Ecuador Real Estate – facts about buying property in Ecuador and finding out local regulations

Thanks to one of my readers, I came to the attention that in Ecuador there is no such a thing as “Short Sales” on properties. I will try to provide some inside view about Real Estate Sales in Ecuador.

Latin American countries have particular structural features that complicate the regulatory environment of capital markets and affect the effective execution of short sales on real estate properties. For local Ecuadorians to purchase a real estate investment through a lender (Bank or Government Agency) it is easy since the introduction of the US dollar as the official monetary unit for all banking and government transactions.

In theory financing is available in Ecuador, but in practice it is difficult to arrange for foreigners.

The Ecuador constitution guarantees free access to the banking and credit market to locals and foreigners alike. The same as it guarantees the free right to own and hold property.

You can buy real estate once you land in the country using only your passport as identification. This is not just a policy of the current administration that can easily be changed – the Ecuador constitution guarantees the right to buy and hold property for everyone, citizens and foreigners alike. In fact, once you are in the country with a valid visa, the Ecuador Constitution guarantees that you have the same legal rights as Ecuadorian citizens, with the exception that you can not vote.

Additionally, there are no restrictions on owning beachfront property as there is in some other countries. Real Estate problems have mostly been the result of buying property that the seller did not have the right to sell – a proper title search, or buying title insurance, mitigates this risk.

The difficulty that foreigners face on financing is the inexistence of a “credit rating” system in Ecuador. Adding to this, there is a high default rate in their financial system, so it’s hard to qualify for a loan without a local employment history or a co-signer.

A good credit rating in the US does not mean anything here. Interest rates are typically 12% or more, and 30% to 50% down payment is standard.

The great opportunity to take advantage is on Pre-Construction Featured Projects in Ecuador. You could finance your down payment free of charge and cero interest until the project is ready. Also you could sometimes get the sellers to provide future direct financing, but they will typically require at least 50% down payment.

Getting back to the term of “Short Sales”, the definition applied to this term in Latin America it is completely different, “short selling” relates to market shares or stocks.  Latin American capital markets are characterized by the following factors affecting country risk perception from the international investor perspective:

  • Reduced liquidity
  • Limited price formation
  • Unavailability of information
  • Small economic size

All this facts makes it difficult to assess the appropriateness of short sales norms. Let’s say in Ecuador there is no currency market since their official monetary unit is US Dollar, so there is no possibility of short sell that would depend on the existence of a fixed or a floating exchange rate regime.

Therefore, Ecuador does not approved or makes it feasible to short sell in equity markets; there are no regulations on the topic.

This is the best place to invest in cheap property, not to go on market trading…

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If you need help with information related to buying property in Ecuador at real cheap price let me know… Hereyou have a sample of a real cheap property only $ 65.000 US dollars on sale directly by owner, ocean side gated community in Playas Villamil, the best ocean weather in the world.

 

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About Lina Landivar

Ecuador News & Travel, Inside scope, property listings, key ready packs, plus free services, proven honest local references, and how to avoid getting “overcharge” while in Ecuador.

Posted on November 8, 2011, in Finding ways to my retirement or living overseas and tagged , , , , , . Bookmark the permalink. 2 Comments.

  1. Spot on with this write-up, I truly think this website needs far more consideration. I?ll in all probability be again to learn way more, thanks for that info.

  2. You have a great weblog and I like your style of writing about this stuff. Keep up the good work!

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