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Property appraisals

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dliss62
9/7/2016 15:13 EST

Wife is headed down to look at properties, but uneasy about realtors. Any recommendations on how to best determine price of real estate? I know MS in Colombia is haphazard and not sure about appraisals. I also know that Colombians have a hard time accepting when their property is not worth what they think. Any suggestions from veteran expats appreciated.

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ParadiseLost
9/7/2016 15:24 EST

To be fair I'm not sure that the issue is Colombians not accepting what the property is worth. Selling here provides exactly the same problem. Realtors tend to ask you 'what you want' rather than providing any real advice. Some of the bigger agencies work some sort of scoring system but it's hardly scientific. Put it this way I have a property on the market and actually had it put on significantly less than the realtor suggested.

Even time on the market isn't a great indicator of something being mispriced. Long time to sale isn't unusual here.

One of the big measurements they use is price per square meter with thoughts about an upper band for the zone. That of course misses a whole lot of information about property quality etc. but they should at least be giving you that as some sort of guideline.

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mtbe
9/7/2016 15:25 EST

when we were looking at properties, I'd have my Colombian wife go first. She would short list them, then I would go take a look. As soon as they saw me, the price would jump...my wife would remind them the original asking price.

It's very difficult to find the correct price since they don't have a county assessor like in the states, where you can just go to the website and find out how much someone paid for their property...or even call the county assessor.

Best option to find what a good price is to look at many different places, take into consideration location, etc... When I say many...I mean 30-40...seriously. You need to get a Peso/Sq Meter cost.

Try to talk to the neighbors too. My wife did this just to find out who our new neighbors might be, and they would normally always say 'they're asking too much for that place'...even if a higher price on their neighbors house would mean a higher price for their house.

We ended up buying from the bank on a foreclosure essentially.

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perdidogringo
9/7/2016 15:31 EST

When I was looking for a property to buy (with cash ready to go mind you) it really was an exercise in frustration. Many properties were so ridiculously overpriced, I just behgan to believe that they weren't serious sellers; but instead, just wanted to know what someone would offer for their place.

One particular property in Chapinero Alto that is really wanted was listed by no less that 4 real estate agencies for 500,000,000 COP. I went to see it a couple of times and figured I would offer 440,000,000 COP and hopefully settle on or about 470,000,000. Well, when I made the offer to the owner, the lady became "offended" by my offer, rejected it outright, and would have nothing to do with me after. It was then that I knew it was going to be rough to by a place here.

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dliss62
9/7/2016 16:32 EST

Thank you all for your input and as I suspected...NOT GOING TO BE EASY! No reliable comp or appraisal system to go by.

Looks like the only way is to exercise due diligence as MTBE suggested.

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jonrod888
9/7/2016 16:40 EST

It doesn't hurt to be diplomatic with sellers. When I sold an apartment ... and I'm a gringo ... I listed it below market with 2 different brokers. Verbally agreed to a price with a lady without the brokers. Her son showed up at a meeting with his lawyer ... after 5 minutes I told them to leave and the price is now 25% higher but you have to deal only with the brokers ... not me again. I called the brokers and raised the listed price making the price above market. Eventually sold without the brokers for cash at my original price to someone with no lawyers and all paperwork done by a notary. Moral of the story, there is no control on real estate sales/market. Sellers can list with many brokers (there are no broker contracts nor exclusive agency), prices are whatever the seller wants and can change, sellers are not necessarily in a rush to sell, sometimes getting someone's confidence is better than a lawyer who may not know what he's doing or agencies who only want a commission without providing any service nor advise. Good luck.

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jonrod888
9/7/2016 18:33 EST

Another thought, there is no recording of the actual selling price of real estate unless a real estate agency does it maybe. The agreed upon price is in the sales contract which is only kept by seller and buyer, not recorded anyplace. There is a sales price for tax purposes which goes to the tax office and registry but that could be 30% or more below selling price.

