Who are buying houses?

[earlyretirement]

I have a question about role of real estate agents dealing with high end properties.

I am wanting to buy a expensive property en CABA. However, the real estate agents ( a famous one) is giving all sort of road blocks to me. Can experienced members here guide me on how to tackle them, please?

Some of my issues with them which I am not sure, one how to resolve or maybe I could be totally wrong? Please guide?

1. They ( real estate agent) will not let me meet/talk/ see/ do video call with owner till day of signing the escritura. Is that how it works? ( They fear, they will get sidelined and lose their commision)

-- Yes, this is totally normal. Realtors there are always worried that you will just by-pass them and cut them out of the deal. They don't get their commission until you do at least a boleto (30% down payment). One thing you might do if the realtor won't budge (although keep in mind it might ruin your trust and relationship with them, is you could just write up a letter with your contact information on it and tell the seller you're interested in buying their property. Still, they might be suspicious and prefer to go through a broker. But in the letter, you can say that you can go through and contact your Escribano to show that you're serious.


Remember, by law, you as the buyer get to pick the escribano to be used for the transaction.

2. They are asking for a 4% commision just for the fact that they have the property and shown me once. Its a lot of money for an expensive property. What is the law of the city for this? And what services are they expected to provide to pocket 4% commission!!!!

Yes, it's typically at least 3% and up to 4%. There is no law. It's what the realtor you're working with charges. Remember, they will only get half of that. They need to share 50% with the listing agent. It's the listing agent that always ends up making more money on the deal. They typically get about 2% to 3% from the seller and 50% from the buyer's realtor.

3, They want a fees to reveal property papers to my chosen escribano. They say - it can be refunded if I have genuine reasons not to buy after sighting the papers. What is the CABA law for this?


It's not normal to have to pay anything but are they asking for a "reserva" (deposit)? Because yes this is normal.

4. I had seen the property in glorious fotos fully furnished and decorated. when I went to see the property - at least 50% of it had been removed. I still loved it. Thereafter, I asked the real estate agent - I want to buy the property as it is ( decorated) . he says its impossible. The property will be stripped naked and I would only get the walls. I said, can you allow me to speak to owner to discuss this. he said - No. Is there a way around this?


NO, it's never assumed to have anything unless it's specifically listed as furnished. But most properties are NOT with furniture. You have to negotiate with the owner/his agent for each thing you want to buy.

5. I am looking to buy and hold for life time. They have agreed to my proposal to lower the price in escritura by 40% from what I would actually pay. Any cons to that ( especially as I am not planning to flip or resell).


It's tough to get 40% lower. Most reputable escribanos don't want to go lower than a certain threshold. Remember, technically this is illegal. Most escribanos will agree to go down lower but most a maximum of about 30%. Just remember that you will use the real price on the boleto but after that you destroy the boleto and on the title deed it will be listed as the fake lower price. Typically what many people do is just go 30% lower and the boleto (down payment) you pay will be used for that. And then at the closing when you wire the remaining 70% they can use that price as the amounts match up.


The only downside is the capital gains tax should you decide to sell it. Since you're using a fake lower price, your capital gains tax will actually be higher. But you benefit from lower annual property taxes each year as you're using the fake lower price.

6. What is the correct percentage fees for escribano on present day. Is it based on paid price or the price as input in escritura?

Most really good ones charge around 2.5% plus IVA. You can tell the Escribano you don't need an official receipt and he can typically discount some of the IVA fees.

7. Since its an extremely expensive property, I asked him I am ready to pay 33% immediately to show interest but I request 6 months to pay rest ( as I need to sell some property in another country to raise funds) . He laughed at me as if I was retarded. Then he ( real estate agent) declined without even consulting the owner.

NOPE. This isn't how it's done. Typically you put a reserva deposit and then do a boleto within 15-30 days of 30%. Then you close within a month or so. Sellers don't want to wait too long. They don't "finance". Argentines don't believe you should even start to buy or place offers unless you have 100% of the cash. Especially if you're a foreigner.
You typically sign a boleto document when you pay the 30% deposit saying you will close and sign the title deed within X days (typically within 30 days). If you don't then there is a penalty component of X per day for X days and then if you don't pay by X day then you lose the boleto. What you're asking to wait 6 months is totally unreasonable for a local. It's not like the USA.

8. How does one transfer cash on very high end deals like this?


You use a private institution to legally wire the funds in. You really don't want to mess around with the blue/black market as you want to do this all legal to avoid problems later. There are lots of reputable firms you can hire to bring in the funds. Just keep in mind you'll pay a % of the total amount. Typically 2-3%.
But realistically if it's a high end property, the owner definitely has a bank account OUTSIDE of Argentina and it's perfectly legal to wire from your bank in the USA or wherever it is to the sellers account outside of Argentina. However, it will be listed on the title deed. Many Argentines that are dodging taxes and don't have that bank account declared, won't want to do it that way. But if you can, try to get them to allow you to wire it abroad so it never has to enter Argentina.

9. Finally, he is not ready to lower the price even by 1 usd...from its listed price. I admist the property is damn good. I imagined we are in a bearsh market but it does not seem so.

- Many sellers won't sell unless they get the price they need or want. Many properties are for sale for many many years as owners are holding out. Remember it's NOT like the USA where owners are leveraged or have mortgages. Many properties have passed on for generations and generations. And even if they haven't, these are owned properties with no mortgages or debt on them. Some owners just want their #. It can be super frustrating.


