If you're considering buying a house or other private property in Oaxaca, Mexico, you're embarking on an exciting journey! This article outlines the steps you will be taking to purchase property in Oaxaca.

Many expats prefer to buy private property over communal land in Oaxaca, and in Mexico in general. There are complexities and restrictions associated with acquiring communal land. Private property offers more straightforward ownership rights and fewer bureaucratic hurdles.

The first thing is to understand that the process of buying property in Oaxaca can be complex and time-consuming. 

There are many neighborhoods to consider, including Oaxaca city center (el centro), Jalatlaco, San Felipe del Agua, Guadalupe Victoria, Tlalixtac, Tutla, Huayapam, San Agustín Etla, San Sebastián Etla, Xoxocotlán, Zaachila, and Cuilapan. Those are sought-after locations near Oaxaca City. There are additional options in the surrounding mountains, such as Ixtlán de Juárez in the Sierra Juárez to the north, and the coast, such as Mazunte and Huatulco, for example.

The cost of living, available services, and applicable Mexican real estate laws vary drastically from area to area. People waste years or decades searching for properties that just don’t exist. For example, there simply isn’t any affordable house with an excellent water supply less than a block from Santo Domingo cathedral in el centro. You’ll have to be realistic, and you’ll have to physically spend some time in the various areas deciding if they are good matches for you or not. It’s not just a numbers game.
   

After picking one or more communities to focus on, you’ll need to connect with the locals. If you haven’t been living in Oaxaca for a decade already, that means finding a bilingual and experienced real estate agent to guide your journey.

You can tell if an agent is experienced or not simply by examining his or her network. Professional brokers in Oaxaca have a network of colleagues that work collaboratively yet independently. There isn’t any sort of MLS (a master database of all listed properties for sale) like in the United States. Professional real estate agents use the telephone and face to face meetings to connect with fellow agents, tax specialists, notary lawyers, appraisers, engineers, architects, and other professionals who might be involved in your real estate deal. You’ll be working with a team, as it’s definitely not a one-person job.

It’s common to find, for example, a non-professional attempting to sell a single piece of land on Facebook on behalf of some family member who actually owns the property. Such deals can be made to work occasionally, however you’re going to waste large amounts of time and money proceeding without a professional network, especially if you don’t understand the community rules or speak Spanish fluently.

Furthermore, the majority of online listings you’ll find for Oaxaca properties simply don’t exist. Invalid online listings are not necessarily scams, rather thousands of non-professionals make online posts themselves having insufficient data. Such posts rarely get updated, and the internet is full of such lingering posts. It’s advised to find a professional who can consistently bring real, vetted offers.

You’ll find some properties that work following the above steps. Before making an offer, it’s essential to conduct thorough research and due diligence on the property you wish to buy. 

In Oaxaca, due diligence includes confirming the ownership status and ensuring the property is free from legal disputes, unpaid taxes, liens, or a blocked water supply. You’ll need to determine the applicable paperwork, including an escritura for private property and/or an acta de posesion for communal land. A Mexican public notary or city hall will conduct a legal title search, depending on the type of paperwork that applies. You may need Mexican residency to purchase communal land.

Lots of Oaxaca property owners desire to make money selling their property, however many simply don’t have the paperwork in place to do so legally. It’s not going to work as a foreigner to buy property without the proper, legal paperwork. In certain communities, it’s wise to know whether the family selling the property has a history of reputable real estate transactions.

It’s helpful and saves time to have a certified appraisal for the property you are considering purchasing. Most owners will have one made upon request, if they don’t have it already.

Usually some sort of semi-formal offer letter (letter of intent, or LOI) is drafted from the potential buyer to the owner. It basically states the price you are offering to pay, which may be different than what the seller is asking.

The owner then usually proceeds with a counter offer, which may be written or verbal. It’s common that sellers need a certain amount of money and won’t accept less. What they will accept is more often than not about 10% below the publicly advertised price. That is, it’s common for sellers to have about 10% wiggle room to negotiate the price down.

Once a price is agreed upon, the next step is to negotiate exactly what that price includes. Most owners cannot lower the price much, however they can include extra features or services for the agreed upon price. Always keep in mind that everything is negotiable in Mexico. Everything. It’s not just a numbers game.

Once the price and features work for both sides, a formal promisory contract is drafted. The contract doesn’t need to be written by lawyers. As with everything, the payment and paperwork process is negotiable. It’s important to have all the steps agreed upon between the buyer and seller in the form of a written and signed contract.

The purpose of the contract is to agree on the timeline for the various transactions of money and paperwork. Due to the way that Mexican tax law works, there’s going to be multiple financial transactions.

As a foreign buyer, you are going to have to provide confidential data such as bank account numbers and various forms of identification. It’s critical that these data are always transferred in a secure manner.

There is virtually no escrow available in Oaxaca, as it’s fundamentally like the wild west days of America. The banks won’t help you with a formalized buy-sell process. You, the buyer, are responsible for arranging the terms and process of the sale. This is when having a professional real estate agent really starts to pay off.

As per the contract, it’s usually the case that a non-refundable deposit of around 10% is transferred from the buyer to the seller. This is referred to as earnest money in the United States. Then commissions are paid out in separate transactions, and then the bulk of the home price is paid out in a couple more transactions along a specified timeline.

There is usually some mix of bank transfers and cash involved in the various transactions, depending mainly on how the seller would like to handle the money. The payments can be made in as little as about three weeks and up to about a year. It’s all negotiable.

Usually on the date of the last transaction, the buyer and seller agree to meet at the notary or city hall to sign over the ownership and transfer the deed. You, the buyer, will be responsible for the closing costs, typically around 4% to 6.5%. At this point you’ll have possession of the property and the paperwork that says it’s legally yours, and the real estate deal will be paid in full.

One of the biggest frustrations for foreign buyers is the long duration of the property-buying process in Oaxaca. Due to political delays, bureaucratic inefficiencies, and staffing issues in government offices, registering the property with the authorities can take several months or even up to a year. Expected delays are usually accounted for in the contract, however it’s common for unexpected delays to happen.

After you buy the Oaxaca property, you’re going to have to start paying property taxes. You’re going to have to put any water and electricity bills into your name. If the property was recently subdivided land or a new condo, you’re going to have to apply for an address from the authorities. This all takes time, possibly up to a year or two. Meanwhile, be sure to know how to maintain the property to avoid losses.

You’re going to have to be patient. Don’t expect to flip the property, buying at a low price and selling quickly at a much higher price. Oaxaca real estate simply isn’t that liquid, due to all the political delays involved. Plan on using your property for at least some years, or else plan to purchase real estate in a more developed state of Mexico.

Lots of English speaking expats and Americans have bought property in Oaxaca, Mexico. It’s a rewarding experience for those with realistic expectations.

When purchasing property in Oaxaca, Mexico, it’s important to keep in mind:

   •    It’s best to work with a professional with a professional network.

   •    There is no escrow.

   •    It’s going to take lots of time and patience.

   •    It’s going to be amazing in the end, once you are a happy Oaxaca property owner.