International Forum

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Mexico and Central America exhibit unique characteristics in terms of size, development, and cultural influence. The Hispanic community's importance in the real estate market is highlighted, emphasizing the need for trust and awareness of cultural nuances while conducting business. Explore how transfer of real estate tax and transaction costs impact property dealings in these regions.

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Angela Angela Espinoza Espinoza International Forum International Forum Mexico/Central America

The difference between Mexico and Central America ( why this is important ) The Central American nations are smaller, less developed countries, while Mexico is the largest Spanish-speaking country and thus casts a very large shadow on Central America, especially on Guatemala, El Salvador and Honduras, although those countries each have their own unique identities as well. Mexico and Mexico and Central Central America America

The truth of the matter is that people from Mexico and Central America are no longer just immigrants, but an integral part of the North American culture. The Hispanic community is here to stay and this is why it's very important that we start seeing them as relevant and extremely important clients for your own Real Estate Market. The 2013 Fannie Mae National Housing Survey found that nearly half of all Hispanics (48 percent) say this is a good time to buy a home and that they are more likely than the general population to prefer owning, particularly for lifestyle reasons. At least 84 percent see home ownership as the best investment plan, a way to save for retirement, or a way to build wealth. If you do a very good job for one Hispanic family, they will tell everyone about you. Benefits of Benefits of conducting conducting business with business with Folks from these Folks from these countries countries

Why is there a trust issue? Why is there a trust issue? Imagine buying a house in a place without multiple listing services, franchises, or real estate licensure. Down payments are extremely high, around the 50 percent mark. The amount you can borrow is based on your age of all things, and after all that, it s really easy for a renter to claim rights to your house while you re away, leaving you with nothing. Many have been taken advantage. Many lenders and realtors have been charged with fraud and many other acts toward the Hispanic communities.

Transfer of Real Estate Tax (Impuesto de Transferencia de Bienes Raices) Transfer of real estate tax is levied at a flat rate of 3% on the property value exceeding US $28,571.43. Transaction Transaction Costs Costs Registration Fee (Derechos de Registro por Venta de Inmuebles, also known as the Alcabala) Registration fee is around 0.63% of the property value. Notary Fee Notary fees are around 0.15% to 1% of the property value. Real Estate Agent s Fee Real estate agent s fee is around 5% of the property value. MOST transactions are paid by the buyers :O Real Estate Transfer Tax (Over the excess of US$28,571.43 of the total price) 3.00% buyer Registration Fee Notary Fee 0.63% buyer 0.15% - 1.00 % buyer Real Estate Agent s Fee 5.00% Seller sometimes buyer Costs paid by buyer 3.78% - 4.63% Costs paid by seller 5.00% ROUNDTRIP TRANSACTION COSTS 8.78% - 9.63%

Foreigners can invest and buy property in El Salvador, Guatemala, Honduras, ect. and can hold dollar accounts and use these accounts when seeking local financing. No single natural or legal person-- Salvadoran or foreign--can own more than 245 hectares. Rural lands cannot be owned by foreigners except for industrial purposes. How difficult is How difficult is the property the property purchase purchase process in process in Central Central America? America? There are no restrictions on foreigners buying urban land. Foreigners should be aware of the need to be cautious about property rights. All property is registered in the Instituto Libertad y Progreso, a state owned registry that clearly identifies the owner of the property. The accuracy of this registry, which is currently being computerized, makes property insurance obsolete. This type of registry system is common in Central America and is considered a safe way to guarantee ownership. A notary prepares and notarizes the sale agreement. He then facilitates the payment of the registration fee (Derechos de Registro por Venta de Inmuebles, also known as the Alcabala), which is 0.63% of the property price. An additional 3% over the excess of US$28,571.43 should also be paid as the Transfer of Real Estate Tax (Impuesto de Transferencia de Bienes Raices). After which, the deed is presented to the Registry office, and finally to the Municipality. The whole process of registering a property can be completed in around 22 to 37 days. The round trip transaction costs include all costs of buying and then re-selling a property lawyers fees, notaries fees, registration fees, taxes, agents fees, etc.