Why Buying Property in Lake Chapala is Expensive
Buying and selling real estate in Lake Chapala is unique in many ways. I sold real estate in the U.S many years ago for a short time and it was a pretty straightforward process.
To figure out the price of a home required some basic appraisal skills that figured in certain factors such as lot size, construction style, amenities past sales price and the current value of similar homes in the area.
A comment some potential home buyers mention about property prices in Lake Chapala is that they seem way overpriced and some of them are. In past years, especially between 2001-2005 was a time when the lake level in Chapala dropped to some of its lowest level in over 50 years, during that time so did property values.
As the Lake level began to recuperate so did real estate values and many homes began to sell at inflated prices, especially those near the lake or those with lake views.
While some properties are reasonably priced, many of them are not, some are often inflated both by homeowners and real estate agents. This is when pricing gets out of hand.
Many homes are initially priced way above actual market value.
Sometimes this happens because of a real estate agent talks to their best friend who wants to sell their home, the owner suggests a price to the agent (usually 20%-30%) more than they paid for the property.
The listing agent agrees, fully knowing that the property is overpriced but takes the listing anyway.
After a few months, the house doesn’t sell, so, the seller looks for another agent (new real estate company) to sell their home.
The next agent wants the listing but tells the owner it’s a bit overpriced. Now, the new agent tells the property owner that in order to sell their home they need to drop the price, so they reduce it by 10% which still may not be enough.
Halfway through the six-month listing contract, the agent suggests another price reduction of say of another 2%-3%, by this time the property is priced at what the property should have been valued at in the first place.
This scenario is common, and its both the fault of the homeowner and the real estate agent.
A lot of owners have a sentimental attachment to their home, the owner may believe that their home is worth more than the current market value. This is especially true if the home has been remodeled or home improvements have been made.
Listing a property above market value will make the owner happy but it also makes the property harder to sell.
Some homes on the MLS have been listed for over 5 years.
Find the right buyer mentality
When it comes to selling a property, the find the right buyer mentality almost never works.
Love at first sight home sales are rare, most people need something unique to convince them that a property is worth more than current market value.
Over the years I have seen many big properties that are overpriced and of course, most will never sell at the original listing prrice.
The exception to this rule seems to be with Mexican nationals, they will put their home on the market at 40-50% over market value with the mentality if it sells fine if it doesn’t its no big deal.
No one expects to give their home away but it can be prevented by knowing what property values are going for in certain areas.
If you buy your home at a fair value you should be able to sell it for a profit or at least break even in the future.
Whats a good price?
There are many ways to figure out if the price of a home is reasonable. Currently there are a couple of local real estate publications that can give you an idea of what home prices are going for in a certain area.
This can give you a guideline of what you might pay in a similar location. A good real estate agent should also be able to guide you.
He or she should have past data of what a home sold for and can factor in any home improvements that may have been done along with inflation. This can give you a better idea if the asking price is reasonable or not.
We always hear the term location, location, location.
This is a determining factor with a homes price. I have seen some homes in both San Antonio and Ajijic that have sold for outrageous prices and much more than land value and construction quality can justify.
These homes are often well designed and built of quality construction, many of them are in a good neighborhood so things like being close to shopping, transportation and the town square (plaza) have an impact on the value of a home.
Reasonably priced homes sell fast!
One thing I have noticed about new potential home buyers is that they come down with a look and see attitude, some of the begin looking for homes long before they move down. Once they are ready to buy they find that the homes they liked have been sold and struggle to find something similar.
Usually homes that are priced well sell fast, there may be a lot of homes available for sale but the good ones go quick. If you find yourself just curious about home construction types and the different areas, we recommend taking a tour of lakeside so you have an idea of whats available.
When you are ready to by then its time to contact a realtor and see what homes are for sale in certain areas or villages and once you find something you love make an offer and secure the home, good homes don’t last long.
We realize that moving to Mexico is a big step for many, finding a reasonably priced home can be a big challenge. In order to streamline the process its important that you sit down with your real estate agent and discuss in detail what you are looking for along with your budget, this way he can make a better assessment of your needs and help you find your dream home at a reasonable price.