Puerto Vallarta Real Estate Articles

Currently in Mexico, there are no licensing requirements to be able to act as a representative for a buyer or a seller of real estate. AMPI, the Mexican national organization of real estate professionals, sets standards for joining their organization. Included in their requirements for membership are education and a history of practical experience in the business of selling real estate in the community where the agent/company practices business.

Not all persons representing buyer or sellers are members of AMPI. Membership is not compulsory. Some independent offices or agents choose not to join AMPI. Their decision not to join does not mean that they are not qualified to offer a high level of service or competency. An individual buyer or seller should conduct their own research and determine whom they want to use in a sale.

AGENT The use of the word "agent" means one who is representing a buyer or seller. Being an agent does not mean that the person/company has special training or licensing. In this article, agent is used in the general sense. An agent is a person that performs an action or brings about a certain result. Agent can mean the individual person helping you transact business, and/or the company for which they work.

AGENCY Agency is an action or power; it is when a person or firm acts for another. PRINCIPALS in this discussion, mean the buyer (s) or seller(s), not their agents. Agents have a form of agency or relationship with the buyer and/or seller.

When buyers and sellers entrust another person(s) to represent them in a real estate transaction, they have the right to expect a certain level of service, ethics and professionalism. The practices followed by agents and their level of performance varies by individual, country and state.

In the absence of a large body of law in Mexico dictating the actions of real estate professionals, individual offices or AMPI may agree upon certain policies. Professional standards set by AMPI and/or individual companies, may give the buyer or seller a higher level of service and competency than they would receive otherwise.

A buyer or seller should think about their relationship with the agent that is working with them in the sale or purchase of real estate. The principals should ask questions to clarify their relationship with their agent.

The principal should ask the owner of the real estate company what the policy is in representing buyers and sellers. Principals should not assume that real estate practices in Mexico are the same as they have experienced previously. If the principal wants confidentiality, for example, they should discuss it and get an agreement of what is confidential from the person they are appointing to negotiate for them.

Compensation to the agents can be paid out of the listing or marketing fee agreed upon between the listing office, the seller and the buyer's agent. Representing a buyer does not prevent the buyer agent from being paid from these funds.

REPRESENTATION The duties of a broker or agent depend on whom the agent/company represents. If you are a prospective seller or buyer, you should know that the agent/company who lists the property for sale is the owner's agent. When this is the case, the buyer or his agent should not tell the owner's agent anything that the buyer would not want the owner to know. An owner's agent can disclose to the owner any material information known to them.

An agent or company who acts as a buyer's agent, represents the buyer. An agent/company representing the buyer can place the interests of the buyer first. The owner's representative should not tell a buyer's agent anything that the owner would not want the buyer to know. A buyer's agent can disclose to the buyer any material information known to the agent.

INTERMDIARY There is also the situation, where an agent or company is working with a buyer and seller for the same property. In this situation, the agent or real estate company should be acting as an intermediary. An intermediary acts between two persons as a go-between or as a mediator. The real estate agent/company should not disclose that the owner would accept a price less than the asking price, unless the owner authorizes them to do so. The agent/company should not disclose that the buyer would pay a price greater than the price submitted in a written offer, unless authorized to do so by the buyer.

The agent/company should not disclose any confidential information that either party specifically instructs the agent not to disclose, unless the information materially relates to the condition of the property.

As a seller or buyer, you should discuss the subject of confidentiality with your representative, in advance of beginning any business with them. This confidentiality agreement includes promoting a property for sale before a particular buyer shows interest. As the seller, if you don't want your agent/company to say you will take a lesser price than the listed price, you need to cover this with them in advance. If you want your agent(s) to welcome offers, you can direct them in what information you want them to give to an agent with a prospective buyer.

When a representative receives compensation for a service, the principals in the transaction should receive value for such payment. Value comes from the competency and professionalism of the agents receiving the fees.

In all cases, the real estate agent or company should treat all parties honestly.

All principals or all agents working in the business of real estate do not follow these concepts of REPRESENTATION AND INTERMDIARY. You should not assume that you understand how business practices are usually conducted. Think about what you want and expect from your agent(s). Clarify what your working agreement will be, in advance of transacting any business.

Understanding in advance how business is conducted in the sale and purchase of real estate will save you time and money. Think about what you want to happen in the transaction and define in advance the role of your representative (s).

This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer conduct his own due diligence and review.