How to get hosed in a Chilean real estate deal

Step 1: include a seller’s agent who lives the Vivo Sudamericano.

Step 2: watch the disaster unfold

I was shopping for beach property in order to assuage my hunger to be near the sea. Santiago is nice but I’m a water dog and require regular injections of saline in order to stay balanced. The mountains really don’t do anything for me, though the desert’s lack of human habitability I find slightly comforting.

I had found a beach property I quite liked, which was recommended to me by my friend CaliforniaBob (rest in peace) so with my lust for water and his mortality fresh in my head, I decided to pull the trigger and start enjoying it before I too dropped dead unexpectedly. The first time I had been down to see these particular parcels, I was impressed, and after having thought about it briefly, decided to go have another look. The second time I arrived, I went to see the lot I had my eye on.

“Oh, yeah. This one was sold.” said ChamulloBob. Hmm. Well, shit. The properties were being represented both by a local seller’s agent (ChamulloBob) and a partial-local buyer’s agent (a gringo who has been here in Chile for several years). Their deal was that they would split the commission on the sale. Fairly straightforward.

“What else have you got?” I asked.

“These other ones down here, let’s go see,” and so we went to look. As luck would have it, not just another lot, with better elevation and a better view of the bay, but its neighboring lot as well, both available and both for similar prices. After inquiring as to what the sellers were asking for them, I made up my mind. Both were asking some 8.5 million CLP each, which was a steal in my opinion, but my inner Jew had to haggle and see if I could bring the price down some.

“I’ll take them both. 8.5 is OK but see if they will take 8 first.”

And so, I assumed that my simple request would be followed, meaning that they would see if the seller would take 8, and if not, capitulate to their 8.5 asking price. Not rocket science.

And so a week passed and I heard nothing, then I get an email that they would not accept 8 and wanted 8.5. “OK.” Thinking that my simple instructions would be followed. Not rocket science.

Then several days pass and I get a note that one lot has an offer for 9. “Hmmm…” thinks my brain, “These lots have been sitting around for months with no buyers and all of a sudden, when I show interest, the magical mystical offers materialize.” Let me guess, it’s an invisible Argentine, who always manages to outdo my last offer by a little amount. Because that has happened, like, ALWAYS, in every single property negotiation we have done, ever, in South America, of which there have been many, and we’ve been there and done that and called them on it. Then, quickly, those magical Argentines stop coming to the bid table. Amazing!

Do you hear that, Argentina? Your people are being used as an excuse for other South American countries to pull the Vivo on price negotiations!

So I said this to my buyer’s agent, and I think he took it the wrong way and assumed I was accusing him of ripping me off, which was not the case. “I’m going to sit on my hands and watch what happens to this,” I told him, and so became an amused observer with an eye on the prize.

And so a few more days pass, and then we hear that the seller’s agent is selling it for 8.5, not 9, and they sign the papers tomorrow. Which is funny and sad, because that’s what I said I would pay for it. And I really wanted to two adjoining lots, so I’m not really interested in the other one anymore.

So, my INTJ brain ticks through this data and comes to the only calculable conclusion that ChamulloBob was acting as both a buyer’s and seller’s agent in this case, and screwed both me and my buyer’s agent over for the grand reward of a couple hundred bucks. Something about which I also hint to GringoRealtorBob, which I think might have made him more angry, because I haven’t heard back from him.

Then I realize that I did all that daily standing-in-line at a Uruguayan bank (which I know I will do plenty of when I am in Hell) for nothing…

Spain to offer residency to foreign property investors

There is such a glut of empty and foreclosed and reposessed housing in Spain, as icing on the cake of their financial woes, that the government has proposed a program to offer permanent residency to foreigners buying properties valued at €160,000 or higher (USD$200,000). The plan has yet to become official policy but maybe they’ll get it drafted into effect in another decade or two.

Read the article here for more information.

Crackpipes, naked strangers, and advice from an Ecuadoran Grandma

Today was an interesting day. We started cleaning out the new old apartment. On one hand I like doing things like this: you work with your hands, you get to wear your overalls, and you get to see results. Granted it’s not as efficient as delegating the work to a peon, but it’s nice once in a while to do the stuff and get it done, and watch the phoenix rise from the ashes.

