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Below is a guide to the process and cost of buying real estate in Chile. It is not designed to be exhaustive nor 100% spot on in terms of costs. These can vary from case to case. However, the guide will give you a good idea as to how to go about buying property here.
If you are interested in buying property in Chile, please visit our sister-site www.pacificfive.co.uk
The Process and Cost of Buying Real Estate in Chile.
Chile is not a stereotypically corrupt South American country. In fact, it ranks with Transparency International as having the same levels of corruption as the US and Belgium and lower than Spain. However, if you do not speak good Spanish and do not know the local business customs, buying a property in Chile is likely to be a frustrating process. Although there are obviously exceptions, real estate agents in Chile have a terrible reputation. They can be highly unprofessional and often make you feel as if they are doing you a favour! Arranging appointments and getting the agent to keep them is sometimes a challenge. If you're short on time or simply don't have the patience to deal with these people then we can take the hassle out of the process.
We are experienced in buying real estate in Chile. Not only have we bought property for ourselves but we have also successfully assisted others (including Chilean friends!) navigate the process of buying property here in Chile.
An outline of the process and costs is below. All prices are in Chilean Pesos. The exchange rate is around us$1=530 pesos and £1=1035 pesos. For the sake of simplifying the numbers it is easier to assume us$=500 pesos and £1=1000. For example, 100,000,000 Chilean Pesos is around us$200,000 or £100,000.
Lawyer's fees: When buying real estate in Chile, your lawyer is the most important person in the process. The lawyers we work with and recommend are highly experienced and work with some of Chile's most important companies and individuals. We trust them implicitly.
The first job of the lawyer is to conduct a title search. The cost of this is around 50,000-100,000 pesos. This can take a couple of days or sometimes longer. The reason for the difference in price and time scale is that the lawyer must check the titles for the last 10 years, checking for debts and other legal issues. If the property has had just one owner in the last 10 years then the title search will be very quick (assuming no legal issue turns up with that one owner). If the property has had 20 different owners in 10 years, the lawyer will have far more work to do in order to establish whether the title is clean or not.
Assuming the title is clean, you then move on to the next step in the process. It is common to leave a deposit for the property before actually signing the final purchase contract. This is called the promesa de compra-venta and is used as a sign of good faith between the buyer and seller. There is no convention as to the amount required, but around 10 million pesos is usually enough. This is done by leaving a cheque with a Public Notary-it is not cashed. The lawyer will write a short contract to ensure that everything is legal. At the same time, the lawyer will be writing the escritura or the final purchase contract. Most lawyers have a minimum charge of 500,000 pesos to do this. If you're buying a 50 million pesos property this works out at 1%. However, it is not common for a lawyer to charge 1% on a 500 million peso contract-the price for writing the contract would be less than 1%. It's up to the lawyer to decide exactly how much to charge.
So, lawyer's fees should be in the region of 100,000 pesos plus a maximum of 1% of the value of the property.
*It should be noted that in some cases, the seller will agree to share the costs of the lawyer. However, this is a point of negotiation. If the seller refuses to split the cost, the buyer must pay the entire fee.
Notary fees: The notary is the person who legalises all the documents in the purchase process. The notary makes unofficial documents official and charges handsomely for the priviledge! It is also the notary's job to hold onto the funds for the purchase of the property until they need to be released. Notaries in Chile take their job very seriously and there is no risk in leaving your money with them. In actual fact, you will not leave any physical cash with the notary-you will leave a cheque under 'instruction'. i.e. Waiting for the time to pass the cheque to the seller at the time of signing the contract.
Notary fees vary from around 150,000 to 350,000 pesos depending on the price of the property.
Real Estate Agent's Commission: Agents charge 4% commission. 2% is paid by the seller and 2% by the buyer.
Inscription at the Property Registry: When you sign the final purchase contract you do not officially own your property. You'll get the keys to the property and the seller will no longer be allowed to enter the property but the purchase is not complete until it is registered with the Conservador de Bienes Raices. The cost of this is either 0.2% or 0.3% (less than 1%), depending on the region of the country. There is a maximum payment of around 350,000 pesos.
In all, the total cost of buying a 100,000,000 peso property should come to around 103,500,000 pesos. i.e. around 3-4% of the price of the property.
So that is the basic process should you wish to buy real estate in Chile. If you require assistance with finding or buying a property in Chile than please get in touch with us. Our contact info can be found at www.pacificfive.co.uk