But carrying costs of expensive properties can be very little in BA as the HOA fees compared to expensive cities outside the USA are very low relatively speaking. Also, property taxes are also relatively low. Especially if it's been in their family for a long time and the declared price of it is very low. Expenses/utilities are fairly cheap there as well. So they just aren't motivated many times to sell unless they hit their #. Still, more times than not, everything is negotiable. Just see how long it's been on the market.

Overall, I am not very happy dealing with such snarky agents. However, i really like the property very much. henceforth, my dilemma.

Can anyone advise me please on my 9 doubts.
Who is the listing agent on this property? Typically you have a buyers agent and then the seller's agent. Try reaching out to the listing agent directly if you haven't. That realtor will be more motivated to close the deal as they will make both sides of the commission. The downside is that they often times are looking out for the best interests of the owner but still, the buyer's agent doesn't do much at all.
You get to select the escribano you want to use on the transaction and they are the ones doing the heavy lifting.

 

[earlyretirement]

Are you willing to forfeit this deposit if you can not come up with the rest of the money in 6 months? If not, that's probably why he laughed.

Locals just never want to wait as time= money. For them, they have witnessed lots of economic upheaval and they don't want to take it off the market for that long. Lost opportunities. To them, if you don't have all the cash, then you shouldn't be making offers. It's how they think.

I have seen times where the seller allowed a long closing period but it was right after the correlito when people were super desperate for money. It was for a big building. It was for a big American investment company. They structured it where they wanted to pay a deposit and then close within 3 months. Well, the seller smartly stipulated that for every day the buyer didn't close it was a $1,000 US dollar a day penalty. And then if the buyer didn't close within 5 months then they would lose their entire 30% boleto deposit.

They went down to the deadline and had to pay $1,000 a day penalty for a few months so in this case, the seller didn't mind too much. The property was a multi-million dollar building.

So, if you really wanted to try to get them to accept a multi-month delay then offer to structure the deal like that. Where you do a 30% boleto and then agree to pay a $XXX a day penalty for up to X months. if you don't close in time. And then if you don't close by X month then they get to keep your boleto.


I think they would still laugh at you, however they would take much more seriously. I found in living and working there in Argentina for many years, you had to get creative like this and structure things this way if you wanted to go outside the box.

But anything can happen in life. I personally wouldn't want to buy something in Argentina unless I had 100% of the cash. My advice would be to just sell your property, get the cash and then see what's for sale at that time. My guess is if this owner is so stubborn, the same property will still be on the market by that time.


And also remember all the various taxes and fees. It all adds up. Realtor's fee plus IVA tax, Escribano's fees + IVA tax, stamp taxes (3.6% - split evenly between the buyer and seller), money transfer fees, etc.

 

[Ceviche]

And also remember all the various taxes and fees. It all adds up. Realtor's fee plus IVA tax, Escribano's fees + IVA tax, stamp taxes (3.6% - split evenly between the buyer and seller), money transfer fees, etc.

Is IVA on realtor's fees and escribano fees compulsory? required by any government agency?

 

[earlyretirement]

Is IVA on realtor's fees and escribano fees compulsory? required by any government agency?

Yes, it is. It's required by law. HOWEVER, if you tell the escribano or realtor you don't need an official receipt, they many times can discount part of the IVA. But these days, with fear of AFIP, most want to declare at least part of the deal so they have justified income.

But yes, legally it's 21% IVA tax on whatever you're paying them. Some realtors for example, if you don't ask for an official invoice will make up a fake one later. If you're paying 4% commission, maybe they will say you only paid them 2% and then put some IVA on that.


Back in the day, many realtors would let you avoid the IVA and just not charge it and they wouldn't declare any income and not pay any taxes on it.

These days, AFIP is a lot smarter. They are looking at listing prices of properties and then what owners are declaring. They are looking at who the listing realtor was on that deal. And remember, Escribanos are putting their license on the line declaring a fake illegal price most times. So it's all a bit more complex now.

I've been buying real estate in BA since 2002 and things are a lot stricter now.

 

[earlyretirement]

Also, there is a lot of good advice and information on this thread. Some I agree with and some I don't. For example, I seriously doubt a seller is going to take 50% less than what they listed it. No way I see that happening. Most will negotiate some but I've never seen a seller take anything close to that much less.

Also, I will say I'd totally avoid new construction. With the exception of a big developer that has been around for a long time. I've purchased several new construction and fortunately most times it worked out as the developer was a large developer (G&D) that had a lot of experiences.

But one time, I purchased a new construction in Recoleta from a developer that had been around a while but it wasn't too big. The construction took forever (as do most. Most are severely late in getting delivered). But the developer ran out of money as materials cost skyrocketed. So at the end of the project, they basically told all the buyers that unless they paid 15% more than what was stated on the buying contracts, then it wasn't getting finished.


They said, you can sue us but that won't help you at all. It was very frustrating and there was really no recourse. They were correct, you could sue them but things move slowly in the court system and the judicial system there doesn't really work and nothing you can do any way if they declare bankruptcy.

After that, I'd never buy a totally new construction that was several years from being finished. Personally, I would just wait until it was already done or almost done. Even with a larger developer, I'd have pause. Granted, the prices are super low when you first break ground. But it's always late and with no legal recourse if they never finish.