Foreigners who intend to buy, build or renovate a residential house in Mexico usually need to sell units of their home currency buying Mexican pesos to fund the project. Most foreign buyers spend between US$150,000 and US$500,000 (or equivalent) for a typical dwelling space in Mexico—depending on the location, size and type of home. Luxury homes in the most desirable locations change hands for significantly more.

Payment might be staged or made all at once. Either way, when you’re selling your foreign currency to buy a home in Mexico, the rate at which you buy Mexican pesos will significantly influence the final price you pay for your home.

How exchange rates affect the price you pay

Suppose you intend to spend $5 million pesos buying, building, or renovating a home in Mexico. The table below illustrates how many US dollars you’ll need depending on the exchange rate:

As the table above illustrates, if the Mexican peso weakens to 21 pesos to the dollar, a five-million-peso home will cost around 240,000 in US-dollar terms. However, if Mexico’s peso strengthens to 17, that exact same purchase will cost around 295,000, which is 55,000 dollars more.

Also, keep in mind that the exchange rate advertised is often the “mid-market” rate, so if today’s price is quoted at 19 pesos, you’re likely to be offered 2% to 4% less than this when you go to a retail bank to sell your foreign currency and buy or wire Mexican pesos.

Payment scenarios when buying or building a house in Mexico

There are typically two scenarios for payments when you buy a home in Mexico:

• Making a one-time payment, with or without an initial deposit.
• Buying or building a house using a staged payment schedule.

One-time payment, with or without a deposit

When purchasing a house outright in Mexico, buyers usually make a single payment, or pay a deposit followed by a final payment at closing. In either case, securing the best possible exchange rate at the time is vital. When the closing date is some months after the deposit date, locking in a guaranteed exchange rate in advance enables you to budget confidently in your home currency.

Buying a house in Mexico using staged payments

Buying a house in Mexico using a staged payments schedule is typical in three scenarios:

• When you buy a house from a developer before it’s built on a pre-sale arrangement—sometimes referred to as buying “Off-plan.” (In Spanish these transaction are known as preventa.)
• When you are building or renovating a house in Mexico and ‘chunks’ of money are needed as stages of the building or renovation unfold.
• Some sellers might also accept staged payments as a form of seller-led credit.

When you are faced with having to pay, for example, five million pesos over the course of a year or more, locking in a set exchange rate can help you to budget for the project in your home currency and mitigate additional costs if the peso happens to get stronger during the course of the payments schedule.

Hedging against currency fluctuations

Foreign exchange rates are not easily predicted, but a financial service exists that enables buyers of Mexican property to hedge their currency risk, mitigating the effect of foreign exchange rate fluctuations during the course of the purchase, or building/renovation period.

The purpose of currency hedging is therefore to help you budget confidently in your home currency and avoid additional costs in the event that the Mexican peso strengthens in value during the course of the purchase cycle.

How MexEdge could help you to manage your house purchase budget

MexEdge offers a service that simplifies currency exchange for property purchases in Mexico. They coordinate with trusted banking partners to help you lock in your exchange rate and assist with transfers between your home country bank and your bank account in Mexico (or the escrow or seller’s account), providing a personalized service and guiding you every step of the way. MexEdge never directly handles your funds.

MexEdge’s currency partners also offer better exchange rates than retail banks typically offer.

When you intend to transfer at least US$100,000 (or equivalent) to buy a house in Mexico, learn about how MexEdge could help. A free personal consultation is available to discuss individual situations.

The information contained in this article is published in good faith and not intended to constitute personal, professional, legal, financial or investment advice, nor replace the services of professional advisors.

Policy wording for Mexican property insurance

Property insurance policies sold in Mexico differ from policies you are used to seeing in your home country. The policy wording is unique, and the types of coverage offered by insurance companies is different here, so some things that you would expect to be included as standard, might not be present if you purchase your insurance in Mexico directly from a Mexican insurer.

Familiar policies, fully underwritten in Mexico

To help foreign residents who own property in Mexico to purchase insurance products familiar to them, specialist companies based in the U.S. have developed property ownership insurance policies which reflect the wording, terms and covers included on US and Canadian policies.

The insurance policy is fully underwritten by a Mexican insurance company (by law, it has to be this way), but the U.S. companies work in partnership to create a product that is familiar to those purchasing insurance in the US and Canada, and which is legally sound under Mexican law.  The premiums are paid in US dollars and any pay-outs are also paid in US dollars.

Policies to suit your situation and needs

The home insurance policies available in the market offer a wide range of options, and you can choose what to include and what to exclude as part of your coverage plan.

Depending on where your home is situated in Mexico, the risks (and coverage) you need to insure against will vary. For example, homes near the coast should be insured against hurricane damage and earthquakes, whereas inland only cover for earthquakes (and perhaps flooding, if you home is situated near water) will be needed.

Home insurance policies cover a wide range of eventualities and the most common coverages include reimbursement of costs related to:

• Damage caused by hurricanes and earthquakes
• Damage caused by and wind storms and floods
• Injuries to housekeepers and other workers in your home
• Burglaries and vandalism
• Damages to third parties, e.g. falling trees
• Coverages for owner-specific liabilities, e.g. in condos

You can cover all risks or named perils

Policy options and choices include all risks versus named perils, whether to cover assets like outbuildings surrounding the main property, and the option to insure your personal goods.

• The better policies will include coverages for third party liability: this is  helpful in the event that someone who does not live at your home meets with an accident on your property, or where some damage is caused to a neighbor, e.g. by a falling tree.
• This article about third party liability in relation to your home shares more details.
• Other considerations to take into account when you’re assessing your insurance needs include purchasing cover for any watercraft you may own, as well as special arrangements for condos, where some liabilities are shared and some are owner-specific.

Regardless of the type of insurance you choose, the insurer underwriting the policy is far more important than the broker or agent selling you the product: in the event of a claim, the integrity of the underwriter will determine pay-outs, not the insurance broker.

Learn more about caring for and insuring your home in Mexico

Mexperience publishes extensive information to help you plan and care for your home life in Mexico through guides, articles and free eBooks:

• Free eBook: House maintenance and home security
• Latest articles about property insurance
• Articles about real estate in Mexico

Comprehensive guide to real estate in Mexico for buyers, owners, sellers and renters—continually revised and updated.

Extensive and detailed guide to real estate in Mexico

Our comprehensive guides to real estate in Mexico introduce you to essential information about property in Mexico whether you are:

• Renting property in Mexico;
• Buying a home in Mexico;
• An owner who needs to insure and maintain the property;
• An owner who plans to rent a property in Mexico;
• Selling your home in Mexico; and
• Working with Real Estate Agents in Mexico.

Property rental in Mexico

We publish detailed guides about all aspects of property in Mexico, including renting residential property here.

Property purchase in Mexico

Connect to detailed and exhaustive guides about buying and owning property in Mexico.

Owning and maintaining a property in Mexico

Browse detailed information that helps existing property owners manage, maintain, and insure their property in Mexico.

Insurance for your home in Mexico

Helpful guides and insights to help you consider how to get the right level of coverage for your home and property in Mexico, including coverage against third party liability damages.

Selling your home in Mexico

When you come to sell your residential property in Mexico, our guides and articles give you practical insights to help you prepare, market and sell your property.

Working with realty agents in Mexico

Insights and tips for finding and working with a local realty agent in Mexico, whether you are renting, buying or selling a property.

Learn more about real estate in Mexico

We continually update our guides and articles about matters related to property and real estate in Mexico.  Connect to further resources for insights and connections:

• Latest insights about real estate in Mexico
• Latest insights about renting property in Mexico
• Tips and insights about insurance for your Mexican home
• Latest insights about realty agents and agencies
• Connect to professionals who can help with property closings

Get your property transaction independently examined

An independent examination of your sales contract and transactional procedures provides cross-checks as you navigate your way through a property purchase or sale in Mexico.

Linda Neil and her team at The Settlement Company® are experienced real estate professionals who can:

• Explain the procedures, legal matters, and tax rules to you in detail, independently of parties who have a vested interest in the transaction.
• Examine the details of your property purchase/sale contract to ensure that it does not contain clauses that may cause adverse effects and/or create undue risks.
• Ensure that the fees you are being asked to pay for professional services are reasonable, and that the tax calculations are aligned with current tax rules.
• Offer you a direct line for independent verification of matters which arise that you are unsure about as you make your way through the property transaction.
• Act as liaison between you, your real estate agent (if you are using one) and other professionals—for example, the Notary Public or local attorney situated in the State where the transaction is taking place.

