Real Estate Buying Process in Argentina
Before moving to Argentina, I starting researching the laws here. I found that owning property here as a foreigner was very safe. Real estate prices have steadily risen over the years - even during times of economic crises (about every 10 years). Like many others, I knew the currency was going to eventually get devalued. It was inevitable.
Property prices have always been priced in US Dollars so even though the currency devalued, property prices have held up their values. I was here during the crash. That was clearly the time to buy. The locals literally couldn't withdraw their money in their savings and checking accounts for months. There were people that were panic selling their properties to come up with cash. I've always been adventurous but I wasn't THAT adventurous to purchase during that crises. Looking back, I wish I did because the property took a tremendous dip in prices and they rebounded quickly.
I started putting ads online and in the paper asking foreigners that purchased property here to email me. I offered to pay them $150- $200 each to fill out a questioneere. I asked them what mistakes they made, how they got cheated, what realtors they used, how they transferred money here and what taxes they were charged. I was amazed at the high percentage of people that got swindled or were given wrong information or charged false taxes. I spent several thousands of dollars in those surveys but it paid off tremendously for me.
When you purchase property here in Argentina your first step is to get what is called a CDI number. The CDI number is the equivalent to our Social Security number in the USA. It's a tax ID number that is required to purchase property here in Argentina. Your lawyer can get it for you but I opted to do it myself so I could learn about the process.
Getting your CDI number is fairly easy but time consuming. You first need to make a photocopy of your passport and go to the local police station. You need to bring your actual passport as well. You tell them you want to apply for a CDI number. You fill out a form and you pay a very small fee of less than $10. You must give them an address of the hotel or apartment you are staying in. The following day, they will send an officer to verify that you are staying there. He/she will give you a paper that you must take to the AFIP office. The AFIP is the equivalent to our IRS office in the USA. It's the tax authority here in Argentina.
I went to the AFIP office in downtown Buenos Aires and I waited in line 2 hours. Make sure you have 2 photocopies of your passport with you. I didn't and when I got to the front of the line they told me it was required. I think the employee working there took pity on me and told me to go around the corner and get photocopies made and let me cut back in line. They take both photocopies of your passport and then they give you a paper that is basically your CDI application. They simply handwrite in your CDI number on the paper and then they stamp it with their official AFIP stamp. Voila! You now have a CDI number and can purchase property in Argentina.
Your next step is finding a reputable and knowledgable real estate agent. This is not as easy as you might think. I found that the vast majority of realtors in town don't have too much experience. In the USA and Europe my experience has been that the realtors are very knowledgable and really "sell" that property to you. They give you all the reasons you should buy the property. Here in Argentina, many realtors don't know simple answers to simple questions. For example: which way does the sun set and rise (so you know how much natural daylight there will be in the apartment)? Why is the seller selling? How long have they lived here? The answer to most simple questions is usually. "I don't know".
Also, a MAJOR difference here in Argentina vs. many places around the world is they charge the BUYER a commission to purchase property here. Yes, you heard that right. The standard commission is 3% + vat taxes (21% on that 3%) of the purchase price. So if you purchase an apartment for $100,000 then you would pay a realtor's commission of $3,630 ($3,000 + $630 in taxes as professional service fees have a vat tax on them).
I found it an oddity that many realtors in town are old women. I'm not sure why that is the case. I did find a realtor that is truthworthy and I find them honest to deal with. Still, compared to realtors in the USA and Europe they just don't compare here in Buenos Aires. Also, you will never hear a realtor say, "don't buy this..it's priced too high". Realtors are given a percentage of the purchase price when you buy so it's in their best interest for you to pay the highest price possible. Not once did my realtor tell me, "Mike - this is overpriced. Let's offer a lower price".
Basically, property in Buenos Aires is priced for the most part by the square meter. (1 sq. meter = 10.76 sq. feet). That price per sq. meter will go up or down based on what part of town you are buying, the type of building (new construction vs. older), the floor the apartment is on, view/no view, etc. Mainly though property is priced by the sq. meter. New construction is priced high compared to existing buildings. Property in places like Puerto Madero is as high as $3,000 a sq. meter while property in Barrio Norte can be found for around $1,000 per sq. meter. Property in many areas of Recoleta is selling for around $1,300 - $1,500 per sq. meter.
It's a strange process here going around seeing listings. Unless the realtor is the same for the buyer and seller you almost always have your realtor, the seller's realtor and many times also the owner. I find the system here is very stone-age. No one trusts anyone here. The realtor's are all very guarded in their listings. It's very primative.
