As property prices are steadily appreciating, now is a great time to invest in Ecuador real estate. An oil boom–created by the completion of a new oil pipeline to the coast, combined with record oil prices in 2006–has also added even more intrinsic value to a property investment in Ecuador. Combine this with Ecuador’s equatorial sunshine, the choice of spectacular mountains, high plains, jungle, or coastal settings, and the unvaryingly friendly and welcoming nature of Ecuador’s people, and you have a combination for a quality of life that’s hard to beat.
Excellent Real Estate for Sale in Ecuador
Today there are lots of great real estate buys in Ecuador. For example, you can buy a two-bedroom condominium in Quito’s historic center, close to good shopping, gourmet restaurants, and hotels, for under $55,000, with a 1,000-square-foot pre-construction condo going for under $30,000. A two-bedroom apartment property in Cuenca’s colonial historic center, only a block from the main square, just sold for $39,000. A beautiful one-bedroom furnished apartment can be rented in Cuenca’s most luxurious neighborhood–directly on the Tomebamba River–for just $350 a month. In Vilcabamba, Ecuador’s Valley of Longevity, a two-story traditional Ecuadorian house with five bedrooms on 2.5 acres, with lots of fruit trees and a fresh water source, was sold recently to an International Living reader for just over $60,000.
The Best Places to Buy Property in Ecuador Right Now
From an investment standpoint, Ecuador’s coastline probably offers the best value. Prices on the coast are being compared to those in Mexico and Costa Rica 20 years ago and Panama 10 years ago. Until recently, annual appreciation has been in the single digits, but this is changing quickly.
New three-bedroom condos with ocean views go for less than $100,000 in Salinas, Manta, and Atacames. Small beachfront houses are selling for $65,000 to $80,000 in such pleasant villages as Punta Blanca, Olon, and Canoa. For something more grand, you’ll be hard-pressed to pay more than $225,000.
Despite the high level of interest on the coast, most IL readers still prefer the great weather and cosmopolitan lifestyle of the colonial mountain cities of Quito and Cuenca. Prices for new, luxury condominiums in the two cities run from $50 to $65 a square foot. If you’re willing to take on a project, check out a historic building in need of restoration. Many travel books report that the best Spanish colonial districts in Latin America are in Quito and Cuenca, both UNESCO World Heritage Sites.
Other hot areas for Ecuador real estate are north of Quito, in the Otavalo and Cotacachi area, and in the southern Andean village of Vilcabamba. Both areas have great weather and lots of rural countryside.
How to Purchase Ecuadorian Real Estate
Once you’ve settled on where you want to live and are ready to purchase your new home, you’re going to need to know the process for buying real estate in Ecuador. It is relatively simple, and with competent legal advice, you’ll have no problem. The real estate business in Ecuador bears little or no resemblance to what you’ll find in the U.S. There is no such thing as multiple listing, for example. Agents in Quito will have no idea what properties are available in Manta or Cuenca or even necessarily what’s available from other agents in Quito. Agents may be trained and certified, or they may not be. Many real estate agents are simply friends of the property sellers who happen to have the time and willingness to show the house. Lots of properties in Ecuador are sold by word of mouth and never make it into the newspaper or onto agents’ lists. When properties are listed, it’s not uncommon to find them listed with several realtors–at different prices.
Many of the realtors who sell to foreigners work as buyer’s agents and charge the buyer a commission. Our experience, in recent years, is that the buyer usually gets a better deal working with a buyer’s agent due to the lack of controls in the local real estate market. Plus, a buyer’s agent who works with foreign buyers will have a better idea of what you are interested in than a local agent–and he’ll be working for you.
Ecuador real estate prices are all over the board. A nice house in a good neighborhood may be selling for $70,000, while the owner of an equal property right next door might be asking for $200,000. Owners often confuse the sentimental value of a property with what it’s actually worth. A good realtor, particularly one familiar with foreign buyers, can help sort things out for you.