In this case, we’re cleaning out 40 years of not-been-cleaned chainsmoke residue, settled Santiago smog soot, and lord knows what else. We’re serial renovators and global slumlords. We like to find deals in gentrifying neighborhoods, get them on the cheap, and sell them for a profit after we pimp them out. Some folks think we’re nuts, but this isn’t our first rodeo. And we’ve done worse.

“Hey, honey, what kind of drugs can you smoke off the end of a butter knife?” I ask WifeBob.

“Oh God, I don’t know. Don’t tell me,” she answers, and, being unable to resist the curiosity, “What did you find?”

“I think I found their paraphernalia. Some burned butter knives. Oh, and here’s their pipe,” as I extracted a 6-inch tube of plastic, cloth rubber-banded over the end, from its bed in the inch of dust above the medicine cabinet. “Well, this is better than the first crack house we’ve owned!”

All in all the place is in remarkably good shape, structurally. But it was used as a college flop-house for some time, and has probably literally not been cleaned for decades. There’s beautiful hardwood under all that caked-on greasy soot.

Some people don’t have the stomach for it. We almost lost it a few times, scrubbing someone else’s petrified vomit off of a wall in the corner. Who leaves that stuff? Seriously? Oh, yeah… crack head college students. I won’t even mention the mystery substances I had to scrub from around the toilet.

Nothing says love like taking over scrubbing puke, feces, and pubes-caked-in-urine-residue for your significant other while they fight their gag reflex and get some fresh air.

The whole time, we were both discussing the merits of advice from my brother-in-law’s Abuelita from Ecuador. She used to drill into her kids:

“It’s OK to be poor, but you don’t have to be dirty.”

Good advice, and it’s true. Always made us wonder why some people in impoverished areas don’t seem to mind sitting around, sometimes literally, in their own shit. That can’t be pleasant. Go wash off, man. We’ve seen areas where people don’t have two pennies to rub together, but you could eat off their floors, even the dirt floors, and they were clean and wore clean clothes. Then we’ve seen others where you wonder if these people have ever taken a bath or washed their clothes, or even know how.

Between our “dirty” apartment and our “clean” apartment, which we have for one more week, we saw a crazy old man, stark naked, wandering around in the street. Folks kept their distance, but despite the fact that there was a park full of families right next to where he was, no cops came to take him away. Maybe they figured he wasn’t harming anyone, so let him dance like a loon in the middle of the street.

Good news, Chile has Tempurpedic beds. We went to their showroom earlier today, on a Saturday, during their advertised hours. They were actually open. The shopkeeper was knowledgeable and pleasant, and patient enough to get our bizarre international credit card purchase set up straight. She gave us advice on directions to go where we were going next. The directions turned out to be correct. The bed will be delivered on Monday. For less than the cost of our Queen size spring mattress in Uruguay, we can get a King size Tempur memory foam mattress in Chile.

Flawless experience.

Then we bought a vacuum for the house. The plug on the cord was the right kind. When we plugged it in, it worked.

We also went furniture shopping.

Did I mention we did all of this in one day?

Chile kicks ass.

How to buy property in Chile for non-residents (and how to get your RUT)

Non-residents and non-citizens can buy real estate in Chile with few problems. The process is straightforward, which is probably why there are few reliable sources with complete information.

The first and foremost thing you will need to do is get a Chilean RUT number (taxpayer ID number, don’t let the name scare you). This is done by finding the closest office of the SII (Chilean version of the IRS) and going there with:

1. A printout of this form, filled out with the parts for your name and address (an address in Chile) and the box “Solicititud RUT” checked. Nothing more should be needed on this form.

2. A photocopy of your passport.

That’s it. It costs nothing, and it took me and WifeBob 20 minutes to get it done, most of which was spent waiting for our number to come up. When you are done, they give you a temporary ID paper with your RUT number, which you use in the meantime. They told us that they would mail the cards to us, but this is not the case; you actually pick them up at the same office in a week or so; sometimes they can have them done in 3 days but hey, it’s a bureaucracy. In the meantime, your paper works as your RUT card, and is 100% valid to use for real estate purchases.

