That didn't take long. Within hours of publishing the following article, my 'nemisis', who's posted several comments in the past, sent me a message accusing me of doing what he/she has complained about before...that I am writing as if things in the USA are superior than here in EC. I also got the following comment from someone..."Ugly American"....which I deleted as I will not tolerate disrespect in this column.
If you're looking for a bit of entertainment, check out the comments that follow at the bottom of this post.
PS...thank you to many of you who've sent me positive comments, noting you appreciate my reality writing style. Many of you have stated you prefer hearing the good, the bad, and the inbetween so, if you should visit, you will arrive with an eyes-wide-open, informed mindset versus visions of rose-lined streets, rainbows, and busses that spew nothing but lavender-scented butterflies.
July 18, 2012
Well, I have a chicken in the oven with garlic and black pepper and a VOJ (vodka orange juice) at my side. I'm ready to write about my next subject matter....real estate. Or, 'real state' as they seem to call it here.
In my last entry where I blurted out a bunch of miscellaneous observations about life here in Cuenca, I focused a bit (a BIT) on real estate listings. This time, I'm going to FOCUS on the whole matter of buying and selling real estate here in Ecuador...well....at least Cuenca.
As I've mentioned before, there is no such thing as an MLS here. In the USA, the MLS is a single database where all properties for sale, unless For Sale By Owner (FSBO), are listed. As a result, people buying or selling have access to everything available on the market. Not here and, apparently, not in many countries either.
Let's say there are 500 properties for sale in Cuenca. If a person wants to buy a property, they are faced with:
- Going from agency to agency, website to website, to piecemeal a very small percentage of properties together to find what they want.
- Website XYZ who has 11 listings, though it is common the websites are not kept current, therefore some of the listings could have been sold a year ago.
- Website ABC who has 59 listings.
- As I mentioned last time, the listings are very often sorely lacking in information, too.
- WHERE is the house?
- I will skp over a listing if it doesn't tell me where it is. I'm not going to waste my time calling an agent just to find out the house is in Timbuktu which is nowhere near where I want to be.
- WHAT does the house look like?
- How many square feet (square meters)?
- How many bedrooms/bathrooms?
- Website LMN who has 37 listings.
- No sign posts out front of the house with info sheets.
- Se Vende (For Sale) signs in the upper windows of a house with a phone number...nothing else. No price, no square footage...# of bedrooms/baths...forget it.
- Property descriptions ripe for 'The Tonight Show with Jay Leno' monologue.
- Walking closets. Really? Where do they go?
- 2 car parking garage. Reality? 2 spaces in front of the house with one car butted up against the front door. No garage door. No roof overhead.
- Fireplace. 98% of all fireplaces in EC are for cosmetic purposes only. They are NOT functional...they are dead-ends.
- Dining rooms. Really? That table of four, 3 feet away from the kitchen counter is a dining room?
As a seller, it's whole different ball of wax. The seller is essentially reliant upon one single source of exposure....his/her agents' website. It is all too common for agents to post the listing on their website, then sit back and wait for 'the call'. Granted, the agent is also keeping his/her eyes and ears out for anyone, who might mention the desire for a property closely matching what he/she has in their inventory, while mixing in social circles and the like. Rarely, does the seller agent pay for advertising in medias such as the newspaper or magazines or expend much energy on promoting the property via other means such as flyers posted at expat hangouts, or even free classifieds. Holding an open house....huh??? Relying 90% on the traffic, what little there might be, that comes to their website can mean a lonnnnnng wait for the seller to get thier house sold. It is not uncommon to see properties for sale, listed on websites for a year or more.
Then there's one of my favorites....different prices for the same property. I went to see an apartment a few days ago. The owners were there and said the price was $61,200. The next day, I saw it advertised for $58,000. An agent friend of mine has a swell hacienda listed for $158K, but on another site it is priced at nearly $40K more!! Why? Because there's no centralized source for the data. So, if a seller changes their price, it isn't changed in ONE place to which all people access...they have to inform each and every agent and expect they update their website accordingly.
- People who sell real estate here, do not need to be licensed.
- There is no such thing as Escrow companies.
- There is no such thing as Title companies.