Although Ecuador’s economy has recovered from the debacle early in the decade, cash is still king here and gives you significant bargaining power. We’ve seen several shoppers submit offers of half the original asking price and end up paying 60% or 70% of the original. For new condos, where more comparative data are available to both buyer and seller, negotiation room runs from 5% to 10%.
6. For a variety of reasons, most of them cultural, many sellers will not allow a "for sale" signs to be posted on their property and some will not allow their property to be listed on a website.
7. There is no exact equivalent to a North American-style “sales contract” in an Ecuadorian real estate transaction. The Promesa de Compra Venta and the Compra Venta serve this function, as do other promissory documents, but there is almost always a matter of days or even weeks between the time an offer is made and accepted and when these documents are executed. In other words, much depends on word-of-mouth and good faith. It is possible to draw up a document similar to a sales contract and have it legalized but it would difficult to have it enforced in court. On the other hand, once money has been exchanged, the Promesa de Compra Venta, Compra Venta or other legalized promissory documents are enforceable in Ecuadorian courts.
8. Depending on the type of property and region of the country, commissions may be paid by either the seller or buyer at rates ranging from 3% to 10%. In most cities, the sellers will pay 3% to 5% on residential sales. A 2008 survey by a Quito real estate association found that sellers typically add 5% to 10% to the ask price if they are paying the commission. Most real estate agents working with foreign buyers charge the buyer a commission ranging from 5% to 8%. Sellers usually lower their ask price if they are not paying the commission so the final price to the buyer will be no higher than if they seller were paying the commission.
9. Most local real estate agents will not provide a free “tour” of properties. In the local market, it is common practice to meet an agent at a particular property. Agents for foreigners generally provide this service but charge $15 to $20 per hour, with some agents reimbursing the buyer if a sale is made.
10. All legal documents in the process are written in Spanish. Documents written in English have no legal status. If you do not speak Spanish, however, it is important that you get a translation of all legal documents so you understand the transaction.
Getting the facts
If you use word-of-mouth advice, such as you might find on internet blogs, bulletin boards or forums, be sure to verify the information with your attorney. Although you can pick up useful information this way, much of what you read on-line is incorrect. Take this sort of information for what it is: a good starting point.
There are a number of reliable tools available for those seeking real estate and business advice about Ecuador. We recommend the Ecuador Owner's Manual, published by International Living (Go towww.internationalliving.com to order). The book provides an overview of buying property in Ecuador, updated every two years, as well as overviews of the visa process and relocating from another country to Ecuador. If you purchase theOwner's Manual are interested in hearing of updates since publication, contact David Morrill atEcuador@InternationalLiving.com. He is also a partner in CuencaRealEstate.
Your best source of information for buying property, of course, is the attorney who handles the transaction.
Once you understand the purchase process, most buyers will find that purchasing property in Ecuador is simpler than in their home country. Foreigners, whether they are residents or not, have the same right to own property in Ecuador as citizens and land registry offices do not record whether a property owner is a foreigner or a native.
The Process
Once an agreement to purchase has been negotiated but the buyer is not yet ready to pay the seller the full price, the buyer's attorney will prepare a Promesa de Compra-Venta, or promise to buy. As noted above, the Promesa de Compra-Venta document is similar to the sales contract in North America, although it is more formal and much more binding on the buyer. It is customary that the buyer makes a downpayment at this point, usually about 10% of the purchase price, when the Promesa de Compra-Venta is signed. The Promesa de Compra-Venta, which is a notarized document, states the sales price, the closing date and lays out penalties for default. Unlike a North American contract, there are fewer avenues for opting out of the deal. It is important that the buyer complete all inspections of the property and negotiate any price adjustment prior to signing the Promesa de Compra-Venta.
Depending on terms laid out in the Promesa de Compra-Venta, the final step in the purchase is execution of the Compra-Venta.
