A View From The Roof—
Understanding the Ecuador Real Estate Market
By Gary Phillips
I just received a call today from a client. They are native Spanish speakers who have
lived in Florida for many years. They looked at a couple of places we have listed, then
yesterday, decided to go out knocking on doors that have “Se Vende” signs posted, “for
sale” to non-Spanish speakers.
“It’s very frustrating,” Rene told me. “First they give a price, and then they say that
they have to talk to the family, then the price goes up. We only have two more days
left here. I don’t like this. It’s not fun.”
I smiled as I wished him well. This is the nature of the Ecuador real estate market—
confusing and frustrating. It operates very differently than in North America, at least for
properties outside of developments built specifically for expats.
In Ecuador, there is no multiple listing service. Except for large cities, traditional real
estate agents are few and far between, and there is no cooperation between agents
because the concept of an exclusive listing is almost unheard of. Therefore, it is every
agent for him/herself.
Because there is no exclusive listing, there is very little agency advertising. Why
advertise when it will just show your competitors what properties you have?
Another interesting thing is that there are very few truly motivated sellers here in
Ecuador. Most people own their own homes. They treat their home like their bank.
Every time they get a little money, they build an addition or another floor. If they decide
to sell, it is because they think they can make a good profit, or perhaps, there is a family
emergency.
They don’t “have” to sell, because they have few expenses. Taxes are maybe $20 to $50
per year. There is no banker breathing down their necks for payments. So what if they
lose their job? At least they have a place to live for nothing.
My Grandpa was A Lot Like Ecuadorian Real Estate Sellers
Some sellers remind me of my Grandpa. He was an inveterate Muskie fisherman.
Every summer, he would pack up the entire family and we would all trek to Leech Lake
in Minnesota, where grandpa would proceed to buy the biggest, flashiest, most expensive
Muskie lure he could find.
The kids absolutely loved it. We would all go out in the boats, fishing for anything,
while grandpa cast for the big one. He never did catch a Muskie, but he didn’t care.
It was the thrill of the hunt and the dream of “maybe” that got him.
I’ve been on three formal real estate tours here in Ecuador. We all packed on the bus,
and trekked around looking at houses. One house we looked at, a very nice house, was
offered at $150,000. No takers on this trip! I went back a few weeks later, and talked
to the owner. Now the price was $100,000. He was Muskie fishing! Even at $100k he
was still probably adding $20,000 or more to his bottom line price.
On three tours in an 8 month period, we saw many of the same houses, all at the same big
prices. All of the owners were Muskie fishing, hoping to catch the big one. And what is
bigger than a bus load of gringos with their expensive cameras and pockets full of
cash? At least in their minds.
We Operate Primarily as Buyers Agents
Which brings me to the point of this story: Pro-Ecuador and Ecuador Development
Group (EDG) operate primarily as buyers agents. Most of the credible real estate
companies here in Ecuador selling to prospective expats do the same.
Several of us in various parts of the country are beginning to work together sharing
commissions and sharing properties with each other to fit the specific needs of a specific
client. We all understand that without happy, satisfied clients, we all go broke. We are
in Ecuador. The Ecuadorian sellers can take care of themselves. It is the expat customers
that need help.
So let’s say you have decided you want to move to Ecuador. Unless you have someone
representing you who knows the ropes, and is specifically working for you, the chances
of you finding the property you want at a fair price is very slim.
As buyer’s agents, we intend to provide you with a valuable service, and we fully expect
to be paid for those services. We charge a fee to sign a contract with us. And we charge
an hourly or a daily rate to show properties. These fees are reimbursed when you buy
something that we help you find. We have fun with our business, but we are serious
about it. We want to help buyers who are serious about moving here.
There are literally thousands of people who are considering moving to Ecuador. Many
want to come down here and check things out. We call them tire kickers. There is
nothing wrong with tire kickers. I have been one many times in my life. But if we tried
to show property to all the tire kickers who come here, we would soon be in the poor
house.
For those of you who are tire kickers, we encourage you to sign up for one of the many
“real estate” tours that are being offered by various companies. We would even more
strongly encourage you to sign up for one of our “Introduction to Ecuador Course and
tours,” where we will not only show you some properties, but we will talk about all the
things you need to know about moving to Ecuador, and introduce you to resources that
can help you do so.
After your tour, when you have made the decision and are ready to look for and purchase
a property, then call us and hire us as your buyer’s agent. Tell us what you want, tell
us your dream, and we will do our very best to find it for you, negotiating to get you the
best possible price.
Our team of expats and Ecuadorians, living here full-time, will work with you, hold your
hand if necessary, and help you accomplish everything you want to accomplish with the
least amount of struggle. Jump in. The water’s fine.
And that’s todays View from the Roof.
Here’s a Cotacachi house that just recently came on the market. It is a year old, has three
bedrooms, 2,500 sq. ft of construction, and 5,800 sq. mt. of land, nearly an acre and a
half. Asking price is $127,000. This one is sweet. Write for details.