How to determine if a Given Lake Chapala Ajiic Home is a “Good Deal” or not!

November 14, 2009

How to determine if a Given Lake Chapala Ajiic Home is a “Good Deal” or not!

# 1

First, find yourself a good Exclusive Buyer’s Only Realtor so you know the analysis he/she will give you of the value of the home is given with your best interests in mind.

#2

Will your Realtor look at the best comparable properties?

#3

Will he/she do his/her best to investigate the seller’s motivation or need to sell and therefore determine the flexibility that is built into the asking price?


Marvin 1
#4

Will he/she be able to pull on many years of experience in negotiating real estate deals to find creative alternatives that will satisfy the seller so you get the absolute lowest price possible…

or is he/or she just a personable person selling and listing real estate here as a hobby… or perhaps the agent is a younger bi lingual agent who is working to do his/her best to feed his/her family and needs to earn that next commission a bit too much?

Well, you get the idea, Of course you want your Realtor to be knowledgeable and nice and easy to deal with and responsive to your needs…but the single most important thing is that he /she  BE REALLY ON YOUR SIDE.

One of the techniques your Exclusive Buyer’s Only Realtor should do to try and get a fair value as a starting place for negotiations in addition to the best comparable sales data available will be a replacement value estimate (a bricks and mortar analysis)

Remember however to use more than a “bricks and mortar” analysis. A given home upon analysis could appear not to be a ‘good deal’ when in reality it might be a good deal “for you”.

What do I mean by this? Well, if you could build the same home for less money in theory this may appear to make the subject property look bad by comparrisiond.

Well Maybe yes and maybe no… but probably not.

Consider these factors: If you valued the land at say $213 USD per sq. meter or $19.78 a sq. ft. and the lot the home is on is small so the land part of the purchase may not account for much of the value.

Let’s assume the lot is 130 meters x $213.00 USD = $27,690

Now if you value the cost of a new home with the same amenities at say $100 USD per square foot.

And. the house is say 1,000 sq. ft x $100 USD = $100,000 USD to build the house with the same amenities.

So, adding the two together you come up with $127,690 USD

The home is older and you feel like you should discount it some for age since the plumbing and electrical systems are older etc. so you discount it by some factor you feel is appropriate and decide that the bricks and mortar plus land makes the value $125,000 USD..

You may determine you should not have to pay over $128,000 USD but the asking price is $145,000 so this seems high given your analysis, right?

But, before decide to make an offer for under $128,000 thinking that you can always come up to $128,000; please consider the following:

Is there another small lot in the area you could build on? If the next closest lot is much larger and no sub dividing is possible you may have to pay significantly more for the lot.

For example if the closest lot is say 260 meters x $200 = $52,000 then the lot to build on will cost substantially more.

You prefer to rent nearby to be able to monitor the construction and consult with the builder so assume the rent in the neighborhood is $800 a month (the same you think you could rent the already constructed home for that you’re considering)

You’re told it will take 8 months to build the house you want on the lot that is available.

So $800 USD x 8 months = $6,400 USD for rent.

OK, let’s add up the cost of duplicating (as close as possible) the already constructed home you really like)

Construction…….$100,000

Lot……………………..  $52,000

Rent…………………..  $  6,400

__________

New House        $158,400

Now the asking price of $145,000 looks a lot better doesn’t it, since the extra land you would have is more than you want (read higher taxes, higher development dues, more gardener expense) and can’t be sold off separately…  and you’d just as soon not be tied up with construction headaches for the next 8 months.

LaFloresta home

By the way I think you could have bought the hypothetical property above for probably $135,000 which would have been a 6.8% discount from asking price… or we may have done even better depending upon just what we learned in the rest of our analysis.

Obviously I’ve made certain assumptions in this example and no two situations are the same. The point is to just do a real world analysis and not just a quick paper analysis.

Consider all the factors.  You can do it, I can help.

Put my 40 plus years of negotiating real estate deals as an investor, broker, and attorney and now as an Exclusive Buyer’s Only Realtor to work for you!

Sid@ChapalaClub.com

Oh, one more thing. I’m not a “Hobby Realtor” and I’m not a young guy who’s struggling to feed his family. I’m just a super service oriented guy with a stack of credentials who has your best interests in mind and has a ton of glowing testimonials to prove it to you which are available.

So, e mail me today. Let’s get started on your new life !

