Buying A House in Nicaragua, Part II
Purchasing a home in Nicaragua is a process. I went through stages while buying a home in León. At first, it was exciting. Next it got frustrating. Then, after several weeks, it started to feel like work. My days were filled with appointments with different real estate agents. I grew frustrated with several home sellers for not having their paperwork in order. It took me weeks of house shopping, before I started to understand the real estate market in Nicaragua.
I was looking specifically to purchase in downtown León. I wanted to be within walking distance of the Cathedral of León, more formally known as Our Lady of Grace Cathedral. The Cathedral is the epicenter of everything Léon. It is one of three UNESCO sites in Nicaragua.
I was looking for a colonial home. I was searching for one with several bedrooms, so I could later rent them. I found that most of the properties were large, most were between 500 and 1,000 sq. mt. (Note: Square footage is measured as usable land space, not just the house construction; 1 sq. mt. = 10.76 sq. ft.) I found that homes of this size were priced between $300 and $400/sq. mt. on average. If the properties were much larger or smaller, than the price per meter varied significantly. I viewed a 1700 square meter home listed at $155/sq. mt. and another that was under 300 square meters for almost $700/sq. mt. Once I began to understand the real estate market and their neighborhoods, searching for a property became more fluid.
In my search, I found that the larger homes were less maintained, as such, they would require a significant investment after the purchase. Some were completely gutted. Others were just shells of former beauty, having been vacant for years. Almost all of the smaller homes had families living in them. They were presentable, kept up, and move-in ready.
It is important to understand that as a foreigner, it highly unlikely that any Nicaraguan bank will be willing to finance the deal. It is possible to secure financing from a bank in the United States, but requirements can be cumbersome. Because of these issues, most property transactions end up being cash deals.
In addition to the purchase price, there are lawyer fees, closing costs, property taxes, and Notary fees for registering with the Public Registry. All this will make the sale of the property legal and a matter of public record.
Once I found a property, I made an offer. After some negotiating, we eventually came to a compromise. I contacted my attorney, who drafted a purchase agreement. I transferred a small, non-refundable deposit (3%) and the process was in motion.
The purchase agreement contained a contingency that gave the seller 45 days to correct and update the required paperwork. I should mention that, most property transactions can take between sixty and ninety days to complete. After that, there would be a penalty. I returned back to the States to wait.