Two Markets: Resales and Developer listings
There are really 2 markets here, one for resales and one for developer listings. Developer listings can be ready for delivery or presales, which can be anywhere from 6 months to 2 or more years away from delivery. Resales are owned by a private party and they are typically ready for delivery, but there are cases when a resale can be a presale. This usually happens when an owner wants to sell before or at delivery. They resell before titling if they can to save money on closing costs and be able to offer a more competitive price.
Presales Can Be Very Risky
Presales can be more risky and in turn the developer usually gives better discounts. Ready for delivery condos are low risk because what you see is what you get. Presales have a big risk of not being completed on time even with the most reputable and reliable developers. That’s usually not that big of a deal for most buyers if they pay as they go or have more money to be paid at delivery. Inexperienced developers can easily mismanage the money and that can cause the construction team to cut corners to save money or in the worst case scenario a project goes bankrupt. You have to make sure you property vet the development to minimize this risk
Resales are Currently The Best Deal
Usually presales are the best deal, because developers have bigger margins and can give great discounts when they have many units in their inventory, but lately that hasn’t been the case. Things have changed since Covid. Supply chain issues, difficulty in finding skilled laborers, increased cost in materials, and other challenges like fluctuations in the exchange rate have caused prices to rise dramatically. It’s to the point where developments are now 30% higher priced than they were just a couple of years ago. What’s happening now is the developers are charging the same or more for presales that are 1 to 2 years away from delivery than ready for delivery resale condos owned by private sellers. Private Resale Sellers bought before Covid at 30% lower prices so they can afford to be more competitive to get a sale closed.
The Strong Peso is Causing Price Increases for Developer Listings
Developers have to deal with the Mexican peso when it comes to cost of construction and materials, but most of the time the prices in the Riviera Maya are in US Dollars. The US Dollar is currently weak against the peso as I write this article on May 7, 2023 (17.77 to 1 USD). This has caused developer prices to go up even more! Some homes have gone from $260,000 to $330,000 in a matter of 6 months. The strong peso is causing developers to have to increase their prices in dollars which has hurt foreigners who want to invest in Mexico.
Double Commissions Steer Buyers to Developer Listings
Developers typically pay commissions of 6% plus IVA to the buyer’s agent whereas resales usually pay 3% because two agents have to split the commission. Also, on a presale an agent only has to get the buyer to put 30% down and they get paid. This causes agents to focus more on presales. It’s an easier sale and they get paid much quicker. Resales can take 2 or more months to close and typically are more complicated for agents to manage.
No MLS Makes It Hard For Consumers to Know What A Good Deal Is
Having no MLS in the Riviera Maya helps developers be able to maintain their higher prices. Consumers aren’t able to gauge what prices should be without the data. Buyers really need to hire a reputable agent that puts the client’s needs first. Someone with a strong knowledge of the inventory that can find the right property that meets their needs at the best possible price..
Older Resales versus Newer Resales
Resale properties often are older properties that might need to be updated. That can give the buyer a big advantage because they can get a lower price for outdated condos that need a little work. The sellers sometimes don’t want to invest any more money to fix the property up and in turn give deep discounts to compensate buyers for having to do the work.
Brand new or barely used resales can be a great deal, also, especially when the seller paid a very low price and can afford to give a better price than the developer.
Work with the Best to Get The Best Results
At Best Deal Mexico, we specialize in finding under market value properties and we have access to special brand new resale deals in some of the nicest developments in the Riviera Maya. We have over 25 years of combined experience in this market and are ready and able to help you accomplish your goal of earning a property in paradise. Take a look at our Resales section now and see the amazing deals that we have then book a call with an expert so we can help you take advantage and get the buying process started.