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More and more Americans and Europeans are choosing to buy a house in Nicaragua. They are attracted by the low prices and the warm weather. In this article, we are going to look at some basic tips that you should know before you buy a house in Nicaragua.
Foreigners are allowed to own property
Foreigners are freely allowed to own real estate in Nicaragua. There are no restrictions to owning real estate in your own name.
A large problem when you want to buy real estate in Nicaragua is that some properties are in ownership disputes after having been seized during the civil war. Most disputes have been resolved but there are a still a lot of disputed properties. Some properties have 3 or 4 owners that all have deeds to the same property. Do not buy a disputed property. It is not worth it even if you are certain that you will win the conflict.
Always make sure that there are no conflicts before you buy a property.
The Nicaraguan real estate market is largely unregulated. Anyone can work as a real estate agent/broker. There are no professional or ethical guidelines that the broker has to adhere to. The brokers are not legally responsible for the information they give you.
Many brokers are honest and do their best to help you find the right house for you but there are also a lot of dishonest brokers that will do anything for a commission.
Always use a lawyer to perform the paperwork.
You should be aware that the asking price that many brokers list is a lot higher than the sellers actually asking price. Advertising high prices is a common practice among well-established brokers as well as small brokers. The well-established brokers try to keep the price artificially high to earn large commissions. You can usually get a lot lower price by talking directly to the owner. It is common that sellers expect you to negotiate and are willing to accept a price 40% lower than the asking price. This asking price is, in turn, lower than the price the broker list the property at. Some properties can be listed more than 60% over the price you could realistically get the property for but I have seen properties where the sellers asking price was less than 10% of the listing price.
It is important to know that not all properties are listed a lot higher then their true asking price or market value. But some are. Inflated prices are more common for cheap properties than they are for more expensive properties. Research the price for any property as well as you can before you decide to buy a property. There is often a lot of money that can be saved.
A common scam
There is a common scam in the property market where the broker negotiates one price with the buyer and one with the seller. He then pockets the difference. This is not illegal in Nicaragua. The best way to avoid this scam is to ask to talk directly to the seller. This can also allow you to negotiate a lower price than that of the broker.
It is common that sellers offer you a lower price if you cut the broker out of the deal. This is unethical if the broker has been honest. If you decide to cut the broker out then I recommend that you pay him his or her commission anyway.