If the buyer is ready to pay the full price negotiated with the seller immediately, the Promesa de Compra-Venta can be eliminated, and the Compra-Venta, the final closing document, can be executed. This saves time and legal fees. The Compra-Venta is also signed in the office of a notary and all outstanding money due the seller is turned over. A brief point of explanation: in Ecuador, as in much of Latin America, a notary is an attorney with advanced training. Generally, you pay the notary at the conclusion of the notarization.
The buyer's attorney is responsible for researching the title of the property, making tax payments from funds the buyer has provided and, after the signing of the Compra-Venta, registering the property with the Office of Land Registry. The attorney is also responsbile for making certain any existing leins on the property are satisfied. The attorney will present two notarized copies of the Compra-Venta to the Land Registry. One will be filed at the Land Registry Office, the other returned to the buyer and serves as the property deed.
If the buyer is unable to be in Ecuador at the signing of documents, he or she can sign over Power of Attorney to an attorney or representative.
Closing Costs and Taxes
Closing costs and fees and taxes are very reasonable in Ecuador. A buyer should expect to pay about 1.5% of the purchase price for these costs.
Real estate taxes and fees are based on an assessed municipal value, generally 15% to 50% of the purchase price. The value will vary by area of the country and by such factors as whether the property is located in a rural or urban area. In other words, a house costing $170,000 may have a municipal tax value of $50,000. The buyer will pay a registration tax of 1% based on this municipal value. At the point of sale, a transfer tax, also based on the municipal value, is also paid. YouAlthough the process for buying real estate in Ecuador is simpler than in North America and Europe, it can be confusing for the foreign buyer.
A good introduction to the process is to understand that the rules for purchasing real estate are different in Ecuador --as well as most of Latin America-- than they are in your home country. Here are some of the key differences.
1. There is no multiple listing service (MLS) in Ecuador. Real estate agents work independently and, as a general rule, do not cooperate very well among themselves.
2. There is a licensing process for agents in Ecuador but the vast majority work unlicensed. There are no legal consequences for being unlicensed. (CuencaRealEstate is licensed, by the way.)
3. Less than 10% of properties on the local market have “for sale” signs.
4. Most properties are "for sale by owner" and often the only way to know this is through word of mouth. Less than 20% have “listing agents,” as they are called in the U.S. and Canada.
5. Although Ecuadorian agents may have signed agreements with sellers (in the 20% of cases where a property is “listed”), these are frequently broken (the seller will find his own buyer, for example) and agents rarely go to court to have them enforced.
6. For a variety of reasons, most of them cultural, many sellers will not allow a "for sale" signs to be posted on their property and some will not allow their property to be listed on a website.
7. There is no exact equivalent to a North American-style “sales contract” in an Ecuadorian real estate transaction. The Promesa de Compra Venta and the Compra Venta serve this function, as do other promissory documents, but there is almost always a matter of days or even weeks between the time an offer is made and accepted and when these documents are executed. In other words, much depends on word-of-mouth and good faith. It is possible to draw up a document similar to a sales contract and have it legalized but it would difficult to have it enforced in court. On the other hand, once money has been exchanged, the Promesa de Compra Venta, Compra Venta or other legalized promissory documents are enforceable in Ecuadorian courts.
8. Depending on the type of property and region of the country, commissions may be paid by either the seller or buyer at rates ranging from 3% to 10%. In most cities, the sellers will pay 3% to 5% on residential sales. A 2008 survey by a Quito real estate association found that sellers typically add 5% to 10% to the ask price if they are paying the commission. Most real estate agents working with foreign buyers charge the buyer a commission ranging from 5% to 8%. Sellers usually lower their ask price if they are not paying the commission so the final price to the buyer will be no higher than if they seller were paying the commission.
9. Most local real estate agents will not provide a free “tour” of properties. In the local market, it is common practice to meet an agent at a particular property. Agents for foreigners generally provide this service but charge $15 to $20 per hour, with some agents reimbursing the buyer if a sale is made.
10. All legal documents in the process are written in Spanish. Documents written in English have no legal status. If you do not speak Spanish, however, it is important that you get a translation of all legal documents so you understand the transaction.