Benefits of hiring an independent professional

Personalized service: This independent consulting service is formed around your individual needs. Furthermore, you can order practical support through the procedures to ensure professionalism and integrity in your transaction.

Overcome language issues: Property purchase/sale contracts are often written in Spanish and the seller’s deed is written in Spanish—by law. The legal terminology and clauses can be obscure or confusing. This service will help you to understand what you are committing to within the context of the sales/purchase contract. Linda and her team will explain what you are committing to in terms of Mexican law.

Oversee your investment: Hiring an independent assessor can protect your investment through an examination of the proposed transaction. This can help to ensure that agreements are realistic and are able to be fulfilled, legally.

Avoid pitfalls and hidden costs.  The costs of dealing with improper procedures or adverse contract terms after a property deal is closed can be substantial. An independent review and examination of your property deal prior to signing or payments being made can help you avoid to the costs and inconvenience of dealing with problems afterwards.

How the support service works

Linda and her team at The Settlement Company® provide an initial consultation, and can offer you a package of support services as you make your way through a property transaction in Mexico.  These services include:

• An initial consultation to talk about your situation and the proposed transaction.
• A review and examination of your sale/purchase contract and the Seller’s deed.
• Explain what you are committing to contractually, with highlights of any clauses that may be unusual or risky, as well as remarks about matters which you might want to consider renegotiating before you sign.
• An independent assessment of the professional fees, transaction fees, and property taxes you should be paying—whether you are the buyer or the seller.
• Advice and information about what structures need to be in place to ensure the property closes efficiently for tax purposes: when you are buying, ensuring that the contract and title are properly documented; when you are selling, how to claim current tax allowances on capital gains.

Service Fee: For the initial consultation and review with a written report, the fee is US$560.

The fee includes the support service as described above and will also include an estimate to supervise the entire transaction including Foreign Relations permits, appraisals, escrow fees, bank trustee fees, (if applicable) no liens and property tax certificates and full registration in the state where the property is registered—which are optional additional services you can purchase if you want or need these.  Fees are billed directly by The Settlement Company® who accept payments in the US, or in Mexico.

Realty markets are localized in Mexico

Mexico is a vast country with wide regional variations in lifestyle, topography and climate, infrastructure, transport links, and local amenities.  The country’s real estate markets are highly localized, and accurate data in regard to prices and historical trends is not easy find in aggregate as it is in the US, Canada, and Europe.

Property portals give you insights into asking prices and rents

In recent years, a series of Mexican property portals have emerged which aggregate property listings nationally: MetrosCubicos, VivaAnuncios and InMuebles24 are the principal ones you ought to review to gauge current asking prices.

The portals also feature extensive listings for home rentals in towns and cities across Mexico, so if you’re planning to rent a home here, the portals are a good way to assess rental prices and find a home to rent.

These sites are helping to bring additional data together for buyers and sellers, but remember that asking prices and sale prices are rarely the same. Real estate agents tell us that closing prices on property here are typically between 10 and 15 per cent lower than market asking prices, depending on the location, state of the property, as well as individuals’ situations surrounding the transaction.

House price data is not centralized

There is no publicly-accessible ‘official’ central register of house prices in Mexico, and even some of the ‘informal’ registers which exist may peddle doubtful data, as sellers are not always forthcoming about the full details concerning the prices at which properties changed hands.

Official registers do exist —on records at local government and Notary Public offices— but getting access to these data is tricky, and generally has to be undertaken in-person on state-by-state (or even municipality) basis, making it near-impossible for any individual to build a precise picture of what is trending regionally or nationally.

Note also, that transactions of untitled properties sold on agrarian terms won’t appear in any official statistics, and the buyers’ pool in this market is smaller because these properties cannot be financed or used for collateral.

Some private firms and government agencies exist that commission data-gathering exercises and compile reports based on those data. The depth and scope of their data may be limited, but they add perspective and insights for potential buyers.

Other sources of house price data in Mexico

In the absence of a central register of prices showing current trends, potential buyers, and sellers seeking to set a price on their property for sale, can repair to a variety of other data sources for guidance.

Local real estate agents

Locally based and well-established realty agents are among the better people to talk to for an indication of prices in a given market.  The good ones will have been operating in the market for some while and will have a balanced perspective about the price levels similar houses in specific local neighborhoods have been listed at and sold for.

The disadvantage of this information source is that agents are inevitably vested in talking-up the price of the product they sell; some agents may represent the buyer and the seller simultaneously (this is not illegal in Mexico as it is in some US states) and so it’s prudent for buyers especially to check other information sources to cross-check price levels.  You can learn more about this on our comprehensive guide to working with realty agents in Mexico.

Live locally for a while, and get a feel for the market

An excellent way to gauge local prices is to base yourself locally for a while (see also: renting) in the area where you are interested in investing.  There is no substitute for getting to know the locale, talking to the locals, and probing friends and local contacts about recent market activity, scoping-out the different neighborhoods, and in doing so obtaining a first-hand sense of the local market. Doing this can also help you to negotiate a better price.

Consider how sellers in Mexico are valuing their properties

Another way to arm yourself with local knowledge is to consider how existing home owners in Mexico are valuing the properties they want to sell.  This article on Mexperience describes typical methods that sellers use to assess residential property values in Mexico, and outlines the key factors that tend to influence sellers’ listing prices.

Reviewing this information can help you to gain additional perspectives as you research prices and consider the value of property for sale in Mexico.

Hire a property assessor

Homeowners in Mexico can hire the services of a property assessor —a valuation agent— who, for a fee will compose a detailed valuation report that will be founded on an array of factors including research of recent sale prices in the area, the desirability of the locality, local access and other amenities the property offers, the size and topography of the land plot, and the condition of the current construction.  This article (Spanish) shares some insights into how valuations work and are priced in Mexico.

Typically, the fee for a valuation is based on a peso-per-thousand rate of the assessed value of the property—and thus higher value properties pay higher valuation fees. For example, if an assessor quotes a rate of $3 pesos per thousand, and your property’s assessed value is $5m pesos, then your valuation fee will be $15,000 pesos. ($5m / 1000 x $3.)  You might be able to negotiate a fixed rate, or lower the rate per thousand if the property is larger, or situated in a more expensive area.

Valuation reports have different purposes.  Lenders may ask for a formal valuation of the property before agreeing to release funds, and sellers use valuations as supporting evidence for their asking price —and some sellers might assert that the valuation is Gospel— but remember that these valuations constitute a professional opinion, not a buyer’s tangible offer.

Offers and direct negotiation are key tools

While various disconnected data sources exist to help sellers and buyers gauge the present market value for real estate, the price of a piece of land or a property in Mexico is most-often determined somewhere between “what the current owner is willing to accept” and “what a buyer is willing to pay.”

Cash buyers have leverage

Most foreigners who have been purchasing real estate in Mexico over the years have purchased using cash, by trading down from —or out of— property markets in their home countries and exchanging these for a home in Mexico, oftentimes as part of a retirement plan.

This form of direct capital investment has provided an additional support mechanism for the residential property market in Mexico, and with buyers not subject to the usual pressures of property repayment schedules and interest charges, the market can remain stable even as prices soften or fall.

Serious interest deserves an offer

The asking price is almost always negotiable, except perhaps in very buoyant periods where buyers far outstrip sellers bidding for local properties.

If you are seriously interested in a property you have viewed, then you should make an offer based on your research and intuition.

Experienced local agents tell us that “the most important thing is to make an offer.” Sometimes “low-ball” offers are rejected without further discussion; and sometimes the sellers engage.  We’re told that sometimes relatively-high asking price offers are accepted by buyers without negotiation, and conversely some exceptionally low-ball offers are accepted by sellers.

The negotiations tend to pivot between:

• the underlying reasons current owners may have for selling which may never become apparent to the buyer but which influence the negotiations and the price sellers are willing to accept; and
• underlying reasons buyers might have for wanting a property that can include things like an emotional feeling they encounter in relation to a house they have viewed, or a hurried moving schedule.

