Question for any Real Estate people here.

I'm looking into purchasing a property here and found from Spencer that there is about 12% added fees and stuff before the transfer is finalized.

One thing noted were "Closing Costs" of 5-6%.

When I was in California, I had several occasions to review closing documents in R.E. transactions; I always found a lot of very vague and general items such as "Document review; Document correlation; document transmission; formalized review; etc."

The first thing that hit me was that unlike items such as Notary, specific fees, etc. these items were charged on a percentage of the sales price. This means that the "fee" for each item does not have anything at all to do with the amount of work involved, but the sales price.

Can some "insider" explain to me if there is any way to avoid the B.S. costs and still pay the legitimate and fair costs?

Thanks.

Sure, any real estate person can explain them to you.

12%?? I gave the following ballpark figures

Assume 2% state / municipal transfer tax
2% Notary fees
1-2% Other costs such as certifications, appraisal, etc.

Are you adding real estate commissions to that?

Buenos Dias...

Closing costs are (ballpark) 3-4% of the purchase price for most transactions. Actually, with the high dollar exchange recently, many of my clients have paid less, in the 2.6-2.8% range. Many (the better?) notarios will provide a line item spreadsheet PRIOR to the closing where each part of the cost is explained. You cannot avoid these closing costs as a buyer, they are an obligatory part of the legal process that allows a buyer to safely obtain a property in Mexico.

The largest fees, as Spencer has noted, are the transfer tax, the notary fees, and the appraisal. These fees are all based on the appraised tax value (the higher the value suggested by the appraiser, the more he gets paid), not the actual purchase price. In general the appraised value is about half of the purchase price. When the appraised value comes in high, the overall percentage paid at closing will increase. (The better value you get, the higher % you pay at closing, in theory). The appraised value often comes in quite close to the tax value you see on your annual predial (tax bill). By law, it cannot be less than that.

Here are some actual costs for a closing this month on a $360,000 USD sale:

NOTE: The tax appraised value came in at $4,300,000 pesos (about $286,000 USD), so higher than normal. My guess is because it was a large lot size, the city has the square meter value of dirt quite high.

(pesos)
Land Transfer Tax        $98,410.30
Transfer Tax Form        $45.00
Preventive Notice $72.00
Archive fee         $70.00
Business Tax $280.00
No Liens Certificate       $570.00
Registry Duties $2,844.00
No debt land Tax $140.00
Appraisal             $12,471.00
Notary´s Folios $500.00
Notary´s Fee $43,499.50
IVA on Notary´s Fee $6,959.92
TOTAL         $165,861.72

If you change this total to dollars, using 15:1 exchange rate, it is about $11,000 USD, almost exactly 3% of the purchase price.

Negotiable: Occasionally the notario will negotiate their fee. They do not have to. Some notarios charge more than others and in some cases even actually provide MORE or BETTER service and accuracy in exchange for the higher fees! What a concept.

Cheers, Thomas