Expats are commonly known to seek properties and real estate in Medellin, Colombia because of the lifestyle it offers apart from the prospects of owning a property and its respective benefits. It can become difficult to own properties when a person isn?t familiar with the real estate market in Medellin, especially more so because the laws and regulations differ from that of real estate in America.
To make an informed decision, you must be aware of all the complications you may face as well as the benefits you can gain by purchasing a property in Medellin. Thus, knowing these truths about Medellin Colombia real estate pays when you?re in the market for purchasing commercial or residential property through a real estate agent.?
Medellin Real Estate Market Truths
It is possible that some real estate agents may not tell you these truths or they too might be unfamiliar with them. Hence, after reading these important facts, it?ll be ideal to research more about the real estate market in Medellin.
1. Majority of Local Buyers
The real estate market of Medellin has less than 1% of foreign buyers and their share is quite limited in the stratified population residing there. This proves that foreign buyers are very limited and although it is not a marker of avoiding the purchase of a property, it definitely translates to selling to local buyers when you decide to resale it in years to come. Additionally, it also means that the real estate agents themselves might be inexperienced regarding dealing with foreign buyers and expats.
2. No Exclusives
Most real estate markets in most countries observe a listing of properties to be exclusive to the real estate agency or agent. This, however, doesn?t hold true for the Medellin real estate market. Unlike the real estate market in the US, it is possible to find several agents attempting to sell the same property in Medellin.
It is also possible that multiple agents and agencies will try to rent the same rental property so be careful and probably meet with multiple agents and agencies before you finalize a purchase.
3. Absence of MLS
It becomes easier to find properties when you have the option to browse multiple listing services that depict the pricing and the particulars of the property but surprisingly, you can?t find those in Medellin.
The real estate agents and agencies do not share a common listing service and the existence of such convenience is scarce which ultimately prevents you from learning about the available properties at a glance. This makes buying or selling or even renting a property difficult without the help of a real estate agent or an agency.
4. Inconsistent Buying & Selling Duration
Properties in Medellin can be bought quickly. It is possible that after you finalize a property for renting or purchasing, you may get quick possession and that you may then own the deed to the property grounds. While this is a fairly quick process, the market for selling follows no such behavior.
Selling a new property might take more than a couple of months and perhaps even longer than a year which prevents the practice of flipping properties. It takes even longer to sell properties in the higher estrato such as the ones included within the scale of 4 and above.
5. Estrato Scale
Properties in Colombia are ranked based on the Estrato scale where 1-6 ranks are distributed socioeconomically. Real estate agents and agencies will optimally try to sell estrato 6 properties to expats in order to profit more but this type of housing is not common in all of Colombia. Most locals, about 75% of them live within or below the estrato 3 ranked housing settlements.
t is also noteworthy to learn that the owners of properties with higher estrato rank will pay more towards the rent as well as towards utility bills than that of the ones with a lower rank.
6. Slow Property Development
It has also been observed that the delivery of property occurs frequently later than the planned and agreed date. Some projects have taken longer than three to five years to complete after the agreement date and the same is the case with refurbishment projects.
In the light of these facts, you should be careful not to outrightly believe the project completion dates provided to you by the real estate agents and agencies. These results have been found to be similar even in commercial properties as well as in residential apartments of various estrato.
7. No Fiador
A real estate agent is responsible for collecting the rent from the rental properties while a fiador, according to the laws, is a consignor who is the owner of the local property. Fiadors are guarantors to the arrangement of a tenant paying the rent and should the tenant fail to do so, an agent or agency will approach the fiador.
However, it is possible that an unfurnished property can be rented or purchased without the existence of a fiador. In such cases, the rent either needs to be paid in advance or directly to the owner of the property.
8. Real Estate Practicing License
There is no legal requirement in Medellin Colombia for real estate agents and agencies to own a license as it is in the US. This means that anyone with property or networking abilities can buy or sell properties without being penalized by the government.
This may also result in fake listings and losing investment if the trust is placed in the wrong agent or agency. Thus, perform background checks and research of your own.
9. Dual Party Real Estate Agents & Agencies
In the real estate market of Medellin, the agent or agency favors both the buyers and sellers and may take commissions from both parties. Usually, the seller pays the commission to the agent or the agencies which is why you may find yourself being offered only high-cost properties. Do your own research because the rates of the property may also vary by a wider margin from one agent to another.
10. Losing Investment
Foreign investors may lose money on their properties even when the investment returns have comparatively grown within recent years. Conversion of currency rates and weakening of Colombian peso makes a huge difference which means that a property purchased only a few years ago may lose its value in the global market despite growth in its rates in the Colombian currency.
Before you purchase a property or finalize a deal in Medellin, you must thoroughly understand all aspects of the Medellin real estate market and these truths to save yourself from losing precious investment.