Some homes are overpriced

Some homes listed for sale are simply overpriced with owners quite unwilling to budge or negotiate on the matter—and they often appear in no hurry to sell.

Some homes stay on the market (or see-saw on and off of it) for many years when current owners hold a firm belief that the value of the property is far higher than buyers are currently willing to pay—thus creating an impasse.

In these situations it’s prudent for potential buyers to consider alternative properties and ‘move on’ from any notions they may have about buying an overpriced property held by an unyielding seller.

Price trends and lifestyle priorities

As elsewhere, buoyancy in Mexico’s property markets ebbs and flows, driven by a wide variety of factors and influences.  Waves of buoyancy tend to be localized, with certain regions or locations increasing or waning in popularity over time, influencing demand. Prices are ultimately determined by the same factors which often drive house markets  —primarily capital flows and demographics— although broader influences can also cause prices to surges or decline.

Price buoyancy continues in popular places

Popular places like southern Baja California, Puerto Vallarta, and the Riviera Maya have experienced property booms that appear to have no end, fueled by high demand as Americans and Canadians look south for beachfront property of the type that has become unaffordable in the US and Canada to all except the ultra-wealthy.

Foreign buyers are also turning their attention inland, beyond the coasts to highland colonial cities where the year-round climate is temperate and improving transport links and local amenities increase the appeal of these locations.  This is driving demand (and raising prices) in lesser-known and under-explored towns and cities which hitherto experienced relatively low house price inflation: among these are Querétaro, Guanajuato, Valle de Bravo, Puebla, Tepoztlán, Pátzcuaro, and Mérida.

Considering your true lifestyle needs

As the capital cost of acquiring property increases, we recommend you consider reading this article about your lifestyle needs as you scout for a place to live and especially when you intend to make a significant property purchase in Mexico.

The advice in that article shares some helpful insights about the types of areas which are likely to continue benefiting from investor interest: they are the typically the ones that offer value for money, have strong local communities, the location’s character and potential, and local services and amenities which people commonly seek when moving to a new place.

Total cost of property ownership in Mexico

Residential property in Mexico continues to attract buyers from abroad for another reason: the total cost of ownership is lower than it is in the US, Canada, or Europe.  Ownership costs are mitigated by lower property taxes (although these have been rising in recent years, albeit from a low base); lower construction costs (but land prices and materials costs have been rising significantly of late); lower ongoing maintenance fees; and a lower cost of living.

Learn more about real estate in Mexico

We publish detailed and continuously updated information about real estate in Mexico that shares valuable local insights and knowledge about property markets for buyers, owners, renters, and sellers.

Resources for Living & Lifestyle in Mexico

Mexperience offers you a comprehensive online resource of information and local knowledge to help you discover Mexico, explore choices, find opportunities and plan a new life in Mexico.  Our resources include:

• Insightful articles about living and lifestyle in Mexico
• Complete guides to aspects of living in Mexico
• A regular Mexico Newsletter you can subscribe to for free

The information contained in this article is published in good faith and is not intended to constitute personal, professional, legal, financial or investment advice, nor replace the services of professional advisors.

What influences the listing price for a property

As we remarked in a related article about property values in Mexico, extensive price data related to property transactions is not readily available here.

Most sellers in Mexico list their property at the highest realistic potential price point based on several variables, including:

• what they paid for the house, plus improvements over the years; and
• technical calculations that can be used as a baseline for the property’s current value (see below);
• assessed present-day market valuations they might have had undertaken by professional valuation agents;
• advice and estimated market values given to them by local realty agents who would market the property for sale;
• current listings for similar properties in the area as advertised on Mexico’s main property listing portals;
• recent comparable sales they know about in the locality.

The price a property is listed for is often arrived at by a combination of some technical calculations used as a baseline for determining value, plus added value factors and local amenities that add appeal and value to a property.

Technical valuations

There are several methods by which a property’s value can be technically assessed. Three common technical valuations sellers may consider using are:

• Similar recent sales
• Present land & building value
• Annual rental yield value

Similar recent sales

All sellers (and their agents) will reference recent sales of similar properties in the same neighborhood as a benchmark to assess a property’s potential value.

Local realty agents ought to know the value of recent transactions in the locality where the property is situated; property listing sites give an indication of typical asking prices, which can be less than the agreed sale price, and typically are 5-15% less.  Assessors who write valuation reports typically also reference these prices as part of their calculations.

Present land & building value

This calculation works best for single homes on their own plot of land and less well for condominiums. Take the number of square meters on the plot and multiply by the current assessed market price for land per square meter in the area. One square meter is equivalent to 10.76 square feet.

To this, add the present market construction cost per square meter (this will vary depending on the quality and style of the building) and multiply by the total square meters constructed. This returns an estimate of what the property would cost to buy and build at today’s prices.

Annual rental yield valuation

A rental yield calculation shows a comparative return on the property vis-à-vis other investments, e.g., leaving your money in the bank, or investing in mutual funds.  It’s also helpful if the buyer intends to acquire the property to rent it out.

For example, if the property can rent for $15,000 pesos a month ($180,000 pesos a year) and the cash purchase price of the property (including closing costs) is $4 million pesos, the annual gross rental yield would be 4.5%.

Features and local amenities that add value

Technical valuation models are only part of the story when calculating the market value of a residential property. They can provide a baseline number to work from, but most properties tend to sell for more than their technical, investment, or ‘replacement value.’

Certain features on the property can add value, and often, services and amenities that are situated near the property are the things that can push up the desirability —and by extension the demand and the price— for any given house.

Examples of features that add value

As we mentioned in a related article, it’s better to have less house in an optimum location than the other way around.

Things that can add value include:

Local infrastructure: The property is well served by local infrastructure that can include good access roads, a local interstate highway, or an airport nearby.

Water supply: The property is served by a reliable water source.

Well developed local amenities: The property is surrounded by well-developed local amenities including stores, schools, medical facilities, community centers, sports and gym facilities, restaurants, and cafés, etc.

Bodies of water nearby: The property is near a clean body of water, for example, a river, a lake, or by the ocean; take note that some locations near water may be subject to local flooding and thus more difficult or more expensive to insure.

Attractive views: If the the property has good panoramic views of the area, whether or nor it’s situated close to a body of water, it will tend to fetch a higher price than a similar property without attractive views.

Property condition and maintenance: Properties that have been kept in good condition and well maintained throughout the years require little or no immediate remedial maintenance or restoration work for the buyer. (For buyers: it’s prudent to get a full survey conducted as some homes that look well maintained on the surface might have issues to deal with that are not immediately apparent on the surface or to the untrained eye.)

Agreeable outdoor living and leisure spaces: Properties with mature gardens are attractive to buyers. If the property also has a swimming pool, fountains, attractive driveways, terraces, patios, etc. these are all value-add features that will increase the desirability and value of a home.

Helpful features: Homes with good water storage and pressure systems, solar panels for water heating (and pool if relevant), garages, car ports, bungalows (for guests’ use and/or for renting out), and homes with alarm systems all add something to the overall value proposition of the property.

Kitchens: A modern well-equipped and well maintained kitchen is an attractive selling point and can add some value to the house, not least as they are relatively expensive to install.

Furniture, fixtures and fittings: Some homes are sold with furniture included in the price or as an optional extra. Fixtures and fittings (built-in wardrobes, light units, bathroom units, etc.) are typically included in the price, although this detail ought to be checked and written in the sales contract.

Local security: Local security services, for example, provided by guard houses in gated areas where all residents in the community pay an annual fee to a security management company for continual vigilance, may add value for some buyers.

How sellers typically decide their listing prices

The price a seller sets for their Mexican home for sale will typically be calculated using a combination of methods that include:

• Technical valuations to calculate a baseline figure (see above).
• Valuation assessments from realty agents and surveyors.
• Seller’s own perceptions and circumstances.

Technical valuations and formal assessments

Sellers might reference an assessment as made by a professional valuation surveyor and/or a local realty agent’s assessment.  These valuations are based on a combination of local research, recent sales data, and their professional opinion about the property and the location it is situated in.

