The wrong listing price is a common mistake when selling real estate in Mexico. Pricing should be based on a total market overview, which includes sales price data, location of comparable properties, amount of inventory in the specific market and the general area.
For the specific property, value includes specific location, view, general condition of the property, amenities (including parking) and price in comparison to other comparable properties.
Basing asking price on seller needs or emotion rather than market value is a mistake. Many times sellers base their pricing on how much they paid for or invested in their home.
If the home is not priced competitively, buyers will reject it in favor of other homes in their price range. Buyers who should be looking at your house will not see it because it is priced over their heads. The result is increased market time. When the price is eventually lowered, the buyers are wary because “nobody wants to buy a house that nobody else wants”.
The end result is low offers and an unwillingness to negotiate. Every seller wants to gain as much money as possible from the sale, but a listing priced too high often eventually sells for less than market value.
These statements are frequently heard from sellers: “Another agent said it was worth more.” “People always offer less than asking price.” “The buyers can always make an offer. None of these statements have anything to do with the home’s value.
Factors that do not affect the value of the property are the owner’s need for money, which has nothing to do with the home’s current market value, and the seller’s personal attachment to the property.
Here are a few mistakes to avoid when selling real estate in Mexico:
1. Over-improving the home prior to selling. Sellers often unwittingly spend thousands of dollars doing the wrong upgrades to their home prior to attempting to sell in the mistaken belief that they will recoup this cost. If you are upgrading your home for your personal enjoyment – fine. But if you are thinking of selling, you should be aware that only certain upgrades are cost effective.
2. Choosing the wrong Broker or choosing for the wrong reasons. Many homeowners list with the agent who tells them the highest price. You need to choose an experienced agent with the best marketing plan to sell your home. In the real estate business, an agent with many successfully closed transactions usually costs the same as someone who is inexperienced. That experience could mean a higher price at the negotiating table, selling in less time, and with a minimum amount of hassle.
3. Using the “Hard Sell” during showings. Buying a home is an emotional decision. Buyers like to “try on” a house and see if it is comfortable for them. It is difficult for them to do if the agent follows them around pointing out every improvement made. Good brokers let the buyers discover the homes on their own, pointing out only features they are sure are important to them. Overselling loses many sales. If buyers think they are paying for features that are not particularly important to them personally, they will reject the home in favor of a less expensive home without the features.
4. Not knowing your rights and obligations. The contract you sign to sell your property is a complex and legally binding document. An improperly written contract can allow the purchaser to void the sale, or cost you thousands of unnecessary dollars. Have an experienced broker who knows the “ins and outs” fully explain the contract you are about to sign, and have your lawyer review it before acceptance.
This article is based upon public information and my personal experience in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his/her own due diligence and review.