What to Buy and Why ?
This is very much up to the individual. Our experience will help an investor identify the investment that meets his or her criteria and the survive the whole purchase process and receive the key is . We often continue assisting the client in design, redevelopment and decoration of the property prior to rental as well.
We will warn an investor who we believe is about to make a mistake in the purchase of a property which would not be a good investment. Even if we have been contacted late in the property search, we would rather see a clients investment deferred or delayed than an error made. After all, we want to see a client return and recommend to others to do the same.
An investor in a rental property may have different criteria to a buyer looking for his Argentine holiday or retirement home. As such we can assist in determining what and where may be more appropriate, saving time and much energy.
We believe that anyone interested in buying a property is about to make a serious investment, and is doing so not on an idle whim. Therefore the time they take is important, besides being precious and irreplaceable. After all, to come to Argentina on a vacation and then spend all of it looking at properties is a waste. Part of our job is to assist in this process. Hence, here too we are more interested in pointing out the truth and the potential pitfalls, so that a client or potential client can be better informed BEFORE embarking on the process of buying here.
Pricing of properties is almost always in US dollars. And almost always the price is measured and compared using the rule of dollars per square metre. (One square metre is almost 11 square feet). Prices vary greatly depending on style and quality of the building and its construction, whether it is new or old, and by inherent factors such as the view, the street, the barrio or neighborhood.
Property prices have risen greatly in a noted recovery of the property market since the economic crisis of 2001 and the bottoming out of the market in mid 2002. Whilst some new apartments in an area like Puerto Madero and in other key locations in Recoleta and Palermo now command prices of US$3000 per square metre and above, it is more common to find prices around the US$1800 – $2200 per square metre today in those areas typically sought after by investors (Recoleta, and parts of Palermo, Barrio Norte and Belgrano).
Prices are often but not always inflated. Typically we suggest an offer of about 10% below the asking price and experience suggests that the final agreed price is about 6%-7% below. If contacted early in the search, we are able negotiate and save the client this amount and possibly a 1% reduction in commission, whereas a client without local knowledge or faced with an agent who views almost all foreigners as sources of unlimited funds, cannot, usually despite best efforts.
What you’ll discover when looking at properties for sale
Most agents will list a property using criteria such as luminosity (brightness) on a scale of 1 (a windowless closet) to 10 (all windows and directly facing the Sun). Rarely is an honest evaluation made, so the buyer has to form his own opinion rather than believe an agents comments. Agents too are known to “miscalculate” the square meterage of an apartment, or in some cases they will even include in the square metres any floor space created by the addition of an “entre piso” (or false extra floor) that has been squeezed in where high ceilings often allow an additional level to be built. This is totally wrong and a misrepresentation of the true square meterage, as ultimately determined by the Title Deed, and nothing else. This method is often used to inflate a price of a small apartment or make a high priced apartment seem cheaper by purporting that it has more metres than is really determined in the Title Deed. Beware !
If a property says it is “frente” it means the front of a building. This could be good, on a pretty quiet street, it could be terrible if on a main road with 100 huge stinky Buenos Aires buses roaring under your window every hour of the day and night. If a property says “contrafrente”, this too could be good if the building backs onto a nice gardens, with a view of trees, or an open space, but it could and more likely be terrible meaning you have a view of a brick wall of the building next to yours – and suffer the associated noises echoing around.
Our aim is to eliminate the time wastage in viewing properties that will never be suitable, and remove the agents omission of certain key details, by asking the appropriate questions based on our knowledge and experience of the marketplace, BEFORE seeing anything.
THE PROCESS from making an offer through to final purchase
Once the property is identified, the buying process is normally broken into three steps. The RESERVA, then the BOLETO, finally the ESCRITURA.
The RESERVA is normally about US$2000 cash and the buyer pays this to the agent (not the seller) on condition that the agent presents the offer to the seller. This allows the agent to assure the owner that the buyer is presenting a serious offer, and in theory assures the buyer that the agent wont show the property to any other potential buyer, until the seller has reviewed the offer and decided whether or not to accept it, reject it or enter into negotiations. If the offer is rejected the agent is obliged to return the reserva to the buyer. Usually a grace period of 5 days is specified.
The BOLETO, represents two things : a sum of money paid in CASH by the buyer to the seller, which by law can be no less than 25% of the purchase price - normally its agreed to be 30%; and the second thing : the Boleto contract, which both parties sign, which forms the agreement of purchase & sale of the property and along with the money paid, acts as the insurance to both parties that neither will back out of the agreement, or else risk losing the sum of money agreed : if the buyer pulls out he loses all the money paid, or if the seller pulls out he is required to pay back to the buyer double the sum of the Boleto, if he withdraws. The Boleto contract states all the terms and conditions for both parties in the transaction, including the final date of settlement, the agreed price, and any special conditions such as items in the property that are or are not included in the sale, and what penalties exist for non fulfillment of the purchase or sale, by either the buyer or the seller, and therefore the re-payment of the amount of money paid in the boleto, or its forfeit entirely.