Seller’s perceptions and individual circumstances

The seller’s perceived value of the property, their motivations to sell and the personal circumstances surrounding the sale will also influence the listing price. Factors that can influence this include, and are often a combination of:

• The price the seller paid for the property (and how long ago).
• Investment the seller has made extending, renovating, and improving the property.
• How much neighbors are listing similar homes for, or have sold their comparable properties for recently.
• Preferred timescales in which the seller wants or needs to sell to liquidate the property for cash.
• Seller’s present cashflow situation in relation to maintenance to keep the property structurally attractive; as well other costs like homeowner association fees and property taxes.
• Sudden change in circumstances and a need to move: examples include job changes, a death in the family, health issues.
• The current owner’s desire for a change of location, region, or country—and what timeline the seller has in relation to those plans.

Sellers’ typical approach

Sellers know that they might have to negotiate with potential buyers; most properties in Mexico sell for between 5 and 15 percent below their listing price.

If there is weak or no interest in the first few weeks or months following the initial listing for sale, or buyers make inquiries but ask for significant discounts, the sellers might adjust their price downward if they become impatient to sell.

Some properties remain on the market for years with sellers refusing to negotiate on the asking price, which might be unrealistic and, in any event, does not attract many inquiries.

If you’re a patient seller and don’t need to liquidate in a hurry, you could try the long-game approach; however, most sellers are (or become) realistic with their pricing if the house fails to sell in a reasonable timescale, as they prefer to not have the property actively offered for sale in the market for years.

Property sales listing sites in Mexico

These are the principal sites to check when you’re seeking to gauge sales prices for homes across Mexico.

Learn more about property in Mexico

Mexperience offers detailed insights about property in Mexico for buyers, owners, renters, and sellers.

• Latest articles and insights about real estate in Mexico
• The value of Mexican real estate
• Tell-tale signs of a good realty agent
• The costs and taxes of buying a home in Mexico
• The costs and taxes of selling a home in Mexico
• Insuring your Mexican home
• Enjoying your home and home life in Mexico

The information published in this article is provided for general information in good faith and is not intended as personal, legal, financial or investment advice.

Your key contacts in a property transaction

All property transactions in Mexico ought to be agreed in writing with a well-scripted contract drawn up by a Notary Public or attorney specializing in Mexican real estate law.

As you move through the process, you are likely to to engage with the services of several key contacts to help you complete the transaction, and these may include:

The seller

Some sellers take a ‘hands-on’ approach to selling their property and deal more directly with the buyer; but most sellers do the opposite and interact through the realty agent and/or Notary Public.  Every case is unique.

As described in this article, some ‘sellers’ are more than one person and this can cause delays as you work through the procedures.  Patience is required, especially if the property you are buying is an older family home that’s being sold.

The realty agent

If a realty agent is involved in the sale, that person ought to function as an intermediary between the seller and the buyer (and their legal representatives) and undertake the ‘project management’ of the transaction.

If you didn’t hire a realty agent, you will need to take on the role of ‘project manager’ for your property transaction—or hire someone to do that for you.

Realty agents often liaise between the seller, the buyer and other key contacts including the Notary Public.

This includes things like liaising about details of the contract as they are reviewed and (re)negotiated by the parties.

The realty agent will also help to overcome any obstacles that might emerge as part of the contract review process and/or administrative elements of the transaction—for example, reminding parties about documents they need to produce to progress the transaction.

The Notary Public

Even if you hire the services of a lawyer to support you with certain aspects of the transaction, you will still need to hire a Notary Public, as the transaction must be filed and recorded by the Notary as part of the legal process.

As the buyer, it’s important to choose your Notary Public independently: do not allow the seller to influence you or to pick one for you.

Realty agents usually have a list of Notary Public offices you can contact—but remember that in Mexico a realty agent often represents the seller and the buyer simultaneously.

The legal attorney

Although you can do everything through the Notary Public, some buyers like to hire a lawyer to provide legal counsel or additional legal support through the process—especially if there are complexities or unusual circumstances surrounding the transaction that require a ‘second legal opinion..

The property surveyor

When you buy property in Mexico, the seller does not provide any type of ‘sales pack’ that demonstrates the property is in good shape as sellers must, by law, do in other countries.  Furthermore, it’s difficult to seek legal redress after you have closed the deal and paid your money.

Therefore, it’s prudent to hire a property surveyor to check over the property, especially if the property is older or situated in a rural or remote setting.  Some architect firms provide this service; check locally.

You will need to pay for this separately, and ask the seller for access to the property before the contract is signed.  If a seller objects to a survey being undertaken, or agrees and makes the process awkward or difficult in some way, that ought to raise a flag.

The architect firm

If you are buying land to build on, you’ll likely use the services of an architect to help you with the building.

Architects usually undertake tests on the land (before you complete the purchase) to ensure that the land is suitable for building on, and to assess the costs of building there. You will need to pay for any land tests and studies separately, regardless of whether the transaction completes.

Outline procedure for buying a property in Mexico

The exact process to complete a property transaction will vary in each case, and to some degree vary depending on what State in Mexico the property is situated in.

However, every transaction follows broadly the course outlined in this description—the realty agent and Notary Public will provide essential support throughout this process and provide specific procedural details based on your situation.

Property valuation

An official appraisal of the property’s market value, known in Spanish as an Avalúo, might be undertaken.  Some buyers commission a valuation report, and some sellers pay for an appraisal and show this document to the seller as ‘proof’ of the property’s current market value—however it’s only a professional opinion.

In some cases, an official appraisal of the property might be required, and if this is the case the Notary Public will advise you about it, and the fees involved.

Verbal agreement

When you’ve found a property you like, you agree a price (and loose terms, e.g. ‘including all the furniture’) verbally with the seller.  This is not binding, but sets in train the process that will lead to the transfer of the property.

If you are buying a home from a real estate developer, especially if you are buying ‘off plan’, advise the Notary Public about this as they ought to ensure that the developer’s permits are in order as part of the legal diligence.

Written contract

The realty agent (and/or Notary Public) will draw up a written contract citing:

• the agreed sales price;
• a written schedule of inclusions and exclusions;
• detailed terms and conditions related to the transaction; and
• any contractual deadlines as may be agreed by the parties.

This document is known in Spanish as a “Convenio de compra-venta” —a sales contract— at which time a deposit, typically 5% to 10% of the agreed purchase price, is paid by the buyer with cancellation penalties set out in the contract if either party withdraws from the agreement.

It’s normal for the seller to provide the contract, although it’s important that the buyer reviews the contract with great care, ideally with legal assistance, and understands what is being agreed and what they are committing to through this document.

The written agreement ought to contain clauses that excuse the buyer from the contract without penalty on matters related to due diligence and force majeure.

Property trust, if relevant

If the property is inside the restricted 50km border and/or 100km coastal zone, the Notary Public will ask the buyer to set up a property trust (fideicomiso); this is done through a local bank.

If the property is not situated within the restricted zone, no trust is legally required but remains optional for buyers who wish to use a property trust as part of their estate planning arrangements.

Closing costs and taxes

The seller and the buyer will have costs to pay as part of the transaction. Capital Gains Tax is paid by the seller and the Notary Public will calculate the sum and arrange for the correct amount to be paid to the Treasury.  The buyer has other closing fees and taxes to pay, that might also include the need to apply for a permit to purchase land in Mexico.

Read more about the closing costs and taxes when you buy property in Mexico, as well as the costs and taxes of selling property here.

Payment for a land or property purchase in Mexico

Whether you are paying with cash or via some type of financing, you (or the person representing you) will need to have the agreed funds available for hand-over at the Notary Public’s office on the date that the deeds are scheduled to be signed across to you.  Payments are usually via a bank transfer, but other payment methods might be feasible—talk to the Notary Public about this.

Note that due to money laundering regulations, additional checks may be required to verify the source of the funds used to purchase a property in Mexico.

Legal due diligence

As part of due diligence in the purchase procedures, the Notary Public and/or the lawyer you hire undertake a series of checks on the property deeds and other records.

The Notary Public is legally responsible to ensure that all documents are in order and that all legal procedures have been adhered to.  The Notary is also charged with ensuring that property taxes, including property transfer taxes, are fully accounted for and paid.

There are many elements to check; this list is not exhaustive but outlines the key things the Notary Public will be looking for:

History and type of property

Checking that the property has a clean history, and that there are no liens on the land, for example an unpaid mortgage or other debt. Under Mexican law, liens are passed on with title of the land, so these checks are especially important. The Notary should also advise you whether the land has a title deed or whether it is untitled and being transferred on agrarian terms.

