Buying Real Estate In Nicaragua
The first step to buying real estate in Nicaragua is to overlook everything you know about the process back home… wherever home may be.
Let me create one thing clear from the start. There are usually incredible bargains to be had buying home in Nicaragua. In fact, there is absolutely no other market in the Americas exactly where insisting upon a 40% revenue or better is reasonable. However, there are few similarities between the regulations governing the real estate industries in North America or Europe, and Nicaragua. It’s because of this lack of similarities that will foreign investors often get into problems. There is a preconceived notion for foreigners that the Nicaragua real estate market is as carefully regulated as it is somewhere else, and it is this incorrect assumption that will sets foreign investors up to become cheated. The only universal real estate investment rule that applies as similarly in Nicaragua as it does in any case else is Caveat emptor, customer beware.
Real Estate Brokers
Basically there is such thing in Nicaragua as a real estate property brokerage that a Canadian, American or even European would assume the term symbolizes. There are real estate brokerage workplaces. Some even have familiar franchise titles, but that’s where the similarity finishes.
There is no mandated, formal teaching of real estate sales people, nor exist specific licensing requirements. Anyone can be a “realtor” by paying for the merchant license or incorporating the Nicaraguan company. I’m not recommending this means “all” real estate sales people are usually incompetent or untrained… many are. In fact, there are a number of retired agents who relocated to Nicaragua and keep successful, upstanding businesses. However, there are several more who are not at all competent, plus operate on the razor edge in between honest business and outright scams. Caveat emptor again!
There are usually no district or federal regulating boards governing the real estate industry in position. Real estate sales are no longer regulated than a vehicle sale made by a street vendor. Outright criminality is not ignored by authorities, yet having the perpetrator jailed is improbable to result in recovery of anything lost. The revenge should create a fleeced buyer feel better though. Nicaraguan jails exist to punish bad guys, not rehabilitate, and they are Hell upon Earth. Unfortunately though, most problems that can arise in a real estate deal are considered civil matters by law adjustment and have to be treated as such. In short, whatever money you think you had been cheated out of… consider it lost. Even with a judgement in the plaintiff’s prefer, collecting money owed in a judgement hardly ever happens. So again, caveat emptor.
A serious shortcoming in the Nicaragua real estate market is that there is nothing similar to the Multi Listing Service (MLS). The lack of any form of MLS indicates there is no central registry of attributes for sale, nor any information as to what a house sold for. The result is that it is rather difficult to decide what a house or even commercial building in a particular neighborhood is worth since there are no comparable home transactions to use as a guide. Appraisers foundation their appraisals on replacement cost mainly, and whatever else they provide is real guess work. Ironically, banks need appraisals created by licensed Nicaraguan appraisers if mortgage funding is being asked for.
There’s no such thing in Nicaragua as a listing similar to what the majority of foreigners would understand the term in order to mean. Real estate shoppers will certainly hear a realtor say that he or she has a list, but it’s common to see several real estate signs on a single property. Likewise, the same property may appear on several real estate company websites and be marketed online by numerous different people. More confusing, the prices advertised may vary for the similar house, sometimes by tens of thousands of bucks. Nicaraguans selling their homes hardly ever lock themselves into an agreement along with one party wanting to sell their particular land, house or commercial creating. If you want to sell something, the particular assumption is the more people selling it the better. And by a lot more people that can be realtors, the owner by themselves, their family and friends, a neighbor, or perhaps a horse drawn carriage driver. This seems chaotic to a foreigner buying retirement or vacation home, however it makes perfect sense to Nicaraguans. Without an MLS service that allows many realtors to show prospective buyers the listed property, letting everyone sell a property seems to be the best way to get publicity.
Another misconception foreign purchasers possess when buying real estate in Nicaragua is that the seller is paying real estate agent. This is sometimes the case, yet even when it is the buyer may be requested to pay the commission. Yes, this really is legal in Nicaragua. In truth, not only could there be a percentage paid by the seller and customer, but the real estate agent may have added a sum to what the seller actually wants in the or her hand. This as well is legal. The worst case scenario would be that the seller wants US$50, 000 for the home. The sellers offers anybody selling the home US$1000 or a portion. The real estate selling agent promotes the home for US$59, 900, permitting negotiating room. A buyer forms on US$55, 000 but is usually told that in Nicaraguan the customer pays the commission. Not really the truth, but common enough that individuals think it’s a rule. The asked for commission can be anything up to just as much as 10%, or it can be a flat fee. Once all is said and done as well as the buyer agrees to purchase the property with regard to US$55, 000. In a case like this, the ‘agent’ will insist on the nonrefundable US$5000 down payment. At shutting the seller receives the US$50, 000 that he or she wanted and the selling broker pockets the rest.
I know of the purchasers who handed a ‘realtor’ US$65. 000 to purchase a three or more acre farm with a small home on the property. The ‘realtor’ after that went to the owner of the property and compensated him US$20, 000 to buy the particular land. It gets worse… the particular ‘realtor’ never bothered to make the name transfer until the buyer discovered he or she was not the owner when he attempted to pay long overdue taxes. In the end the property was purchased with a developer for little more than the authentic US$65, 000, but 8 many years of appreciation later. In another situation Europeans purchase a home and payed too much US$85, 000. Of course basing their offer on the European real estate property values they knew, it was thought they were getting a bargain. The ‘realtor’ pocketed the US$85, 000 along with a commission he charged the purchase as well. Again, perfectly legal within Nicaragua… so caveat emptor.
The way to navigate through what foreign people view as market chaos is by using a knowledgeable real estate consultant to find a home you want, negotiate the price, terms and conditions, perform the necessary due diligence, validate the name and survey, and so on. This is really a fee based service but far less costly than a percentage sales commission, plus far, far less than a costly error would be. One such service is usually Nica Investments, a real estate consultancy that assists foreign investors buying real estate or businesses in Nicaragua.