Sid@ChapalaClub.com

  • kathy mackenzie

    Sid, as a buyers only agent, who pays your fee, the buyer or the seller? And what percentage is it?

    Kathy

  • http://www.flyingintothesun.com Ginger Blymyer

    Great idea to have a buyers agent. I was a Realtor in early 90′s in New Hampshire when they began to have buyers agents. My husband had always been angry at Realtors because he believed they were on the buyers side and finally understood they worked for the seller. So your way to do it is so worth the effort and cost. It is so easy to get excited about a house and not see what is not so good. I always advise a house inspection before buying anyway. It can make bargaining easier and prevent disappointment. Good for you. I lived there in Ajijic for fifteen months in the village until my husband died, and so returned to the USA but still love it there. ginger Blymyer

  • http://www.chapalaclub.com Sid Grosvenor

    Hi Ginger, Thanks for your nice comments. If you’ve read my story you’ll recall that my first wife and I only got to visit here for a few months at a time.

    SHe went to be with the Angels before we could retire here, but we each had blessed in advance the idea of remarriage if we found the right person.

    I found the right person. Arcelia and I have been married now for just over 8 years. I met her while teaching English in Guadalajara. I’m still teaching her English.

    There are a lot of windows and widowers who have found a happy life here in our active community. Perhaps one day you’ll return. I think part of your heart may still be here since you’re participating with us here at Chapala Club.

    God Bless you in what ever you decide. Your friend, Sid

  • http://www.chapalaclub.com Sid Grosvenor

    Hi Kathy, I get paid a portion of the fee my broker receives when a member of his firm sells a home that either he has listed or that another broker has listed.

    A fixed fee or a percentage of the final negotiated sales price of a given home is charged by a broker for marketing services he provides for his client, the seller.

    I have an independent contractor’s agreement with my broker and I receive the same percentage of the fee if I sell a home he has listed or one some other broker has listed.

    I have no incentive to “push” any particular home or lot since I do not list any homes or lots and therefore have given up the opportunity to earn a commission on any listing and I don’t receive a higher fee to negotiate a sale of my my broker’s listings.

    I earn the same percentage of the marketing fee without regard to which broker listed or marketed the home or lot.

    I show all brokers properties that may be of interest to my clients based upon their needs and preferences and exclusively represent them. I do a market analysis, using com comparables, replacement costs, and sales trends.

    I help develop a buying strategy, advise on Inspections, prepare the offer, present the offer, make counter offers, and otherwise use my skills and experience to represent the buyer’s best interest.

    I hope this explains how I’m compensated, but I’d be happy to discuss it more in person or by telephone.

    Siempre tu amigo, Sid

  • Roberta Bulmer

    My husband and I, and another couple are looking for accommodation for two weeks or a month any time during December 2011, January, February or March 2012. We would like something with simple kitchen facilities if possible or B&B in an economical price range.

    We would be travelling from Yuma, AZ, probably flying from Phoenix, and would like information about transportation from the airport to Chapala area.

    Thank you,
    Roberta

  • http://www.chapalaclub.com Sid Grosvenor

    Hi Roberta, I have a friend, who has just what I think you’re looking for. She’s in California now, but will be back I think the end of July. She’s totally bi lingual with dual citizenship.

    She has three nice bedrooms on the second floor. Each has a private bath, a small refrig. in the room, TV with local cable and WiFi if you bring you laptop.

    All rooms have a descent view either of the Lake,Mountains or both.

    There’s fully equipped kitchen on the first floor, laundry facilities, and living, dining areas.

    It’s in Chapala on the bus line but you can walk to the Malecon/boardwalk, central market in Chapala, the banks etc.

    Your trip will be in high season, but I think you could get it for $500 a month in one or more of the months you mentioned for one of the two larger bedrooms and use of the kitchen, living, dining, WiFi, and Laundry,

    I rented my first room in the area from her 17 years ago.

    Oh, she now has an elevator between floors. Its a beautiful restored mansion oozing Mexican charm.

    My bi lingual Mexican wife can help with AP pick up and drop off and tours in the area as well. Lowest prices in the area. Everyone raves about her tours. She knows where to shop for the bargains (she takes no kickbacks from the shops she recommends.)

    Email me at Sid@ChapalaClub.com for more information on her charges on AP Pickup and Drop off and tours.

    Tu amigo, Sid

Email for more information:
Sid@ChapalaClub.com

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