Verification of title or possession

The seller will need to furnish the original land/property deeds, unless the property is untitled, in which case you will need to ask about the Constancia de Posesión. The Notary Public will check these out and advise you whether the land is legally titled or whether you are obtaining possession instead of legal title.

Seller documentation

The seller will need to present to the Notary Public with other documents including (but not limited to): original property deed, up-to-date tax receipts for the property, public utilities bills (proof of payment), plus up to date details of any service fees, for example Homeowner Association fees, shown as paid.

Buyer documentation

The Notary Public will ask for key documentation from the the buyer, that may include but is not limited to: photo ID (e.g. passport), birth certificates, marriage certificates (if applicable), and proof that your stay in Mexico is legal: this can be a Visitor Permit, (you do not have to be resident in Mexico to purchase real estate here) and if you are resident here, then you will need to show your residency card.

Taxes and utilities current

Checking that all land taxes have been paid during the last five years (if applicable) and that utilities (especially electricity) have also been paid during the last two years. By law, you are not liable to any debts after these times.

Title structure, registers and permits

Other items to be checked can include verifying all buildings are on tax registers and have the required building permits (as may be applicable); utilities were legally installed, and payments are up to date; the property is not jointly owned, or if it is, that both (or all) owners agree to the sale; and that the named seller has the right to transfer ownership of the property.

Learn more about property in Mexico

Mexperience offers detailed insights about property in Mexico for buyers, owners, renters, and sellers.

• Latest articles and insights about real estate in Mexico
• Finding a Notary Public in Mexico
• Tell-tale signs of a good realty agent
• The costs and taxes of buying a home in Mexico
• The costs and taxes of selling a home in Mexico
• Insuring your Mexican home
• Enjoying your home and home life in Mexico

The information published in this article is provided for general information in good faith and is not intended as personal, legal, financial or investment advice.

This article describes the principal ways in which homes for sale are typically marketed in Mexico.

Using a realty agent to market and sell your home

Most sellers will enlist the services of a real estate agent to help them sell their home—either on an exclusive or non-exclusive basis.

The better realty agents in Mexico are expert at ‘networking,’ and you ideally want to find one that has been operating for a considerable time, knows the local market, and has an extensive network of relevant contacts. Some agencies are affiliated with agencies outside of Mexico and might market your home to foreigners seeking property here using these affiliate networks.

How will the agent market your property?

Ask the agent how they intend to market your property before you sign-up with them.  These are the types of services good agents will offer sellers:

• Visiting your home to take professional photos and video of your property for use on your listing.  Some agents will use a drone to take aerial footage of the property as well.
• Adding a professional and attractive listing to their own website with a full and accurate description of the property.  The listing ought to be published and read well in Spanish and English to maximize the potential pool of buyers.
• Using their social media and other contact networks to promote your listing and get your property seen by as many potential buyers as possible.
• Promoting your property to the list of potential buyers they are working with.
• Adding your property as a listing on Mexico’s main property listing websites, especially Vivanuncios, Immuebles24, and MetrosCubicos.
• Advertising your home as integral part of their regular ad placements in local magazines, newspapers, and newsletters.
• Featuring your property in their window showcase displays at their local offices.
• Some agents might also market your property through overseas agents’ sites offering property for sale in Mexico, if they are affiliated to other agencies internationally.

Exclusive and non-exclusive contracts

If you sign an exclusive contract with a realty agent, you ought to be clear about what active marketing the agent will do on your behalf, and the exclusivity should have a reasonable time limit set before it expires (6-12 months is common).

Non-exclusive contracts enable you to enlist several agents to market your property at the same time, which may give you a wider reach to potential buyers, but agents typically ask for a higher commission on non-exclusive contracts and they might invest less in advertising your home for sale if they don’t have an exclusive listing.

Realty agent commissions

Commissions are paid by the seller on the closing price.  Rates are set by negotiation on a per-case basis and will typically range between 4% and 8%, plus Mexican sales tax (IVA) at 16%.

Most agents charge around 6%, with the lower range (4%-5%) offered to more expensive houses and the higher range (7%-8%) charged on the lowest valued homes.

The marketing preparation, project management and paperwork required to sell a $50,000 dollar home is almost identical to that required to sell a $5 million dollar home, and so the scale of commissions is negotiable for this reason.

When you factor in the sales tax added, a 6% commission rate will add just under 7% of the home’s final sales value to your closing costs.

Seller-led property marketing

Some sellers choose to bypass the services of a local realty agent and do all the marketing themselves.  This is feasible, but be aware that the agents undertake the project management related to the property transaction and if you don’t hire an agent, you’ll need to do this yourself.

When you put your home up for sale, let all your friends and family know, and direct them to your agent’s website or to you personally if there are any interested buyers.

If you want to use an agent and invest in some additional marketing, you can pay to advertise your own home in various places, asking potential buyers to contact your agent if you don’t want to deal with buyers, or to contact you directly. In the case where a buyer contacts you directly, you might negotiate a lower commission with the realty agent to manage through the sale for you.

Some ways that sellers market their own home for sale include:

• The hanging of of a large polythene printed banner (in Spanish called a ‘rótulo’ or ‘lona’) draped on a door or wall of your home to advertise it for sale to passers-by. (Some agents provide these with their own branding and contact details.)
• Free and paid inserts on Mexico’s principal property listing sites—see the next section for a directory of these.
• Using social media, some sellers pay to ‘boost’ posts about their property for sale; these can be targeted at people in or interested in, Mexico.
• Some sellers will pay to run ads in physical or digital magazines, newspapers, or newsletters that are distributed in the area or location where the property is situated.
• If sellers are looking for buyers living outside of Mexico, they might also list or pay for advertising in popular overseas listing sites like Zillow and Truilla.
• Local listservs and community groups may be another way to promote the house for sale, if the moderators on the listserv will allow this (some, but not all, do).
• Some sellers set up their own website to sell their home, creating a form of ‘electronic brochure’ to present the property in detail, and support the sales effort, whether they are using the services of a realty agent or not.  While this is an excellent way to present your home in its best light, in addition to the cost of creating and hosting the site, you will also need to actively promote it, typically using agents, seller-led (paid) advertising, word-of-mouth and social media—or a combination of these.

Property sales listing sites in Mexico

These are the principal sites to check when you’re scouting for a property to rent and to gauge sales prices for homes across Mexico.

Learn more about property in Mexico

Mexperience offers detailed insights about property in Mexico for buyers, owners, renters, and sellers.

• Latest articles and insights about real estate in Mexico
• The value of Mexican real estate
• Tell-tale signs of a good realty agent
• The costs and taxes of buying a home in Mexico
• The costs and taxes of selling a home in Mexico
• Insuring your Mexican home
• Enjoying your home and home life in Mexico

The information published in this article is provided for general information in good faith and is not intended as personal, legal, financial or investment advice.

The three main costs when you’re selling a property in Mexico are:

• Marketing and selling fees;
• Professional service fees; and
• Taxes.

Marketing and selling fees

Some people put their home on the market and sell their property without the assistance of a real estate agent.  If you have the skills and confidence to market your own home, you can sell your property without the services of a local realty agent; however, as we explain in our Guide to realty agents in Mexico, a good realty agent provides a marketing service, a conduit between the negotiating parties, and someone who will help to work through the paperwork to bring a property sale to successful completion.

Their services come at a price to sellers and real estate agents in Mexico typically charge between 5% and 8% of the sale price in commission, and you need to add Mexican sales tax (IVA) to this (16%), so if the agent’s commission is 5%, the tax-inclusive payment will be 5.80% of the final sales price; and if the agent’s commission is 8%, the tax-inclusive payment will be 9.28% of the final sales price.

You can learn more about how sellers value their home and marketing & selling your home for sale in Mexico here on Mexperience.

Professional fees

Sellers will typically pay a range of professional fees when they are selling their property. These are the most common:

Notary Public

In Mexico, the role of the Notary Public is paramount in property transactions. As we describe in our Mexico Real Estate Guide, a Mexican Notary Public is a legal professional with very important statutory roles, especially in matters related to property transactions.

If the seller hires a real estate agent to assist with the sale, the agent will typically write-up the sales contract related to the sale as part of their service.  If the seller is not working with an agent, the seller will typically hire the services of a Notary Public to compose the sales contract that is presented to the buyer.

