more active in other Mexican cities. In Puerto Peñasco, at the moment, there is no MLS and virtually no cooperation
of any kind among real estate companies. However, this is being worked on
now . A local group of real estate offices is in the process
of establishing a service.
Listing Agreements
In the U.S. sellers usually sign what is called an Exclusive
Listing Agreement, which means they are obligated to pay the agreed-upon
commission to the listing broker, no matter who sells the property--the
listing agent, another agent, or even the sellers themselves. The amount
of the commission, which is negotiable, is included in the price of the
property.
Most listings I have seen in Puerto Peñasco
are not exclusive, which means that if the seller sells directly to a buyer,
the listing agent gets no commission. Agents are thus understandably reluctant
to give out information about the properties they have listed, fearing that
buyers or other agents may go directly to the sellers to make an offer,
thus depriving them of their commission. Nor does a sign
on a property mean that the real estate broker actually has a listing.
In the U.S. each MLS maintains a computerized data base of
properties listed for sale by all its members. When agents list a property,
they fill out a form that includes a great deal of information about it
and enter the data into the system. Other members have access to the data
base through computer programs. So all members of the service can find out
whatever they want about all listed properties. Through a new electronic
gadget similar to a Palm Pilot, agents can now access this information while
out with their clients.
Since there is no MLS in Puerto Peñasco,
it is not easy to get information about listed properties or even to find
out what properties are listed. If a client wants, for example, a 3-bedroom
house on the beach, the agent will have to rely on an informal network of
contacts or perhaps drive down all the beaches in the area and count For
Sale signs. There is really no way to ensure that a search is comprehensive.
MLS members can lease or purchase keysafes,
which they usually use on homes listed for sale. Keys to the property are
placed inside a keysafe hung on the door, and
agents have special keys that are programmed to open it. This keeps the
sellers' homes secure but provides access for member agents.
There are no keysafes in Puerto
Peñasco, so agents for buyers have to find sellers or caretakers
and get the keys from them to show a property. Since many sellers are not
full-time residents, it may be difficult to locate someone who has a key.
The standard practice in the U.S. for sharing commissions
is as follows: at closing the company that has listed the property for sale
receives 50% of the commission agreed upon; the company that brings the
offer from the buyer receives 50%. Each company then shares further, giving
the individual agent a percentage (usually at least 50%) of its half.
In Mexico there appears to be no standard practice for paying
commissions. Many sellers set a price on their property that does not include
a commission, expecting either that the buyers will pay it or that their
listing agents will increase the asking price to make sure they receive
a commission. Since there is no cooperative agreement to share commissions,
the details of each transaction have to be negotiated individually.
