Additional Closing Costs When Buying
Closing costs are paid by the buying side in Mexico. Here is a breakdown of what closing costs look like when buying a property in Puerto Vallarta or in Mexico in general from two (2) different closings for two (2) different amounts. It is important to understand that these amounts can change depending on the value of the property and sometimes depending on the notary used. A realtor might tell a buyer that the closing costs are about 5% to 9% and that is usually the case. However, the real answer is that it depends on the amount. Most of the fees charged by the notary are fixed. The tax property fee of about 2% of the total value.
When buying a property that is worth US$74,000 the buyer will pay 6.91% in closing costs.
When buying a property that is worth US$282,000 the buyer will pay 5.91% in closing costs.
As shown in these two examples it seems like the percentage of the closing costs is deceiving. When the total price of a property is relatively low the percentage of closing costs seems higher. When the total price is high the percentage of the closing costs seems lower. It is important for the buyer to understand how much you would be paying. These posts and examples should give a buyer a better idea. Of course, the best thing is to wait until you have your closing costs sheet from a notary.
As you can see closing cost fees do not indicate a specific fee paid out to a closing coordinator typically used by real estate agencies in Mexico. The notary fee amount is the same whether you use a closing coordinator or not.
If you are buying a property and can prove that you are a Mexican you do not pay some $25,000 MXN for fideicomiso (trust) permit that is due to the government.
Lastly, there is the cost to open an escrow account. of about $600 US. This is also part of your closing costs to be paid with your 10% deposit. This amount is different for all escrow companies used but, generally the same. Yes you can avoid paying such fee by not using an escrow company to secure your money risk free by giving the notary a certified check to hold until close and at closing you transfer the remaining balance from your bank directly to the sellers´ bank.
This process can only be effectively executed if you have access to a local bank in the area where the transaction is taking place. Having a local bank account can facilitate smoother financial transactions, allowing you to deposit or withdraw funds as needed without incurring excessive fees or delays. Alternatively, another viable option is to wire funds directly from your US bank to the seller’s bank account. This method can be convenient, especially for larger transactions, as it allows for quick transfer of funds across borders.
However, it is important to note that both of these options come with inherent risks. Should something go awry during the transaction—be it a dispute over the product, a failure to deliver, or any other issue that might arise—retrieving your funds and obtaining a refund can become complicated. The process of reversing a wire transfer, for example, can be challenging and may not always be successful. It is crucial to conduct thorough due diligence on the seller and ensure that all terms of the transaction are clearly understood and agreed upon before proceeding. Taking these precautions can help mitigate potential risks and protect your financial interests.
how much for attorney fees when buying a property in Mexico?
Depends on what notary public you use. This fee is part of your closing costs. Pay close attention to the closing costs estimate sheet from the notary public and you will see what are the notary fees. See the article on closing costs.
