So you have decided that Los Cabos is your dream location to purchase a 2nd home and with the Real Estate market having been driven by many life style changes from covid, there is little move in ready inventory on the market. However, there is a construction boom and many properties are being offered while under construction. When a property is offered in pre-sale the condo regime has not been completed, notarized and registered at the public registry office yet. At approximately 80% of the construction completion the condo regime can be completed and registered. There are financing options for developer construction but it is very expensive and that means the additional costs will get passed on to the purchaser. Instead, the developer offers the property in pre-sale stages with very attractive pricing with a down payment directly to the developer. This down payment, typically around 35% of the purchase price is not refundable and the developer will use the down payments to build the project.
In the first offering of the property, you can purchase when all there is to look at is an empty location, brochures describing amenities, features and floor plans to choose from. As the construction of the project begins and continues through to the delivery of the property, the prices are increased in stages. Most often a project will sell out long before it’s construction completion. Pre-sale purchasing is not for everyone and you should consider the risk versus the reward of the attractive pricing to buy in early. The listed price of the property is not discounted by a purchaser making an offer, the developers instead offer incentives with their attractive early pricing with incentives, price discounts the higher the down payment is, upgrades, furnishing packages, appliance packages.
You will want to find a broker/agent to represent you and guide you through the many developments in the area being offered in pre-sale to narrow down your options. Will you be renting? What will the HOA/Strata fees be estimated to cost? When will the unit be planned for delivery and when will the amenities be delivered? Many projects have different stages of construction and delivery. Has the developer completed other projects and delivered as promised? Have an attorney in Mexico specializing in Real Estate law review the contract which is a Promise of Sale. A due diligence period to have the developer documents reviewed as well, the title to the property, tax information with the corresponding clave catastral number(s), the developers company structure, who owns the company, and construction licenses.
The Promise of Sale contract will include the developers legal back ground, the purchase price and the payment plan with dates of funds deposited and released to the developer. Legal description of the property and the unit legal description, terms of the sale, penalties in case of non-compliance by either party, dates for construction start and delivery, expect a grace period to be included in case of unforeseen delays in the delivery of the property. Any offers, promises, special agreements, incentives or upgrades. Have the contract reviewed by your broker and your attorney prior to signing. This contract is evidence of the agreement to sell it is not title to the property.
The delivery date of the property and the title to the property many not be at the same time. You will pay the balance of the purchase price to the developer upon the possession/delivery of your unit and it will take approximately 90 days there-after the condo regime being completed for the closing process on the title to the property transferred into your name.
Pre-sale can be exciting as its new and modern and customized just for you. Do your due-diligence and determine if you are a candidate for a pre-sale property in Los Cabos.