The buyer might hire a different Notary Public, or an independent lawyer or advisor specializing in property, to review the contract and negotiate any clauses in it.

The seller pays for the professional advisors it chooses to hire to help prepare the paperwork related to the property’s sale, and the buyer pays for the professional advisors it might hire to review the sales contract and any other matters related to the sale.

Bank trust fees

If the property you own and are selling is held in a Bank Trust (fideicomiso), then you will also need to budget for a ‘trust cancellation fee’ that is levied by the bank. The closure fee varies, but you should budget for around US$1,000-US$1,500 to cover this.

Taxes on the sale of residential property in Mexico

Taxation on residential property sales is a complex area of Mexican tax law and every case will be slightly different depending on the circumstances.  Also, keep in mind that tax laws are subject to reform and because house purchases tend to be long-term investments, the tax laws which apply today might apply entirely, in-part, or not at all when you eventually sell your property.

This section of the guide describes the key principles of residential property taxation as of the date of this article, and guidelines here are intended to help you compose an estimate of the taxes you will be expected to account for when you sell a residential property in Mexico. (Different tax rules and rates apply when you sell commercial property.)

We recommend that you seek professional advice from a Notary Public, tax accountant, or other professional/legal service firm in Mexico to get a detailed appraisal of your situation.

Note also that if you are not a Mexican national then you might also be liable to taxes in your home country and you should seek advice from a specialist tax accountant in that respect, too.

Capital Gains Tax

Mexico applies a capital gains tax on residential property of 25% on the gross sales value of the transaction without any deductions, OR between 1.92% and 35% on the value of the gain (purchase costs less allowable exemptions and deductions): the percentage is calculated on a sliding scale in relation to the gain and we recommend you assume 35% as residential property sales with a gain above $250,000 Mexican pesos will be subject to this rate.

One-time tax allowance exemption

A tax allowance exemption is available under Article 92, Fraction XIX a) of Mexican income tax law that reduces the tax liability for many family homes, although you and the property must meet certain criteria to qualify for the exemption:

• you must be resident in Mexico* with a Mexican tax ID (known as a RFC, or Registro Federal de Contribuyentes); and
• the property you’re selling must be your primary residence in Mexico; and
• the land subject to the sale must not exceed three times the size of the construction on that land (measured in square meters); and
• you can only claim this exemption once every three years.

The flat-rate exemption is the peso equivalent of 700,000 UDIs; the value of UDIs fluctuates and you can get current UDI exchanges rates on the Bank of Mexico website. At the time of writing, 700,000 UDIs equates to approximately $5.9 million Mexican pesos and you can deduct this amount from the sale price if you qualify.

Co-titled property

If the same home is properly co-titled with your spouse or other family member and they are resident in Mexico* with a Mexican tax ID, and the house is their primary residence too, you can deduct an additional 700,000 UDIs in their name.

The tax-deductible allowance is not automatic: you must qualify, you must apply, and you must prove the qualification. Talk to your Notary Public about how to arrange this and what you need to do to present the necessary records for proof.

Talk with a licensed accountant or other professional firm who is experienced in property matters about getting a RFC if you hold legal residency in Mexico but don’t currently have a RFC number and want to use this as a means to claim the tax deductible allowance when you sell your residential home.

* Mexican income tax law does not expressly state whether the foreign person selling a property must have temporary or permanent residency status to avail themselves of capital gain tax exemptions; it does, however, expressly state that the seller must be selling his/her primary residence in order to qualify for tax exemptions on capital gains. The Notary Public dealing with the matter will interpret the law; some will apply the capital gains exemptions only if the seller has residente permanente status; some Notary Public offices may apply the exemptions to foreign residents with residente temporal status.  You can read about the differences in these two residency statuses on our Mexican visas and immigration page.

Deductions allowed for capital improvements

You can deduct the costs of any capital improvements (e.g. building extensions, new flooring, swimming pools, new rooms) while you owned the property, as well as some closing costs commonly incurred when purchasing a home.

To claim these deductions, you must keep and show official receipts —in Mexico, these are known as ‘facturas’— for all services and building work, so be sure to take advice from your Notary Public and/or accountant on how to account for these over time—and follow it.

Any capital improvements made using a building firm or independent builders who didn’t issue you with facturas for the work cannot be deducted.  General maintenance and home improvements, like remodeled kitchens or new bathrooms, do not count as capital improvements.

The currency exchange rate effect

In most towns and cities across Mexico, home prices are quoted in Mexican pesos when they are offered for sale. However, a few places and most notably in Los Cabos, Puerto Vallarta, San Miguel de Allende, Ajijic/Chapala, and Cancun/Riviera Maya, home prices may often be seen quoted in US dollars.

Even though the home may be marketed in dollars and the transaction amounts may be quoted in dollars, the deed will show the amount in Mexican pesos at the exchange rate prevalent on the date of the closing. Any capital gains are calculated only in Mexican pesos and therefore, shifts in the exchange rate can affect the capital gain calculation as expressed in a foreign currency.

Learn more: Read Exchange Rates and Capital Gains on Your Mexican Home to understand how foreign exchange rates can influence capital gains calculations on property in Mexico, because your tax liabilities when you come to sell are calculated in Mexican pesos, not dollars.

Selling your Mexican home as a non-resident

If you are not a resident in Mexico and/or you don’t have a Mexican tax ID, you cannot claim the tax allowance exemption explained above, although you can claim qualifying deductions, so long as you have the official receipts (facturas) to prove the allowed expenditures which can be deducted.

Your Notary Public is a key contact

The Notary Public (in Spanish, Notario Público) is the most important professional person you will deal with when you buy and sell property in Mexico.  Don’t rely on hear-say and instead get the Notary Public to assess your individual situation and the taxes that will likely apply to it.

When you’re buying property, talk with the Notary about what you need to do to plan your estate efficiently, how to structure your arrangements, and how to keep the proper records you need to ensure that when you come to sell your property you (or your heirs) are prepared.

Every property transaction has its own quirks and unique characteristics; cultivating a good relationship with your Notary Public is a crucial aspect of successful property investment in Mexico.

Learn more about property in Mexico

We publish a wide range of guides and articles about property and real estate in Mexico:

• Learn about the costs and taxes of buying property in Mexico
• How do property owners value their Mexican house?
• What drives house prices in Mexico
• Putting your house on the market for sale
• Comprehensive guide to buying and selling real estate and renting property in Mexico
• View the latest articles about real estate in Mexico

The information published in this article is provided for general information in good faith and is not intended as personal, legal, financial or investment advice.

It might take longer to sell than you anticipate

Mexico’s real estate markets are very regionalized and, in most cases, localized.

The location where the property is situated will influence how long it takes for a property to attract a buyer and transact through to closure between the parties.

Property transaction volumes are much higher in big cities, major resort areas, and popular colonial towns than in smaller towns, villages, and islands—and this transaction rate will determine, to a greater or lesser degree, how long it takes to match a buyer with a seller.

Typical time scales when buying a home in Mexico

When you are in the market to buy a home in Mexico, you may find the buying process frustrated by the seller—especially if it is a private sale instead of buying from a developer. This might sound strange, as you might think that the seller will be keen to close the transaction.

However, many factors come into play with Mexican property transactions; sellers may have to negotiate with family members, other ‘interested’ parties (e.g. distant relatives who may or may not be associated with the deeds), as well grapple with nuances of Mexican cultural behaviors in regards to ‘letting go’ of things—like long-held heirlooms.  This article about property cycles across the generations shares some helpful insights.

Some transactions may go through very quickly: for example, when the seller needs fast cash, or a developer is selling you a brand-new property.

Whatever the final time scales end up being, expect the buying process to be different to what you may be used to in the USA, Canada, and Europe—and realize that you may have to be patient if you found your ‘dream home’ and think you can move-in quickly; in some cases, you can; in other cases, you won’t be able to.

Typical time scales when selling your home in Mexico

When you come to sell your Mexican home, you will realize that the location of your property will not only affect its sale price, but also the time it takes to sell the property.  Some properties can remain on the market for years before they sell; this is particularly true of homes situated in remote or rural areas.