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olivio
9/8/2016 04:43 EST

When one buys a property, it is normally in both seller’s and buyer’s interest to declare in the contract a price that is well below the price actually actually paid for the property, because this means less taxes. However, there are two important considerations:
1) If you officially bring into the country a much larger sum than the one declared in the contract, then the authorities may question you and problems could arise. Alternatively, you may agree to pay the seller the difference between real and official price directly into the seller’s account abroad - if both accounts are in countries that will not inform Colombia of your transactions - or in cash (US$/€).
2) If you want to be able one day to sell the property and repatriate your money (Colombia’s economy is flourishin, but nothing is certain in Latina America: ref: Venezuela, Ecuador, Brazil, Argentina), then you will have to pay taxes on any difference between the price stated in the contract and the price at which you will resell the property. You will have to pay capital gains tax on any diference. If the difference is substantial, you will obviously have to pay much higher taxes and possibly have to make some explanations to the authorities …. Unless, of ocurse, you sell to someone who can pays you part of the price directly into your accountt outside of Colombia, or in US$/€.

I agree that intermediaries in Colombia are pretty useless and their role is basically to make phone calls to arrange meetings. They know nothing about the property they will show you. They charge foreigners with “gringo tax”. I was shown in Medellin the same apartament by three different estate agents and asked three different prices, with differences up to 40.000 US$. Some agents will only show you 2-3 apartments and if you do not buy what they show you they will either drop you or ask you to pay hourly fees for their services, which is totally unheard of and is only done with foreign clients. Some of them are real crooks. So beware.

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perdidogringo
9/8/2016 07:51 EST

This is a great thread especially for those of us who were buying real estate in Colombia 15 years ago or more. There was very little information on the web at that time to help and very few gringos (minus a group in Cartagena).

Oilvio- what happens if you sell a property in Colombia but immediately buy another one with the proceeds? I've heard that you don't have to pay capital gains on the first sale- Is this right or urban legend?

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olivio
9/8/2016 08:10 EST

@perdidogringo Sorry, I am unable to answer your question on taxation of any capital gain if renvested. I suggest you ask a local accountant. My personal belief is that (as it would be in my own country) you will be taxed, because it is still a capital gain which you have made, but may be wrong.

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jonrod888
9/8/2016 08:37 EST

Do not trust anyone in Colombia when it comes to buying property ... Colombian nor Gringo. The sales contract is the most important legal document to protect you. When things go wrong, the court will go by what is in writting not what is verbally agreed to. The price of the property in the contract should be the real sales price ... I've had buyers ask for it to be higher to satisfy the 30% down payment required for approval of a mortgage (down payment built into price) but I've refused. The notary will ask you if you want the real price or the value that the tax office provides to be used on all papers for registration. This is where "most" people use tax office value which can be 30% or more below the real price to reduce fees. This price has nothing to do with Banco De La Republica declarations. Your sales contract will confirm the actual price if ever needed.

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dliss62
9/8/2016 14:29 EST

@ jonrod 888, thank you for you valuable input and definitely an issue to discuss with attorney. @olivio, thank you for you knowledgeable advice and all angles will be considered when I pull the trigger.

Great discussion!

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dliss62
9/8/2016 14:29 EST

@ jonrod 888, thank you for you valuable input and definitely an issue to discuss with attorney. @olivio, thank you for you knowledgeable advice and all angles will be considered when I pull the trigger.

Great discussion!

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mtbe
9/8/2016 19:45 EST

Also, depending on the time your wife has, it may be best to find the area you're interested in and just walk around. You will find many for sale signs and can talk directly with the seller. You can cut out the realtor this way...but If you're not familiar with the documents you need, definitely find a lawyer...

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dliss62
9/8/2016 21:18 EST

@mtbe, good advice and a lawyer is a must! I have a few contacts through the fiscalia, and I'm fairly certain I can find a capable attorney who won't be looking to rip me off. Thx!

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