Note: they would not let me pick up WifeBob’s card even though I was carrying her passport and temporary RUT paper. You need a power of attorney for this, or you need to drag your woman into the office by her hair. I recommend using a club to subdue her first.

When you find your ideal property, you will meet with the broker or seller, and draw up a Promesa de Compraventa. This is the sale agreement. You will be required to put down a good-faith deposit, which may be as high as 10%. Sometimes a promissory note will work; ask your broker or lawyer.

Once the Promesa de Compraventa is done, your lawyer should do the due diligence of looking up the property register and making sure that the deed is clean, there are no debts owed on the property, etc. This can take a few days or it can take a month, depending on the speed of said lawyer. Once the bill of health comes back clean, you move onto the next step, which is the official contract.

I should mention at this point that some brokers may be fearful about using the RUT paper instead of the RUT card, but it is indeed 100% legal and proper. It has been done and shall continue to be done. If they are being difficult, have your lawyer reassure them.

Now you should be trying to figure out a way to get your money into Chile. Normally foreigners cannot open a bank account so this presents some problems. Fortunately lawyers can act as escrow agents with the proper bank forms, however one should be warned that unless you trust your lawyer implicitly you are taking an unnecessary risk; the Notarias are held in strict regulation by the government and the lawyers less so. You are safer getting the Notary to do the escrow service for you instead.

The lawyer or notary will need to fill out a form for the bank declaring what the deal is with this incoming money and what it is to be used for. You the buyer will have to draft a letter to the bank detailing the source of the funds. For example:

Date: today
To: Banco Blanco Chile
Re: Funds transfer to NotableNotary from ExpatBob

Dear sirs:

The funds we are sending are for the purchase of an apartment in Santiago, 123 Happy Lane, priced at $1 pesos Chilenos (presently $.005 USD). We are including additional funds to pay for notary fees and exchange rate losses, for a total of $3 US Dollars.

This money has been in our possession for a number of years, and originated from salary and savings of both myself and my wife, WifeBob (RUT 12345, PSP USA 67890), and are stored in The Bank of Bernank. All taxes have been paid in the USA for these funds.

If you have any further questions please do not hesitate to contact me.

Signed,

ExpatBob (RUT 67890, PSP 12345)

After you move your money into the escrow, it comes back out as a bank check, or “vale vista” which, when signed, is considered as good as cash.

The lawyers will draw up the official contract and meet with you at a Notaria along with the seller and any requisite brokers. The Notary is the acting escrow for everything. They take in the contract, which all parties sign, and the signed vale vista. You also sign and receive a copy of a document which lays out what they got from everyone and what they are expected to carry out, basically a receipt for all parties.

It is then the Notary’s job to register the deed with the proper authorities. They then bring back the receipt of the change-of-ownership, conveying it to the new owner, and release the vale vista to the seller. This process can take a day or it can take a week depending on holidays, efficiency or lack thereof, etc.

The buyer is expected to pay on average a 2% commission to the seller’s agent.
Lawyer and notary fees may vary, but the whole process shouldn’t cost more than USD$2000-3000.

Tips:

• Always make sure that in addition to property taxes, there are no debts outstanding from unpaid bills or “gastos comunes” and make sure it is part of the contract that the utilities are all on and working when you get the keys in your hand.
• Get a statement from the former owner of all the bills and account numbers to said utilities, or at least request a copy of the most recent bill, to make the transition easier for changing over the account names (which you don’t *technically* have to do). At least make sure that you can keep up with the payment of the bills (via their account numbers) if the next round of them fails to appear.
• Send extra into your escrow if you can, to cover attorney fees and loss to exchange rate conversion.
• Make sure you have a power-of-attorney drafted so that your lawyer can deal with any documentation or incidental things in your stead.
• Also make sure that the seller has a power-of-attorney set up, and you know who to contact, should they disappear on vacation in the middle of the deal and leave you without keys to the place, like ours did, leaving you with an extra week of hotel costs. Douchebag. In fact I’d make this a stipulation in the Promesa de Compraventa.
• A (good?) site for finding real estate in Chile is PortalInmobiliari0.com. They have a decent selection of various properties, and the prices are not gringo-inflated (ie the locals use it to find what they are seeking).