Another thing is that each apartment you look at usually has a spec sheet that details the number of sq. meters, the floor, the address, the monthly expenses of the apartment, etc. It also has things like a "luminosity scale" that measures the amount of natural sunlight. Guess what? The seller's agent is the one filling out that 1 out of 10 rating. What her idea of 10 and a normal person is rarely correct. Also, the number of sq. meters is many times incorrect on these sheets. I have seen hundreds of apartments now so I can go into an apartment and basically guestimate within a few meters the actual size of an apartment. Many times the wrong size was listed on a spec sheet. When I called them out on it, they claimed it was a mistake. The number of actual sq. meters is listed on the title to the property. Since property is priced by the sq. meter, it's important that you have an accurate size.
Ok. So let's assume you find your dream apartment. What next? You make an offer (reserva). Typically, most properties are priced a bit high so there is room to negotiate. For example, if an owner wants $100,000 -- they will try asking for $108,000 to give room to negotiate and get their $100,000. Again, it all comes down to knowing the property prices in each respective part of town. I have now looked at over 450 apartments throughout the city so I have a great comparison of what a property should be priced at. Typically, I am able to save my client around 7% on average of the asking price.
You need to place a deposit with your offer. Typically $1,000 is enough. If it's a really expensive property they will ask you to put more. I made an offer on a $800,000 house the other day and they wanted a "reserva" of $10,000. I made another offer on a $400,000 house and $5,000 was enough. Keep in mind the seller isn't getting that money. It's held in trust by your realtor. It basically shows that you are serious about purchasing the property. Once you make the offer the seller has 3 options. (1) accept your offer; (2) reject your offer or more commonly (3) counter-offer. I usually offer under the asking price unless the asking price is already fairly priced (which is rare here in Argentina).
You usually give the seller a few days to a week to think about it. Your offer (reserva) has an expiration date. They must respond by that expiration date. Here is something important to remember. Until the seller comes back with a rejection, they can't show the apartment. If your offer price is too low, the seller's realtor can refuse to take it to their client.
Once you agree on a purchase price after negotiations you have two options. There is something called a "boleto" which is basically a down payment of the total purchase price. Typically it is 30% of the total purchase price of the property. If the sales transaction is scheduled many months down the road the seller will ask for a "boleto". The boleto is basically the point of no return for both the buyer and the seller. If the buyer backs out, you lose that 30% down payment. If the seller backs out, not only do they have to return that 30% but they have to double it and return another 30%. They do this to prevent an owner to cancel and accept a higher offer. The offer had better be much much higher or it wouldn't make sense. I have never heard of a transaction not taking place once a boleto was in place.
You pay all realtor's fees at the time of the boleto. The seller is paid and a date is set for the final title deed transfer which is called the "escritura". The "escritura" is when the title is actually transferred to your name. The legal fee (which I will go into under a separate section titled "Lawyer - Notory Public - "Escribano") is paid at the time of the "escritura".
If both parties can close fairly quickly then they will forego the "boleto" and they will go straight to escritura. Typically though, they will ask you to do a "Sena". A Sena is not a full blown boleto but typically $5,000 to $10,000. It works the same way as the boleto. If you back out as the buyer you lose this money. If the seller backs out they will need to refund your sena and double it.
I still recommend that you use a "sena" to lock in the seller into selling. The last thing you want to happen is a seller to change their mind and lose out on a deal you might have spent a lot of time and money looking for. The sena helps prevent the owner from changing their mind in the form of not only returning your sena but they must return it doubled. If you can avoid the boleto and use a sena that is the best option as the realtor does not have to be paid until at least a boleto is performed. The realtor will help keep things on track as they have a big incentive in the form of their commission.
The process is not easy buying here and it's an expensive process. You should note there is NO free way to get u$s into the country of Argentina so it's expensive. You need to pay a fee. I'll go more into this in the "Money Transfer Fee" section. Keep in mind that virtually ALL property purchases here are in cash. Literally. Wire transfers to the owner or cashier's checks are almost non-existent here. The locals do not trust anything but cash. Every single purchase I have made for myself or my client was in cash with the owner sitting across the table from me at closing counting out the money. Mortgages here are very rare with only the elite with the right family name and the right jobs receiving loans and the loans can be as high as 15% per year. Mortgages are non-existent for foreigners so be prepared to pay cash for your purchase.