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Seller's 21 Most Frequently Asked Questions
The questions below will scroll you to the appropriate response on this page, For your additional convenience, you will find a link to scroll you back to the FAQ list at the end of each response
1. Why Century 21?
2. What documentation is required to sell property in Mexico?
3.
4. What about Mexico's Capital Gains Taxes?
5. What features add value to my property?
6. How will my property be valuated?
7. What is a typical commercial valuation?
8. What are some examples of a valuation model?
9. How are Capital Gains Taxes calculated?
10. How do I ensure I get the best price for my property?
11. What are some measurements for pricing my property?
12. How do I pick an agent?
13. How do we determine my selling price?
14. What are the seller's responsibilities regarding working with the Notario?
15. What is a Notario?
16. What is the Notario's role in the selling process?
17. Can my property be used as a rental?
18. How do I prepare for selling my property?
19. How long does it take to Close on my sale?
20. What do Closing Costs consist of?
21. What are the legal requirements for a seller?
22. What is an Apostille and when is it used?
1. Why Century 21?
2. Take advantage of Century 21's worldwide marketing system to sell your property!
1. PROPERTY YARD SIGNAGE using the unique CENTURY 21 “GOLD POST” and with the world famous CENTURY 21 logo.
2. Listing in the Los Cabos Multi List System ("MLS") for hundreds more co-op showing opportunities.
3. Promotion of your property by Century 21’s trained real estate professionals.
4. Representatives in our local offices seven days a week to answer questions or show your property quickly.
5. Unique properties may receive, additionally, custom flyers, custom brochures, magazine photo spreads and articles or separate website promotions.
6. All properties receive customized flyers with photos highlighting the unique features of the property.
7. Announcements regarding the listing of your property and flyers handed out to attendees at a bi-weekly meeting of the MLS membership.
8. As locations and owners permit, "OPEN HOUSES" providing extra opportunities to agents and home-seekers driving around to find, preview and make offers to buy your property.
9. Posting of your property’s description along with a photo series highlighting its unique features on both the www.CENTURY21BAJA.COM website and our www.PARADISEPROPERTY.COM website, which have hundreds of “hits” daily from e-shoppers, wanting to find out what is for sale here in Los Cabos.
10. Three local offices in Los Cabos to serve you and the buying public (with more locations being developed), complete with high speed internet, toll-free phone calling from the United States into our offices, title insurance information, details on available financing, and the services of seasoned and knowledgeable agents.
11. Posting of your property to CENTURY 21 MEXICO website to make it available to anyone searching for international properties through the CENTURY 21 website in the USA or any other country worldwide.
12. COMMUNICATIONS – Our Sellers are continuously kept up to date on all activity happening on their property, from putting up signs, to circulating flyers, to phone inquiries made and received, to showings of their property and feed back from the showing agent. All of this is available 24/7 on our website for you as our client to view at your convenience. Visit us at www.century21baja.com; look for the “VML” (view-my-listing) logo, click on “OnlineSeller Progress Reporting” ; click on “Property Owner”; then enter the User Name and Password your listing agent will give you to see up-to-the-minute posted activity and comments on recent tours.
3. WHY LIST WITH THE MOST WIDELY RECOGNIZED NAME IN THE REAL ESTATE WORLD AND MEXICO?
4. Century 21 and its independently owned affiliates world wide annually spend millions of dollars to keep the CENTURY 21 name and logo in front of the reading and viewing public. That advertising along with referrals from affiliate offices keep our phones continuously ringing and e-mail in-boxes filling with inquiries about property here in our part of Mexico. When you list your home with CENTURY 21 Paradise Properties to SELL, you plug into those millions of dollars of world wide investment whose sole purpose is to attract Sellers and Buyers...
5. WHY LIST WITH CENTURY 21? Our next call or e-mail may be asking for a property just like yours. A CHANCE LOST MAY NEVER BE RECOVERED. LIST TODAY!
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7. What documentation is required to sell property in Mexico?
8. As a seller, your Real Estate Agent will be your first resource for ensuring you are meeting all requirements to sell your home or land in Mexico. Be prepared with the following information:
• Evidence of Title (a full copy of the original) with exhibits
• Title meaning a public instrument document issued by a Notary Public.
• Note: a private agreement is not considered evidence of title, but a copy of it will be required if it is your evidence of ownership.
