September 14, 2011
Real Estate Prices Up in Cuenca: How to Still Get a Bargain when Buying a House
We’ve read that property prices have shot up 20% since Cuenca was first named the best retirement haven in the world in 2009. We’ve been watching the market real close since then and property prices have definitely increased. A lot of the increase is not by expats but by returning Ecuadorians. Another fact is, real estate prices in Ecuador have always been high, especially land in the city...and this told to us from an Ecuadorian.
Remember, you cannot go by the listed Internet prices. In other words, the price you see on the Internet is much higher than what the price of a property should really go for.
I do a lot of online research and I have noticed that a few of the real estate companies for Ecuador are not even based in Ecuador—they are based in the U.S. Now, what this tells us is a big price mark up. We’re not telling you how to do things but we are letting you know there are other ways of buying properties without going through a real estate company.
If you really want to go through a real estate company make sure they are actually based in the city where you are buying the house from and that no agent living in the U.S will be getting anything from the sale. Ecuador does have FSBO's as well.
It’s paradoxical but it is not the Ecuadorians targeting gringos that you have to worry about too much—it’s the gringos targeting gringos! I hope you didn’t miss that. You have to be willing to walk away. There are a lot of folks in the Ecuador real estate market right now because it’s going to be hot and everyone and their grandma wants to get in on the action. It’s sad and unfortunately, it’s true.
UPDATE: 2015 - we don't think the Ecuador real estate market is that hot right now. Most people moving to Cuenca, rent rather than buy, at least right away. They have heard some of the scary property buying fiasco's and are staying wary of jumping in with both feet and that's good.
As most of you know we are frugal and we like to do most things ourselves without having a middleman involved and it is mostly because of this kind of thing going on…it’s how we gringos get targeted for overpriced properties. Remember, you are most likely to overpay if you’re new to Ecuador, and Cuenca. Ms. Diligence asks: Have you lived here for at least a year before making a decision about buying in Cuenca or Ecuador in general?
About listed property prices: You can try and get a better price when you come to visit but it will still be overpriced because the listed price is way overpriced to begin with. Do you see what I’m saying? It’s fun to look at houses online from the comfort of your own home, and it’s nice to have a big list of houses to look at, but it will be much better to come here and then get the addresses to the houses and then go look at them. When you see a home you like, leave a note on the door in Spanish for the owner to contact you directly.
English Speaking Real-estate vs. Spanish Speaking Real-estate
When I look in the Ecuadorian classifieds in the newspaper for homes for sale, more than half say, “Price is negotiable”. Not only that, but home prices are more reasonable. Not all of them, but a lot of them are. This is because their main target is their own people—Ecuadorians targeting Ecuadorians. The best way to find a house bargain here is to not be in a hurry, meet locals, and go out and look at homes every single day. If you do this, you will know the market--then and only then should you think about an offer. You may have to hire a translator if you don’t speak Spanish.
So in a nutshell, talk to some of the friendly locals, get the house addresses and go look at them, leave a note for the owner on the door and find a bargain priced property yourself? It may take months and months of looking and doing research and walking around, but hey, it will be well worth your effort in the end. Once you have actually negotiated a price with the owner then if you need to use the real-estate company the house is listed with there will be no targeting and no agendas.
Most of the real-estate online Internet companies for Ecuador like to give you a good spiel about “how not to get targeted as a foreigner when buying property in Ecuador”. It all sounds good and nice but their prices reflect differently than what they say on their website. They are in fact already targeting you as a foreigner!
A Gringo the other day was bragging all over the blogs and forums about how cheap their beach home is they just bought for $110,000. But get this, International Living brags that you can buy both a beach home and a mountain home here in Ecuador for $125,000. Not if you already paid $110,000 for your beach front home!!
See, those gringos bragging about buying a house on the beach for $110,000 did not buy a bargain. They bought an overinflated 3 bedroom house on the beach, and only think they got a bargain because they compared it to beach front homes in Myrtle Beach, South Carolina where you cannot buy a tiny lot on the beach for $110,000, let alone a three bedroom home!
A friend who lives in Mexico told us you can get a brand new 200 square meter house built for 70k. And Mexico is more expensive than Ecuador, so how is it that we see houses advertised for twice as much in Cuenca Ecuador on the internet?
The truth is the advertised property prices are not that great here. You got to be diligent and do your own research. Even the more wealthy Ecuadorians who are coming back from the U.S where they have lived and worked most of their adult life are getting targeted with gringo prices! They have not lived here so they don’t know that a beach house for $110,000 should actually only be about $60,000 to $75,000 brand new! They don’t know that. All they know is what they keep hearing and reading in the paper. They keep reading and hearing about this: Cuenca Ecuador best retirement haven in 2011 for the third consecutive year in a row…