Getting the facts
If you use word-of-mouth advice, such as you might find on internet blogs, bulletin boards or forums, be sure to verify the information with your attorney. Although you can pick up useful information this way, much of what you read on-line is incorrect. Take this sort of information for what it is: a good starting point.
There are a number of reliable tools available for those seeking real estate and business advice about Ecuador. We recommend the Ecuador Owner's Manual, published by International Living (Go towww.internationalliving.com to order). The book provides an overview of buying property in Ecuador, updated every two years, as well as overviews of the visa process and relocating from another country to Ecuador. If you purchase theOwner's Manual are interested in hearing of updates since publication, contact David Morrill atEcuador@InternationalLiving.com. He is also a partner in CuencaRealEstate.
Your best source of information for buying property, of course, is the attorney who handles the transaction.
Once you understand the purchase process, most buyers will find that purchasing property in Ecuador is simpler than in their home country. Foreigners, whether they are residents or not, have the same right to own property in Ecuador as citizens and land registry offices do not record whether a property owner is a foreigner or a native.
The Process
Once an agreement to purchase has been negotiated but the buyer is not yet ready to pay the seller the full price, the buyer's attorney will prepare a Promesa de Compra-Venta, or promise to buy. As noted above, the Promesa de Compra-Venta document is similar to the sales contract in North America, although it is more formal and much more binding on the buyer. It is customary that the buyer makes a downpayment at this point, usually about 10% of the purchase price, when the Promesa de Compra-Venta is signed. The Promesa de Compra-Venta, which is a notarized document, states the sales price, the closing date and lays out penalties for default. Unlike a North American contract, there are fewer avenues for opting out of the deal. It is important that the buyer complete all inspections of the property and negotiate any price adjustment prior to signing the Promesa de Compra-Venta.
Depending on terms laid out in the Promesa de Compra-Venta, the final step in the purchase is execution of the Compra-Venta.
If the buyer is ready to pay the full price negotiated with the seller immediately, the Promesa de Compra-Venta can be eliminated, and the Compra-Venta, the final closing document, can be executed. This saves time and legal fees. The Compra-Venta is also signed in the office of a notary and all outstanding money due the seller is turned over. A brief point of explanation: in Ecuador, as in much of Latin America, a notary is an attorney with advanced training. Generally, you pay the notary at the conclusion of the notarization.
The buyer's attorney is responsible for researching the title of the property, making tax payments from funds the buyer has provided and, after the signing of the Compra-Venta, registering the property with the Office of Land Registry. The attorney is also responsbile for making certain any existing leins on the property are satisfied. The attorney will present two notarized copies of the Compra-Venta to the Land Registry. One will be filed at the Land Registry Office, the other returned to the buyer and serves as the property deed.
If the buyer is unable to be in Ecuador at the signing of documents, he or she can sign over Power of Attorney to an attorney or representative.
Closing Costs and Taxes
Closing costs and fees and taxes are very reasonable in Ecuador. A buyer should expect to pay about 1.5% of the purchase price for these costs.
Real estate taxes and fees are based on an assessed municipal value, generally 15% to 50% of the purchase price. The value will vary by area of the country and by such factors as whether the property is located in a rural or urban area. In other words, a house costing $170,000 may have a municipal tax value of $50,000. The buyer will pay a registration tax of 1% based on this municipal value. At the point of sale, a transfer tax, also based on the municipal valuAlthough the process for buying real estate in Ecuador is simpler than in North America and Europe, it can be confusing for the foreign buyer.
A good introduction to the process is to understand that the rules for purchasing real estate are different in Ecuador --as well as most of Latin America-- than they are in your home country. Here are some of the key differences.
1. There is no multiple listing service (MLS) in Ecuador. Real estate agents work independently and, as a general rule, do not cooperate very well among themselves.
2. There is a licensing process for agents in Ecuador but the vast majority work unlicensed. There are no legal consequences for being unlicensed. (CuencaRealEstate is licensed, by the way.)