• Evidence (receipt) that the property taxes are paid up to date
• Evidence (receipt) that HOA are paid up to date
• Evidence (receipt) that Fideicomiso annual fees are paid up to date
• Evidence (receipt) that Water service is paid up to date
• Evidence (receipt) that Phone service is paid up to date
• Evidence (receipt) that Electricity/Power is paid up to date
• Evidence (receipt) that OTHER services are paid up to date
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10. What about Mexico’s Capital Gains Taxes?
11. In Mexico, gain realized on sale of real property is taxed, but the tax is determined differently than in the U.S.A.
12. Here, the gain from the sale of the property is treated as ordinary income, and the tax is calculated and collected at closing. A Capital Gains Assessment is provided by your C21 professional at the time a listing agreement is accepted. One of two calculation methods may be applied for residential property:
1. 28% of the adjusted gain after deductions for: the original property value stated in the title document, with a few indexing points added annually, improvements, realtor’s commissions, and any notary or closing fees. Deductions must be accompanied by legal receipts (facturas), the manifestation of construction and/or improvements, and any other required supporting documentation.
2. 25% of the sale price with no deductions
13. Under conditions whose exact detail changes from time to time a permanent resident, whether Mexican or foreigner, may be exempt from all or some of the tax.
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15. What features can add value to my property?
16. Values of property can escalate when attractive features exist on or near the property:
• Property is well served by local infrastructure (e.g. good roads, airport);
• The property is near the beach. (In Los Cabos this would include Medano Beach, the Marina, the Corridor beach, farther north on the Sea of Cortez or Pacific shore, etc.)
• The property has good panoramic views of the area;
• Property is in good condition and requires little or no immediate maintenance;
• Property has terraces and allows easy access to panoramic views
• Property has a swimming pool / Jacuzzi, good landscaping, garage, large capacity water and gas storage, satellite system or dish, telephone service ready to initiate.
• Any furniture and furnishings: Homes in Los Cabos are usually sold fully furnished, but not always.
• Local security - for example in gated areas - where all residents in the community pay an annual fee (HOA) to a security management company for 24x7 vigilance;
• Any features which make the property unique and add to the cost of construction and / or take up additional land; e.g. a large ornamental fountain.
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18. How will the tax man value my property?
19. If you own a house in the USA, Canada or Europe, you are required to pay tax to the government, usually based on an official valuation of the property. In Mexico, this is known at the Catastral value, and is set by an officer appointed by the county; no onsite inspection is required. The Catastral value will vary depending on the area where you own, and can be a fraction of the commercial value of the property. This official value is used by Catastro to determine the annual tax, known in Mexico as the Predial. The Predial is payable annually, early in the year, and you get a discount for early payment, or penalty for late payment;. With your tax number you can look it up and pay on-line in the Municipality of Los Cabos. You will find the Predial is very low (and could border on insignificant) when compared to property taxes (even at the lowest rates) in Europeor the US, or the annual rental value of the property. This is one of the reasons why cost of property ownership is low in Mexico. Although the Catastral value is an essential number for working out tax liabilities, in practice it serves of no use in assessing the commercial value of a property.
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21. What is a Commercial Valuation?
22. A commercial valuation, unlike the Catastral valuation, is an attempt to determine what a willing buyer would likely pay and a willing seller take, in the relevant marketplace. In other words, what it is “worth” in the normal sense. Many factors, including the nature and size of the property, its amenities, its location, view, etc., come into play in making such a valuation.
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24. What are some valuation models?
25. The three common ways in which properties can be valued, all three of which are usually determined and then harmonized in a commercial appraisal, are:
26. Investment Value
This is deduced by determining how much the property would fetch monthly from a rental (based on similar rentals in the neighborhood / area) and multiplying by a factor. This factor is usually calculated by taking into account the cost of maintenance and applicable property taxes. If you wanted to see a return in 6 years (which is about average) then your formula would be: (Monthly Rental x 12 + Annual Maintenance (Including Service Fees) & Taxes) multiplied by Years (6). To make this assessment the appraiser investigates the local rental market for comparable properties.
27. Similar Recent Sales
If the property is in a neighborhood where houses / land plots are similar, then you may be able to get an indicative commercial value from prices paid for similar size and type properties in the area during the last 12 months. An estate agent would be able to guide you in this respect, and this is an area in which your Century 21 agent can help.
28. Replacement Value
Another way of determining the commercial value of a property is to take the commercial value of the plot (land), and add to it the cost of construction, should you build it today (this is usually expressed in cost per square meter of construction) and depreciate this value according to the age of the house. You would then add on the value of any special features. Here, the investigator must look into local costs of construction for similar properties.
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30. How are Capital Gains Taxes actually calculated?
