Buying real estate in Buenos Aires, Argentina

In October 2005 we purchased our first apartment in Buenos Aires, Argentina. Since then, I have had many people ask me about the process of purchasing property in Buenos Aires. The intent of this blog is to answer some of those basic questions and provide a fundamental framework for other foreigners looking to invest in this beautiful city.

Our story

In April of 2005 my wife and I decided to make some changes in our life. For six years I had been a salesperson for BMC Software, a large systems management firm, located in San Francisco. Life and work were good, but everyday was the same. Wake up, read the paper, go to work, work out, come home and play with the kids and go to bed. Life was all about the weekends. We decided that life was just too short. We had visited Argentina three years before, and the exchange rate was still around 3 Peso's to the dollar. Our Spanish was pretty poor, but the city had everything we loved in San Francisco - Culture, nightlife, restaurants, entertainment, and interesting people. There were excellent Spanish/English immersion schools for our kids during the school year and a kid's country club complete with organized sports and creative activities for all ages during the summer months. Once our decision to move was made, it was unbelievable how quickly things came together. We wrapped up our life in San Francisco in about 6 months. Sold our house, resigned from work, put everything in storage, had several goodbye parties, and in October we boarded our plane. 17 hours later we landed and started life in Buenos Aires for a year.

Searching for a Property

I wasted no time in my search for an apartment in BA. The real estate market in BA is definitely hot with properties priced right lasting only a couple of days on the market. Initially, I contacted a real estate agent who was eager to show me the properties she had for sale. In Argentina, there is no MLS, so real estate agents only have computer access to properties that their company is selling. This makes it difficult to get relevant market information, and in my experience, incents the agent to only push you towards the properties that are in their computer. Most people rely on the weekend edition of the classified ads in "The Clarin" or "the Nation" (http://clasificados.lanacion.com.ar/IndexInmuebles.asp?Rubro=852), both local newspapers. If your Spanish isn't perfect, I've added an index of abbreviations:

• Two bedrooms = 3 ambientes (3amb)
• Dormitorio = bedroom
• Listed prices are in argentinean pesos even if they have $ in front (if it is priced in dollars it is stated specifically like D, USD or u$d)
• Safe family-oriented neighborhoods: Recoleta, Barrio Norte, Palermo, Las Canitas, Belgrano
• City of Buenos Aires is referred to as "Capital Federal"
• lum = luminosity scale; basically telling you the property has a lot of natural light
• baul = baulera; a storage room usually located in the basement of the building
• cochera = parking space
• balcon = balcony
• P# = Piso or floor number
• M2 = square meters - 1M2 = 10.76 square feet

Every real estate company (or property owner) publishes their listings in the weekend paper, and on Saturday morning, there is usually a rush of people to the desirable listings. In Argentina, the real estate industry is unregulated therefore you come across all types of people who are mainly interested in making as much money for themselves as possible. If you purchase a property through a real estate agent, you will be pay a commission of 3% of the property purchase price. Real estate commissions are usually 3% for buyers and 3% for sellers. When making an offer on a property, always demand to meet face to face with the owner of the property as well. This ensures that the owner understands the price/terms directly from you. I have heard of multiple cases where the real estate agent will simply negotiate a price or turn away an offer without even consulting the seller. If possible, always work as closely as you can with the seller/owner of the property.

Escribano

An escribano is both a real estate attorney and notary public and is necessary in any real estate transaction. The job of an escribano is:

1) Draft all legal documents associated with the purchasing transaction (Sena, Boleto, Escritura)
2) Do all of the due diligence needed to insure that the property title is clean and free of liens
3) Assist the buyer (if foreign) in securing a CDI number which is required for purchase
4) Look out for the best interest of the client (something I have yet to find with the real estate agents)

Obviously, a good, trustworthy, escribano is a critical part of any real estate transaction in Argentina. I have been warned never to rely on a real estate agents referral for an escribano. Try to find a reputable escribano who is interested in protecting his/her reputation. Argentina has a sophisticated and complete title registry that allows for the easy tracing of property ownership. It is the job of your escribano to trace an validate the title of your property. The Escribano will typically charge a fee of 2.5 - 3.5% of the property purchase price. If your Escribano is trying to charge you more without good reason, I would look for another.

Securing a property

There are some spectacular properties in Buenos Aires. Buenos Aires has a huge European influence that is very evident in the french style architecture. High ceilings, crown molding, white marble entries, and walk-out terraces are the norm rather than the exception. The apartment we purchased still had it's original bathroom from 1922 - fixtures and pedestal sink included!

Once you find a property that is right, it is important to make a solid offer and secure it quickly. Negotiating the purchase price is common and usually expected, but as with anything, final price will depend on a number of factors. For instance, the property I purchased was priced on the higher side, however, it was in exceptional condition, and in a great old (well maintained) building. I purchased directly from the owner avoiding real estate commissions and the additional risk associated with working with a real estate company. At the end of the day, I was able to negotiate a 3% savings. Not bad considering there were two other offers at and above asking price. The fact that I didn't use an agent made the difference for the seller -- saving us both an additional 3%.

Typically, you want to place a deposit with your offer. This deposit can vary but is usually around 1% of the offer price. If it's a really expensive property they will ask you to put more. Keep in mind the seller isn't getting that money. It's held in trust by your realtor, and shows that you are a serious buyer. In my case, since I didn't use a realtor, I skipped this step and went straight to signing a "boleto", (which I will describe soon). Once you make an offer the seller can accept, reject, or counter your offer.

Once a price is agreed upon, the next step is to set a date for the signing of the "boleto". The boleto is probably one of the most critical steps in the purchasing process. In order to sign the boleto, the buyer must put down a non-refundable deposit on the property. This is not a trivial amount of money, typically 30 - 40% of the agreed upon sales price. This sum is paid in cash to the seller, and unless the escribano finds an undisclosed lien or title dispute on the property, it is non-recoverable. Conversely, if the seller decides to back out after a boleto is in place, a sum equal to twice the amount in the boleto must be paid to the buyer. This discourages sellers from accepting other offers before the sale is finalized. Once you have a signed boleto in place the property is locked up. At the signing of the boleto, any relator fees are paid, and a mutually agreed upon date is set for the signing of the "escritura", or closing document.

The time between the boleto and escritura is used by the escribanos to validate title of the property, check that all bills are paid and no liens exist, and give ample time for the seller to move belongings. In my case, it was 18 days. There is nothing standard here, just a mutually agreed upon date for settlement.

Once all is validated by the escribano, the parties meet, sign the escritura, and pay the remaining property balance in cash. It is important to meet at a mutually agreeable spot (such as a bank) for the signing of the escritura. All cash is laid out on the table and hand counted by both parties before the escritura is signed. Once signed, keys are handed over, escribano fees are paid, and work on your new property can begin. I will go into building renovation in my next post.