3. Less than 10% of properties on the local market have “for sale” signs.
4. Most properties are "for sale by owner" and often the only way to know this is through word of mouth. Less than 20% have “listing agents,” as they are called in the U.S. and Canada.
5. Although Ecuadorian agents may have signed agreements with sellers (in the 20% of cases where a property is “listed”), these are frequently broken (the seller will find his own buyer, for example) and agents rarely go to court to have them enforced.
6. For a variety of reasons, most of them cultural, many sellers will not allow a "for sale" signs to be posted on their property and some will not allow their property to be listed on a website.
7. There is no exact equivalent to a North American-style “sales contract” in an Ecuadorian real estate transaction. The Promesa de Compra Venta and the Compra Venta serve this function, as do other promissory documents, but there is almost always a matter of days or even weeks between the time an offer is made and accepted and when these documents are executed. In other words, much depends on word-of-mouth and good faith. It is possible to draw up a document similar to a sales contract and have it legalized but it would difficult to have it enforced in court. On the other hand, once money has been exchanged, the Promesa de Compra Venta, Compra Venta or other legalized promissory documents are enforceable in Ecuadorian courts.
8. Depending on the type of property and region of the country, commissions may be paid by either the seller or buyer at rates ranging from 3% to 10%. In most cities, the sellers will pay 3% to 5% on residential sales. A 2008 survey by a Quito real estate association found that sellers typically add 5% to 10% to the ask price if they are paying the commission. Most real estate agents working with foreign buyers charge the buyer a commission ranging from 5% to 8%. Sellers usually lower their ask price if they are not paying the commission so the final price to the buyer will be no higher than if they seller were paying the commission.
9. Most local real estate agents will not provide a free “tour” of properties. In the local market, it is common practice to meet an agent at a particular property. Agents for foreigners generally provide this service but charge $15 to $20 per hour, with some agents reimbursing the buyer if a sale is made.
10. All legal documents in the process are written in Spanish. Documents written in English have no legal status. If you do not speak Spanish, however, it is important that you get a translation of all legal documents so you understand the transaction.
Getting the facts
If you use word-of-mouth advice, such as you might find on internet blogs, bulletin boards or forums, be sure to verify the information with your attorney. Although you can pick up useful information this way, much of what you read on-line is incorrect. Take this sort of information for what it is: a good starting point.
There are a number of reliable tools available for those seeking real estate and business advice about Ecuador. We recommend the Ecuador Owner's Manual, published by International Living (Go towww.internationalliving.com to order). The book provides an overview of buying property in Ecuador, updated every two years, as well as overviews of the visa process and relocating from another country to Ecuador. If you purchase theOwner's Manual are interested in hearing of updates since publication, contact David Morrill atEcuador@InternationalLiving.com. He is also a partner in CuencaRealEstate.
Your best source of information for buying property, of course, is the attorney who handles the transaction.
Once you understand the purchase process, most buyers will find that purchasing property in Ecuador is simpler than in their home country. Foreigners, whether they are residents or not, have the same right to own property in Ecuador as citizens and land registry offices do not record whether a property owner is a foreigner or a native.
The Process
Once an agreement to purchase has been negotiated but the buyer is not yet ready to pay the seller the full price, the buyer's attorney will prepare a Promesa de Compra-Venta, or promise to buy. As noted above, the Promesa de Compra-Venta document is similar to the sales contract in North America, although it is more formal and much more binding on the buyer. It is customary that the buyer makes a downpayment at this point, usually about 10% of the purchase price, when the Promesa de Compra-Venta is signed. The Promesa de Compra-Venta, which is a notarized document, states the sales price, the closing date and lays out penalties for default. Unlike a North American contract, there are fewer avenues for opting out of the deal. It is important that the buyer complete all inspections of the property and negotiate any price adjustment prior to signing the Promesa de Compra-Venta.
Depending on terms laid out in the Promesa de Compra-Venta, the final step in the purchase is execution of the Compra-Venta.