31. In order to determine the taxable Capital Gain, the following costs and expenses are deducted from the amount for which the property is officially sold:
• The original land cost and the depreciated construction cost, based on the number of years the property was held and adjusted for inflation according to the official consumer prices indexes.
• Additions, modifications and improvements, but not maintenance, made on the property (construction), adjusted as above, but only if officially recorded (“manifested”).
• Commissions paid to real estate brokers by the seller.
• Closing costs that were paid by the seller at the time seller acquired the property.
• A factor periodically published by the government intended to compensate for inflation.
32. The Notario will calculate the tax on the adjusted amount, retain the tax so calculated, anf forward it to the Ministry of Finance and Public Credit.
33. An American seller will then generally be entitled to deduct the tax paid in Mexico from any tax that would be due to the US IRS as a result of the same sale, so he or she is not double-taxed.
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35. How do I ensure I get the best price for my property?
36. First, keep in mind you get only one chance to make a first impression, so don't ignore curb appeal.
• A well kept exterior implies a well maintained home. Maintain the grounds regularly while showing your home. Remove dead limbs and debris from shrubs and trees to ensure the entrance is inviting and appealing.
• Plant extra flowers for more color or spruce up landscaping with potted plants/trees. Repair fences or courtyard walls and touch up with paint or stain. Store lawn equipment, toys and other outdoor items away neatly. Board the beloved dog or other large pets with neighbors while showing the house.
• The front entrance of your home is a key part of the "First Impression." Paint, clean or stain the front door. Remove old screens if they don't fit or operate properly. Make sure entry light and doorbell are in working order.
• Put out a nice welcome mat and a potted plant if you have room on the steps or entrance way.
• Clutter and dark colors turn off most buyers. That means getting rid of everything you can live without.
• Clean everything. Ask a friend or your agent to assess your efforts. Wash windows and mirrors.
• Clean the oven and all appliances. Clean all grease spatters and polish chrome fixtures and surfaces.
• Clean smudges, especially around doorknobs and light switches. Make sure cabinets don’t look worn or damaged.
• Frequently in Mexico, a home purchase includes furnishings. If you’re including furnishings, be sure they are not worn, soiled, or broken. Remember that as a purchaser even you would be suspicious of the quality overall when smaller items appear to lack regular care and maintenance.
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38. What other factors may affect the pricing of my property?
39. Establishing a reasonable and profitable listing price for a home is perhaps the biggest challenge for every home seller. Before coming to a final figure, many sellers ask themselves: “That home down the block went for a bundle; can I just price my home in the same ballpark?” “Can I jack the price up in a hot market?” These and many other factors must be considered before settling on a listing price.
40. While you, as seller, likely have great affection for the home, your sales associate will not set the price based on an emotional connection to the property. Instead, s/he will evaluate the location, condition, amenities and size of the home. Terrace square footage is sometimes included in the total ‘construction’ sq. footage, and in Los Cabos, we frequently consider this area part of the living space because the weather allows use even without a roof. A private pool and courtyard can offer seclusion and privacy that will increase the selling price.
41. A house in a secluded, more suburban area may appeal to some, while others will want to be closer to the nightlife, golfing, the ocean or beaches. What is the physical condition of the home? Is it a fixer-upper? Does it make a good first impression (the ever important curb appeal)? Will it appeal to a growing family, or is it better suited to investors looking for income to payoff their purchase until they can enjoy the sun, sand and sea after retirement?
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43. How do I pick an agent?
44. You’re currently on a Century21 website, and we're here to help you sell your home; considering the cost and benefits of hiring a professional is part of your preparation for sale.
45. Your Century 21 Professional can:
• Provide a comparative market analysis.
• Provide a comprehensive understanding of the market, enabling us to aid in setting an appropriate selling price to move your property quickly.
• Use a comprehensive array of marketing tools to introduce your property to the marketplace, ie., MLS, print and web publications and open house activities.
• Help negotiate an acceptable purchase offer.
• Give you an opinion on touch-ups and repairs that should be made before showing the house to prospective buyers.
• Coordinate the closing -- a VITAL role and one too often neglected in other offices.
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47. How do we determine my selling price?
48. You should of course consider closing fees, other selling costs, and the amount of cash you want to net after the sale. But you should NOT start with the amount of cash you need and work backwards to a price. Instead, set your price based on how your home compares to similar size homes in the same neighborhood, then visit our site or consult your agent for help in estimating how much cash you will have after the sale. If you set your price at an unrealistically high number the home simply will not sell, and you may even poison its saleability even at a reduced price weeks or months into the selling process. Remember, typically, the buyer pays all closing costs, so you, as seller, are only responsible for selling agent commissions which in Los Cabos are usually 10% of the sale price plus IVA on that amount, and for any capital gains tax owed to the Mexican government.