Conversely, some homes can sell soon after they are listed—these tend to be properties in Mexico’s popular places including larger cities (especially trendy neighborhoods of Mexico City) as well as popular beach resorts and trendy or sought-after colonial mountain towns.

Most of Mexico’s realty markets are not as “mature” as property markets in the USA or UK, for example, and transaction volumes are lower.

As a rule of thumb: land and property in rural and remote places, as well as those in areas with less well-developed amenities and local services will take considerably longer to sell —perhaps a year or more— than properties situated in larger towns and cities, and the most popular towns and resorts.  These also tend to be places which offer nearby local services and amenities—shops, schools, community centers, clinics, hospitals, etc.

Typical time scales when closing on a property transfer

Once a buyer and a seller have agreed to proceed in earnest, the paperwork can take anything from a few weeks to several months to reach a close.

If you are buying, you should not rush your Notary Public or lawyer as they conduct the necessary checks as part of their due diligence.  If any untoward matters arise, these may add delays, but addressing them helps to protect the buyer and the seller.

Most real estate transactions in Mexico go through without major delays, and with all the necessary paperwork and title deeds completed to legal norms.

The solidity of the legal procedures involved in Mexican real estate transactions has enabled US insurance companies to provide secure title insurance. It’s important, however, that both buyers and sellers exercise patience and understanding. Mexico’s legal system is bureaucratic; managing your own expectations (and your practical plans) to suit will save a lot of unnecessary stress as you purchase or sell your Mexican home.

Tip: a good local realty agent might help

Finding and working with a well-established realty agent in the locality you intend to move to in Mexico can bridge important gaps in most people’s capabilities, in terms of providing local knowledge and planning, as well as helping to save valuable time as the good agents will know the transactional procedures and might be able to provide facilitation that can accelerate the sales process.

Learn more about property in Mexico

Mexperience offers detailed insights about property in Mexico for buyers, owners, renters, and sellers.

• Latest articles and insights about real estate in Mexico
• The costs and taxes of buying a home in Mexico
• The costs and taxes of selling a home in Mexico
• Working with a realty agent in Mexico
• Insuring your Mexican home
• Enjoying your home and home life in Mexico

You don’t have to be legally resident to own a home in Mexico

You do not have to be resident in Mexico to own property here, so there is no need to qualify for residency status under the immigration rules to buy land or a house—whether you purchase directly, or through a property trust.

Note, however that when you sell the property, there are certain property capital gains tax allowances that you may access only if you have legal residency in Mexico.

Mexican law on property ownership

Mexican law on property ownership is comprehensive and provides protection for the seller and the buyer in all property transactions provided that the law is followed, and you (most usually through a Notary Public) ensure that all necessary documentation is present and that the procedures are adhered to.

Mexican law provides for private ownership of land by foreigners, and its law is specific about the way in which land rights should be transferred from seller to buyer.

A Notary Public will guide you through the details of these, but generally:

• Property may be purchased and owned outright for residential use by foreign nationals outside of the 100km (~62 mile) restricted land border zone, or outside of the 50km (~31 mile) restricted coastal zone.
• Inside of these restricted border and coastal zones, foreign nationals may own land through a fideicomiso (a property trust) which is set up through a local bank and provides for ownership of the land and/or property in all but name. See the section below for more details about this.

Permit required by foreign buyers

If you are not a Mexican national (natural or naturalized) and depending on which Mexican state the property or land is situated in, the transaction may require a special permit that grants a foreign national the right to hold title deed of a property logged in their name on the Federal Register.

Check with the Notary Public in the state where you are purchasing dealing with your transaction, who will advise you if this is necessary in your case and will usually offer to manage the filing on your behalf if it is.

Whether the land or property you intend to purchase is situated inside or outside of the restricted zone (see above), foreign buyers must apply for and obtain a permit to acquire property in Mexico.

By applying for the permit and accepting its terms, foreign buyers agree that they will not seek the intervention by their home country’s government in any matters related to the property, and that they submit to the exclusive jurisdiction of Mexican civil courts in all matters and disputes related to the property.

The permit application carries a fee and typically takes around six weeks to process and get issued—but timescales can vary.  Once the application is filed, the official file number may be used in reference for matters related to the property transaction while you wait approval and issuance of the permit.

The application for this permit is made to the Secretaría de Relaciones Exteriores, Mexico’s equivalent of the US State Department, who is responsible for processing and issuing the permits.

This Federal Law requirement was reintroduced in 2022, but we are told by associates that some states in Mexico are not enforcing it at present. Talk to your property agent and/or Notary Public for further details about this in the place where you intend to buy.

See also: Costs and taxes of buying property in Mexico

Fideicomiso: property land trusts in Mexico

The Mexican Constitution forbade foreign nationals from owning property that was within the restricted border zones. This law was intended to protect Mexican soil from foreign invasion, and a property trust provides a means for non-Mexicans to buy and hold land and property if it’s physically situated within about 30 miles of the coast, or within about 60 miles from a land border.

To enable non-Mexican persons to invest in land and property inside the restricted zones protected by the country’s constitution, the Mexican government introduced a system of land trusts—essentially a special type of investment ‘wrapper’ that enables you to legally and securely hold title of property in all but name.

In practice this means that any non-Mexican national who wants to buy a home with an ocean view, or near the beach or a land border with Mexico, they can do so by means of a special property trust, which is set up and managed through a local Mexican bank.

The trust holds the deeds to the property, and you and/or other persons named in the trust are sole beneficiaries to that trust—and by extension, to the property that is folded into it.

The trust gives full rights to do whatever you like with your property:

• It can be developed (in accordance with local planning regulations).
• It may be rented or leased.
• It may be sold, or given away.

The trust thus enables you to own the property in all but name.

The trust also enables you to name a beneficiary or beneficiaries to it, so you can bequeath it (and by extension, the property) to others.  Some people choose to buy Mexican property through a trust even if the property is not situated inside the restricted zone, as part of their estate planning preparations.

See also: Costs and taxes of buying property in Mexico

The role of the Notary Public in Mexico

The Notary Public is the most important legal person you will deal with when you make a property purchase investment in Mexico.

Under Mexican law, the title deed to the property must be prepared by a Notary Public, and the Notary is also responsible for calculating and reporting tax duties owed to the Mexican tax authority arising from any property transaction.

As a buyer, it is your right to choose the Notary Public you wish to work with, and it should be your first port of call after you have agreed in principle to purchase a property in Mexico.

Experienced buyers choose their Notary Public independent of the seller’s preference or advice.  The Notary Public will ensure that all documentation and permits are in order so that the transaction can proceed.

Read more about finding and working with a Notary Public in Mexico.

‘Ejido’ land and Title vs Possession in Mexico

You should be aware of ‘ejido’ land in Mexico, as there is a lot of it; and while many properties and developments now built offer a legal title deed, some properties continue to be transferred on ‘agrarian’ terms.

About Ejido land in Mexico

Ejido (agricultural) lands have a long history in how they came into being; these properties are akin to “commons land.”

The ejidos are usually owned by a community of local people and possession of the land is passed down through generations within the communities which own the parcels.

These land parcels do not have legal title (property title deeds – see next section) and any matters and disputes related to them are dealt with by local comuneros, at agrarian courts, usually termed Asambleas —assemblies— that meet about once a month and are led by the elders of the local community.

Legal Title vs Possession

There is a distinction between ‘commons’ land and land that is registered with a Title Deed recognized and enforced by Mexican civil law courts.

Some types of property in Mexico, especially rural or semi-rural properties —and some that are quite desirable— are only available for purchase under Agrarian terms, and while this type of property transfer gives you possession, it does not offer legal title.

Read more about buying, having, and selling property without title deed in Mexico

Title insurance for your Mexican property

Some buyers consider taking out title insurance on the property they buy in Mexico. Title insurance covers you should the property you buy subsequently turn out to have liens associated with it.

This is especially relevant if the property you are buying has been privatized, having previously been classified as being “ejido” (or “common”) lands (see previous section); but even if this is not the case, title insurance will protect you if any other previously unforeseen lien or charge is brought against the property before you took possession of the title deed.

Rates for title insurance are around the equivalent of USD $5-6 per USD $1,000 of the property’s sale value; payable once only at the point of purchase, before you close.

Consult a realty agent or other legal or consulting professional regarding matters relating to title insurance. There are several insurance companies that now offer title insurance for Mexican property and, as the number of providers increase, rates should become increasingly competitive.