A good Boleto is worth its weight in gold and is legally enforceable, and gives the buyer the upper hand. We assist using an excellent Escribano (property lawyer) to prepare a legally safe and airtight Boleto as a means to ensure 100% protection of any clients needs and interests.
It is at this point of the Boleto that both buyer and seller pay the real estate agent the commission. A strange custom indeed given that the agent’s job is not really complete until the purchasor has purchased the property.
The final stage is the ESCRITURA. This is both the title document and contract of sale and purchase, and is the only legally recognized document between buyer and seller, denoting that actual transaction. The Escritura it contains all details of the property, and forms part of the legally registered title document. The Escritura is prepared by, read by and signed in front of the registered lawyer, or Escribano, who notarizes that all parties agree, and that the buyer pays and the seller receives the agreed sum or balance payable in CASH, on the signing of the Escritura.
At this stage any taxes due by either party are paid to and retained by the Escribano who by law must pay them to the tax office (“AFIP”). Also at this final stage the buyer and seller pay the Escribano for his services and costs in the preparation and execution of the Escritura. See the section Escribano / Property Lawyer.
Normally a period of 30–60 days between Boleto and Escritura is common, to allow the seller to arrange his move and the buyer to arrange his money, also and MOST importantly, allowing the Escribano time to verify the sellers right to sell and that there are no problems with the title and that there are no unpaid taxes, mortgages or problems that would affect the buyers right to a clean unrestricted title on purchase of the property.
Occasionally a seller is prepared to omit the Boleto stage, or enter a contract called a Sena and pay about 10%, which has risks and benefits for a buyer. But in no circumstance can the important work of the Escribano be rushed or overlooked, therefore at least 5 working days must be allowed between Reserva and Escritura if there is no intermediate Boleto stage, to ensure that the Escribano can receive and verify all the required documents and research the original title and the past 20 years history which is held in the Government records.
Selling a property as a non-resident foreigner
As a non-resident (that is one who does not yet have rights to claim residency in Argentina and who does not hold a local “DNI” number, like a US Social Security number), to sell a property he or she must apply for approval to do so from the tax department (“AFIP”): such approval commonly taking between 30 and 60 days. During such time the tax department will verify that all taxes for the property have been paid, or it will require payment to be made, before issuing to the non-resident foreign investor, the certificate approving the sale and advising the amount of the ITI Tax payable on sale, which the Escribano retains from the money the seller will receive.
Without this AFIP Tax Office Certificate, an Escribano (property lawyer) cannot effect the legal contract and deed of sale, for a non-resident, non-DNI holder.
So buyers beware : without Argentine residency and a DNI number, a non-resident foreigner cannot SELL a property as easily as they can buy one.
Agents in Buenos Aires
We are NOT real estate agents and this information is provided to assist other purchasors. As such we do not work with any agent exclusively or any agencies in particular - unless they prove time & again to meet our level of professionalism. We prefer to maintain independence and work with those agents that have the property our client has interested in, or look for properties with those who we know and trust who consistently provide a professional and honest reliable service.
Argentine real estate agents here can be professional, but it’s the exception rather than the rule. Fortunately there are some excellent exceptions. But in Argentina it is still very much the law of Caveat Emptor (let the buyer beware).
Sadly there are almost no legal requirements of professionalism (yet) and more sadly there are many who set themselves up with a PC in a small ratty apartment who call themselves agents - who list properties, with little or no knowledge of the demands or needs of providing a proper service. Especially for foreigners. They hold keys and they can just about manage to open a door and point out the obvious, but most soon most fall short of what we expect, especially when asked to pay the agent 3, 4 or sometimes even 5% commission for their “service”.
Properties can be found in many ways: online, in the press, by wandering around the streets looking at signs and too, by asking people.
Quite often the agent that lists the property is not the agent who encounters the client (or vice versa), and so often the commission that both the buyer and seller pay, is split between the agents respectively.
Most times therefore, seeing a property involves going with one agent who meets the other agent on site.
Most agents will work together, but it has been known to pass that a property you might show interest in, is strangely no longer available, according to your “agent”. This may be true, or it may not: the reason being that the selling agent cannot agree with your agent on how to split commissions.
Again, some agents want to show you any property in the hope that in stupidity or desperation you will buy something. Some people are fooled into making costly mistakes and parting with their money, and Argentines can be very good at spotting the “dumb tourist” and gouging out the advantage. And, can they lie ! This is about the only consistent quality that I have found in agents here. For a client who knows no better buying or selling can be a sad, confusing and frustrating process.
For prospective purchasors who seek help we will often save that person much time alone and will often succesfully negotiate a lower commission rate than the client otherwise will obtain from an agent directly.
The Buying and Selling process
What to Buy