If the buyer is ready to pay the full price negotiated with the seller immediately, the Promesa de Compra-Venta can be eliminated, and the Compra-Venta, the final closing document, can be executed. This saves time and legal fees. The Compra-Venta is also signed in the office of a notary and all outstanding money due the seller is turned over. A brief point of explanation: in Ecuador, as in much of Latin America, a notary is an attorney with advanced training. Generally, you pay the notary at the conclusion of the notarization.
The buyer's attorney is responsible for researching the title of the property, making tax payments from funds the buyer has provided and, after the signing of the Compra-Venta, registering the property with the Office of Land Registry. The attorney is also responsbile for making certain any existing leins on the property are satisfied. The attorney will present two notarized copies of the Compra-Venta to the Land Registry. One will be filed at the Land Registry Office, the other returned to the buyer and serves as the property deed.
If the buyer is unable to be in Ecuador at the signing of documents, he or she can sign over Power of Attorney to an attorney or representative.
Closing Costs and Taxes
Closing costs and fees and taxes are very reasonable in Ecuador. A buyer should expect to pay about 1.5% of the purchase price for these costs.
Real estate taxes and fees are based on an assessed municipal value, generally 15% to 50% of the purchase price. The value will vary by area of the country and by such factors as whether the property is located in a rural or urban area. In other words, a house costing $170,000 may have a municipal tax value of $50,000. The buyer will pay a registration tax of 1% based on this municipal value. At the point of sale, a transfer tax, also based on the municipal value, is also paid. Your attorney should give you a close estimate of all closing costs prior to closing.
Property taxes are very low in Ecuador. The owner of the $170,000 house mentioned above, pays about $250 annually. Again, the tax is based on the muncipal value.
As we mentioned earlier, if you are not fluent in Spanish, make sure to have the closing documents translated into English or your native language. This is well worth the extra expense. If you are present at the closing, the Ecuadorian notary will make sure that you understand the documents you are signing.
A Final Word
If you own real estate in Ecuador you should have an Ecuadorian will. Although it is very possible that your Ecuadorian assets will go to your heirs without a will, this can be a long and painful legal process. You will pay less than $200 to have a simple will drawn up by an attorney and notarized. If you wish, you can write a "hybrid" will that will be good in both the U.S. and Ecuador. Simply have the will notarized in Ecuador with a copy sent to your representative in the U.S.
e, is also paid. Your attorney should give you a close estimate of all closing costs prior to closing.
Property taxes are very low in Ecuador. The owner of the $170,000 house mentioned above, pays about $250 annually. Again, the tax is based on the muncipal value.
As we mentioned earlier, if you are not fluent in Spanish, make sure to have the closing documents translated into English or your native language. This is well worth the extra expense. If you are present at the closing, the Ecuadorian notary will make sure that you understand the documents you are signing.
A Final Word
If you own real estate in Ecuador you should have an Ecuadorian will. Although it is very possible that your Ecuadorian assets will go to your heirs without a will, this can be a long and painful legal process. You will pay less than $200 to have a simple will drawn up by an attorney and notarized. If you wish, you can write a "hybrid" will that will be good in both the U.S. and Ecuador. Simply have the will notarized in Ecuador with a copy sent to your representative in the U.S.
r attorney should give you a close estimate of all closing costs prior to closing.
Property taxes are very low in Ecuador. The owner of the $170,000 house mentioned above, pays about $250 annually. Again, the tax is based on the muncipal value.
As we mentioned earlier, if you are not fluent in Spanish, make sure to have the closing documents translated into English or your native language. This is well worth the extra expense. If you are present at the closing, the Ecuadorian notary will make sure that you understand the documents you are signing.
A Final Word
If you own real estate in Ecuador you should have an Ecuadorian will. Although it is very possible that your Ecuadorian assets will go to your heirs without a will, this can be a long and painful legal process. You will pay less than $200 to have a simple will drawn up by an attorney and notarized. If you wish, you can write a "hybrid" will that will be good in both the U.S. and Ecuador. Simply have the will notarized in Ecuador with a copy sent to your representative in the U.S.
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