Commissions. This subject gets my goat. Again, no standardization. I have never believed in percentage-based commissions...here, or anywhere. I have a lot of real estate agent friends and I'm sure they will get their voodoo doll out and start sticking pins in it after what I have to say.
Why should an agent make $6,000 on a $100,000 sale and make $18,000 on a $300,000 sale when they have to (pretty much) do the exact same thing for both sales? It's like my beef about property taxes....why should I pay $5,000 a year, being a single person, for a house which happens to be more valuable than the exact same house located in a cheaper neighborhood that houses a family of 5 (3 kids in school) that only pays $3,000 a year but uses MORE of the city services (ie; schools, police, streets, lighting) than I do as ONE person?
Here, commissions are very confusing and not at ALL standardized. At one agency, the seller may be charged 3% commision and the buyer 3%. At another, the seller may be charged 6% commision (standard in the USA) but, secretly, the buyers agent also charges their client 3%. In my oh-so-humble opinion, each party should pay their respective representative a fee for the services they provide. Why should the seller get stuck with the whole thing? Obviously, the commission 'structure' (word used lightly) is fashioned after the USA, but that's all there is in common. The agents may make the same amount of commission percentage as an agent in the USA, but what they do for what they get is entirely different. Here, they don't hold open houses, nor do they invest in advertising, install signposts and keep flyers stocked, oversee inspections, follow through on contingencies, create documentation (ie; purchase/sale agreement), coordinate closings, or even (in some cases) conduct negotiations (ie; offers/counteroffers).
Note: There is very little in the way of consumer-protection laws in EC. In this example, there are NO disclosure requirements to inform the consumer of who is getting paid what, and by whom.
Then there's TERRITORY. I'm not talking about the land itself, I'm talking about 'agent territory'. I did a little test once (I was bored). I asked 3 different agents to show me properties available in Cuenca with XYZ criteria. In all 3 cases, the agents showed me ONLY their listings...as if there were no other properties in Cuenca meeting the criteria I specified. Typically, agents will only show their inventory even though, clearly, there are other properties matching their customers' criteria but because they are with other agencies, they will not show them. Even though they still stand to make a commission!!!! To me, this is a terrible dis-service to the customer.
Then, there's ACCESS. There is no such thing as lockboxes here. If an agent wants to show a property to a client, they must contact the owner (or other agent representing them) and arrange a time they can mutually meet at the property. This can be a nightmare to arrange...when the buyers agent, the buyer, and the seller can all be available at the SAME time to access the property. What a waste of time for the seller side to have someone show up and the buyer spend 5 minutes at the property and say 'Nope, not what I'm looking for'.
Then, there's the SERVICES the 'agents' provide. This is extremely frustrating. It's like there's a laundry lists of tasks that need to be done relating to a sale of a property. One agent might perform items 1, 3, 12, 19, and 27. Another agent might perform 1, 2, 3, 5, 9, 13, and 17. Again, no standardization. That old routine of 'who's on first', 'what's on second', and 'I dunno who's on third' becomes all too familar.
Because there's no escrow or title company services here, one generally has to employ the services of an attorney (MY favorite!!!). They will check public records to ensure there are no outstanding liens. They will draw up the papers that say something about promising to buy. Everyone signs, then off to the Notary to get everything rubber-stamped and pay fees. Money is transfered either by check, or by stacks of cash, or by electronic transfer bank account to bank account. Papers are filed with an agency who transfers the ownership. You're done. No appraisal conducted, no pest inspection, no title policy....nada.
Oh, by the way...I sold my house!!! Now, don't go freaking out on me (Mom)!!!! heh heh heh...this is a test to see whether my Mom really reads my blogs!!! Yes, I sold my house to a lovely couple from NY state. I needed a new project to keep myself busy since I was done with my remodel and left with little to do....to the house, anyway. Now, I plan to become a renter and, NO, I'm not leaving CUE or EC. My plans are to do a little investing and maybe buy a small apartment to rent out to you folks who may travel to Cuenca someday and/or explore the possibility of relocating here and need a short-term rental while here but with more of a 'homey' feel than just a bed in a hotel.
YEA.....oven timer just went off!!! Garlic chicken...here I come!