Choosing the right location for your purchase

As with property purchase in any country, the location in Mexico where you choose to buy is all-important. It’s better to buy ‘less house’ in an optimum location than to purchase ‘more house’ in a sub-optimal location.

Choosing places to live in Mexico

To help you discover and explore potential places to live here, Mexperience publishes a curated list of locations to consider for living, working or retirement in Mexico—organized by popularity and notoriety and classified by the location type

Do the (back)groundwork

It’s unwise to buy on impulse in an area based on your first impressions, especially if you’re on a leisure visit there.

It’s prudent to be familiar with the area and the locale in that area where you intend to invest.

Also ask yourself how marketable the property is in its current condition and location, especially if you are planning to rent it, or should you want to sell it later.

You may want to rent something nearby to start with and get a feel for the place. Once you’re living locally you can assess things like the atmosphere, the local climates, the neighborhood in general, and get to know the locals so that you can get a genuine understanding for what it’s like to live there.

Match your needs with your location

Consider your current and changing lifestyle needs as you make your choices about the location for your property investment.

Real estate purchases require patient capital in Mexico as not all markets are as fluid as places in the US, Canada, or Europe can be—it might take more time to sell a property than you imagine.

Ongoing management of your property

Learn more about maintaining and securing your home in Mexico here on Mexperience.

Learn more about property in Mexico

Mexperience offers detailed insights about property in Mexico for buyers, owners, renters, and sellers.

• Latest articles and insights about real estate in Mexico
• Working with a realty agent in Mexico
• Insuring your Mexican home
• Enjoying your home and home life in Mexico

This article describes the “off-plan” property market in Mexico and some key considerations potential buyers ought to keep in mind before agreeing to buy a home in this way.

“Off-plan” properties offered by developers

Most “off-plan” property sales are offered by developers at the early stages of the project before construction begins, and/or during stages of the project’s physical construction.

Property developers like off-plan sales as it helps their cashflow and the project’s costs can be at least partly allayed before any ground is broken, or as construction begins.

Off-plan projects also help developers to gauge the level of interest for the project in the market and the price levels which buyers are prepared to pay for properties being offered as part of the prospectus.

Discounts and incentives versus off-plan risk

There is an additional element of risk with off-plan purchases that does not exist when buying a pre-built home, and in return for assuming the additional risks off-plan investors (buyers) are enticed with a number of incentives.

The most common incentives offered to buyers are:

• a discount on the advertised “market value” sales price,
• a custom choice of decorations and furnishings, and
• the opportunity to pick from the ‘best available lots’ within the development complex.

Off-plan investments have become more popular as property buyers have become more affable towards investment risks of various types in return for a higher potential reward.

The most sought-after element of off-plan purchases is a discount in relation to the advertised market price, offering the potential of a bigger capital gain from the outset. In some cases, buyers may try to quickly sell the property (called ‘flipping’) when construction is completed if the market is buoyant and buyers are willing to pay a premium when they see the completed project.

Securing a ‘good lot’ (that usually means a decent garden space and/or view) is also attractive to off-plan buyers as the location of the lot within a complex or the view offered by a particular unit on the development can add value and make it easier to rent out, and eventually sell.

Turning a profit in a rising market can be straightforward with off-plan investing; however, care must be taken to gauge market conditions and you must have an excellent understanding of true market values in the locality where you are buying in order to negotiate the right level of discount for the additional risk you are assuming as an integral part of the contract.

If you are buying off-plan you should negotiate a level of price discount that reflects the additional risk that you are assuming as part of the investment. The discount should be based on your own impartial assessment of the estimated value of the property when it is fully completed and delivered.

If you cannot see sufficient reward for the risk you are buying into, be prepared to walk away if you cannot negotiate an appropriate deal from the developer.

The process of buying “off-plan” in Mexico

The process of buying “off-plan” starts with the signing of a contract and with it, your agreement to buy a certain property based on an architect’s plan (a scale model might also be shown) using a defined set of staged payments.

In some cases, construction might have started already, and you will be able to visit the building site.  The final payment stage is usually held back until you are fully satisfied with the delivery of the property and facilities you expected under the terms of the contract.

Potential buyers should undertake due diligence before signing any contacts, and extend caution if a developer insists on being paid a substantial sum (as a percentage of the total sales price) in any of the staged payments.

Key considerations for buying “off-plan” in Mexico

There are several important considerations to reflect upon when you approach a property investment in Mexico and additional matters to consider when buying a property “off-plan.”

Check the developer

Check out the developer. What other projects have they worked on? What projects are they working on now, other than this one? When were their projects scheduled for completion and when did they complete? What is the local reputation of this firm? What are previous customers’ experiences dealing with the developer? Don’t be afraid to ask for references, and follow-up with those references.

Don’t take prominent or extensive advertisement placements in magazines and newspapers, or the presence of a modern website and social media following as proof of establishment or reliability.

Most “off plan” sales are offered before ground is broken, but some projects might already be under construction when you are offered a unit for sale. You should not assume that because construction has begun that the project will be completed.

Ask locally and do your research. Don’t be afraid to ask incisive questions that put the developer on the spot about their reputation, track record, and anticipated completion dates for the project they are inviting you to invest in.

Key points about buying “off-plan”

Here are some additional pointers to consider when contemplating a purchase of property “off-plan” in Mexico:

Understand the risk: remember that when you buy off-plan you are taking  commercial risks on the property development and the developer, as well as the wider market demand for property.

Due diligence: check the developer’s credentials, permits, and licenses; a local Notary Public will be able to ascertain the current legal state of a property development (you will need to hire their services at your own expense).

Don’t sign a contract you don’t understand: get a competent professional to review the contract and explain to you what is being agreed.  It will probably be written Spanish and you might need an interpreter.  Any contracts presented to you in English will only have legal force in their original Spanish versions—don’t rely on the seller’s translation if they offer one.

If the development is cancelled: the contract ought to be specific about what happens if the development is cancelled or left partially constructed and incomplete—and what happens to the staged payments you have already made.  What are the realistic prospects of getting a refund if things go awry? This is one of the key risks of buying “off-plan.”

If you need to withdraw: the contract ought to specify what happens in the event that you cannot complete the staged payments or if you need to withdraw from the contract due to unforeseen circumstances in your own personal situation.

Cross-check the development plans

It sounds obvious to say, ‘cross-check the plans,’ but some people really do buy “off-plan” on the face value of the marketing brochures, or pretty-looking model mock-ups on display at the sales office, or because they can see some construction taking place already and assume everything is in good order. It may work out fine, but not checking the plans significantly increases the risk of your investment.

When you are buying a pre-built property, a good Notary Public will check the plans and permits carefully and tell you about any legal problems that may be present with them before your complete the transfer.

Before you buy off-plan, you should consider paying for legal services to undertake the same checks as you would make with a pre-built property.  In all cases, the developer’s permits and licenses should be verified and your legal counsel ought also to verify that the transaction can lead to proper transfer of legal title.

Some plans never get approval from local authorities, some plans and construction projects come up against a plethora of other complications —too numerous to mention here— but suffice to say that an off-plan contract is just that: a plan, a proposal that is not yet realized—and you need to understand that when you sign the contract and begin to make your payments.

Purchase price and total cost of ownership

Buying any real estate entails more than just the price of the property; ‘closing costs’ (legal and professional fees) and any associated taxes also need to be considered, even when you buy off-plan.

If the property you are buying off-plan is part of a condominium building or a gated community of some type —and most off-plan offers tend to be one of these— there will be monthly management fees (homeowner fees) to pay in addition to any other costs of ongoing ownership.

Find out what the management charges are going to be and remember that these can (and usually always do) rise year-on-year. Check the contract and its covenants carefully and hire a qualified and experienced professional to check it and explain the conditions and the obligations that you are subscribing to when you sign the off-plan contract and eventually take delivery of the property.

Learn more about property in Mexico

Mexperience offers detailed insights about property in Mexico for buyers, owners, renters, and sellers.

• Latest articles and insights about real estate in Mexico
• Working with a realty agent in Mexico
• Insuring your Mexican home
• Enjoying your home and home life in Mexico

The information published in this article is provided for general information in good faith and is not intended as personal, legal, financial or investment advice.