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50. What will the Notario need besides your ownership documents?
51. In connection to real estate transactions, the Notario Publico receives the following official documents, which, by law, are required for your title transfer to the buyer:
• A non-lien certificate from the Public Property Registry based on a complete title search.
• A statement from the Treasury of Municipality regarding property assessments, water bills, and other pertinent taxes that might be due.
• An appraisal of the property for tax purposes.
52. Your Century 21 brokerage’s closing department will insure that these are furnished to the Notario.
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54. What is a Notario?
55. The closing of a real estate transaction requires the services of a Notario Publico (Notary). The Mexican Notario Publico is an official who possesses greater rank and responsibility than the Notary Public in the United States. The Notario Publico is actually an attorney representing the Mexican government, with a lifetime appointment. He is responsible to both the buyer and the seller to insure the legality of the contract, and to the government for the calculation and collection of acquisition and capital gains taxes for the real estate transaction.
56. The Notario Publico finalizes the real estate contract by preparing a much longer and more complex document than a typical American deed (usually 20 to 30 pages in length), and supervising the signing of that instrument by all required parties. He keeps the original. A copy of the deed (for a foreigner, a fideicomiso) certified by the notario is then recorded with the county tax office and with the Public Registry.
57. The Notario Publico charges a fee for his services that reflects the much more expanded role he or she plays, as well as the complexity of the deed itself. These fees should be competitive and are based partly on the value of the property. Typically, a realtor will work with one or a few Notarios and a trustee bank that the office has found to be responsive and easy to work with.
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59. What is the Notario’s role in the selling process?
60. The Notario Publico is a government appointed lawyer who processes and certifies all real estate transactions, including the review and execution of all real estate closing documents, thus insuring a proper transfer.
61. All powers of attorney, the formation of corporations, wills, official witnessing, etc., are handled and registered in the office of a Notario Publico, who is responsible to the government for the collection of all taxes involved.
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63. Can my Property be used as a rental?
64. Property that you purchase here in Mexico can be used as rental property, providing that you register with Hacienda (Mexico's federal tax agency), establish residency and obtain an FM3, and that you acquire permission from the Minister of Foreign Affairs to do so. The language in your trust must include this permission, and if you think you may want to rent it out, make sure our closing office is aware so that they can insure that the proper wording is included in your trust. A Mexican C.P.A. can advise you on these procedures. Please note that your property tax percentage may increase once it becomes “commercial”.
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66. How do I prepare for selling my property?
67. Do not forget to figure in closing costs, legal fees and other selling expenses when determining the selling price. Your sales associate should be able to provide cost estimates, market value, and negotiate with a potential buyer to ensure a good sale price. Basically, your greatest challenge in preparing to sell your property is in ‘seeing’ your home through the eyes of a potential buyer. It is your job first and foremost to remember what once attracted you, as a potential buyer, to this home and to determine whether those same points of interest will attract another buyer.
68. Seeing your own home critically can be a very difficult hurdle for many sellers, and occasionally, more desperate agents may take on the vital role of selling your property for a price they recognize is beyond the market value, which will significantly hamper selling in a timely manner. Your Century 21 professional has your best interests in mind at all times, and will be sincere and straight forward in discussions regarding this very important decision in your life.
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70. How long does it take to Close on my sale?
71. The estimated time is 90 days until everything is completed once all required documents are received by the closing officer at Century 21. As one of only a few brokerages within Los Cabos with an in-house closing department, we can ensure that every detail from offer to closing is handled efficiently and in a timely manner. It is sometimes possible to close in a shorter time, but it may sometimes take longer, as many of the steps involved in the closing process require actions and response from others which neither of the parties to the transaction can control.
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73. What do Closing Costs consist of?
74. The total cost will run from a minimum of about 3% of the purchase price for a very expensive property, to as much as 10% or even more for the least expensive one. Some of the costs are fixed, and others are related to the price being paid.
75. The biggest item, in most cases, will be the acquisition tax (“ISABI”), which is a flat 2% of the price stated in pesos as of the date of closing, charged to the buyer. Since most purchase agreements are specified in dollars, the exact amount cannot be known until closing, when the current exchange rate between pesos and dollars is known, and applied to the dollar figure, and then the result multiplied by .02.
76. Other variable amounts, typically charged as a percentage of sales price in pesos, include:
• Notary fees
• appraiser’s fee and
• various registration fees at the public registry
77. Fixed fees include:
• Foreign Affairs Ministry permit and registration
• foreign investment commission
• preventive notice
• certificates of no liens
• certificate of property taxes paid
• trustee bank’s acceptance fee and first year’s fee
• closing coordinator’s fee
• US bank escrow fee for purchase money control and
• a preliminary title report
78. The Century 21 closing coordinator will prepare and furnish the buyer with an estimate of closing costs as soon as the bargain is reached. The buyer will then be asked to deposit 50% of these costs immediately into the special trust account Century 21 maintains for handling closing costs. The advance payment of 50% and the direct furnishing of funds for the closing office to disburse is necessary because, in contrast to US practice, substantial sums must be paid out in advance of closing in order to start the process and move it toward finalization.
79. The remaining 50% of the costs are then typically due a few days before the scheduled signing. The final total of costs is not typically known until some weeks after the signing when the fideicomiso is finally presented to the public registry. All the costs are of course accounted for in detail in the buyer’s final closing costs statement, and a similar accounting is furnished to seller, and an appropriate refund is made if applicable. Any positive/negative adjustments are rare and minor amounts.
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81. What are the Seller’s legal requirements?
82. You, as seller, must provide:
• Legal title to the property – Fideicomiso
• Power of Attorney if applicable
• Identification documents: valid passport, and FM1, FM3 or FM2. For a corporation, the original incorporation document and required permits and attachments must be presented.
• Status of Property: If you purchased your property as raw land and built or made improvements or purchased a lot with an existing home and/or buildings and improved them, all construction and improvements must be appraised and registered with the property tax office (Catastro) and the Public Registry of Property and Commerce. Failure to do so will impair the closing and significantly increase your capital gains tax liability if there is a substantial difference between the original purchase price and the current selling price.
• Proof of current payments of all property expenses
• Affidavits and Good Faith acknowledgements must be signed by the owner, including No Private Mortgage, Affidavit of No Liens, Affidavit of No Prior Sales Agreement, and attesting to the Status of Employees.
• Should you employ household staff or are selling a commercial property involving past or present employees, as an employer you must demonstrate that all salaries, deductions, annual vacation pay, and termination of employment benefits (Finiquito) have been fulfilled.
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84. What is an Apostille and when is it used?
85.
86. Most people within the USA probably have never heard of or know what an Apostille is. This is because Apostille are only for international verification of signature on your document. For use of your documents within the USA, an apostille is unnecessary and irrelevant.
87. It is also important to understand that an Apostille certificate is issued by the State government for documents that have been signed by an official of that State. For example: you cannot request a California Apostille of your document if your documents have been signed by a government official in Colorado. You would need to obtain a Colorado Apostille from the government of Colorado instead.
88. You can request an Apostille on nearly any official State-based document, created by or signed by an official of that State. Some documents may require more than a single step to acquire an Apostille. Below are some example documents, an (*) indicates additional steps may be required.
• Birth Certificates*
• Marriage Certificates*
• Power of Attorney*
• Certified copies of Articles of Incorporation, Partnerships, etc.
• Court-issued documents
• Death Certificates*
• Notarized documents, signed by a State Notary*
89. If you desire an Apostille on a Power of Attorney, or an Affidavit, a Statement, a Declaration, or an Assignment, you will first need to prepare and complete the Power of Attorney, Declaration, etc. and then have the document signed in the presence of a Notary. (Next) You may need to obtain a “Notary Verification” which is a County government certification that the Notary you just went to is legitimate. The Notary Verification requires you physically bring a Notarized document to the offices of the County government where the Notary Public has been registered with. The County Clerk will check the records on file to ensure the Notary Public’s commission is still valid, and look if the signature matches the Notary’s sample on file with the government. A certificate of Verification will then be attached to the document by the County Clerk/employee.
90. If you desire an Apostille on a Birth Certificate, please be sure you have a most up-to-date version of the certificate to present. If your certificate is of the older type that is small, all white, or a “reverse x-ray photocopy style”, then you need to order a new certificate from your county recorder office before it can be accepted and Apostilled.
91. How long will it take to obtain an Apostille?
Generally speaking in a less than a hour, depending on how close you are to your local government offices and how busy your State office is at the time your arrive. There are services (if you have 2-3 days to wait) that will provide processing of your documents to obtain the Apostille. The information contained in this document was obtained from one such service, http://www.apostilleinfo.com/ on your local computer internet.
92. Additional information on Apostille.
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