Much media attention has been given to real estate in Ecuador and the amazing opportunity it represents for expats and retirees who are looking for an affordable place to live abroad. Cost aside, there are a lot of really great things to love about Ecuador, so it’s no wonder it’s become such a popular destination.

Ecuador offers easy access from the U.S., and its many visa options make the transition relatively simple. Many of its cities have good infrastructure, a wide variety of consumer options, and amenities you’d expect from a much more developed region.

There’s authentic culture, impressive ancient architecture, and climates to suit almost any preference. Not to mention the rich history, breathtaking scenery, and some of the friendliest folks you’ll ever find.

The Ecuadorian real estate market can also be a pleasant attribute. However, if you approach your house hunting journey with any misconceptions, it can also be a giant headache. Here are five facts that could, and should, change the way you think about buying a home in Ecuador.

Melosh

1. There’s no Multiple Listing Service (MLS) in Ecuador.

If you’ve ever bought a home in the U.S., then you (or your realtor) probably searched for available listings using the Multiple Listing Service, or MLS. Ecuador doesn’t have one of those. As a result, you’re on your own when it comes to finding properties for sale in Ecuador.

A good way to start is by hiring a buyer’s agent, since most real estate agents in Ecuador work for sellers, to help with your search. You can look for properties online via realty sites and expat forums.

It’s also a good idea, if you’ve narrowed your search to a particular area, to spend some time visiting and inquiring around about properties for sale. It may be that some of the expats or locals can connect you with someone who’s interested in selling, but may not have formally listed their property.

2. Ecuador is slowly becoming a buyer’s market.

Real estate in Ecuador was a hot commodity from 2006 to 2014 when the market could be best described as “booming.” This was largely because of the tremendous amount of media attention the country was receiving, touting it as one of the best places to retire or buy a second home.

However, the market has slowed as of late due partially to the drop in oil prices, as the economy depends heavily on its oil exports. To help boost the economy, the government has thrown around the idea of increasing property and capital gains taxes, and the real estate market is bracing for that possibility.

As a result of this uncertainty in the market, some sellers have started to lower their prices. One exception is in high-end neighborhoods where supply is low, demand is high, and the wealthy homeowners may be less desperate to sell. Prices in those exclusive areas have stayed the same or, in some cases, even increased.

Diez & Romeo

3. You’ll need a lawyer in addition to your realtor.

You’re familiar with the need, in the U.S., to hire an attorney to oversee the closing process and file the necessary paperwork. You usually sit down with them for no more than an hour, sign a stack of papers, shake hands, and that’s it.

Not so in Ecuador.

Just as you carefully research real estate professionals in order to find someone you can trust, you’ll need to do the same to find a qualified, bilingual (unless you’re fluent in Spanish)  attorney who has experience handling real estate transactions for foreign buyers.

Their role includes ensuring there are no liens against the property or other restrictions that might delay or void the sale. They’ll research the property’s title and ownership history to make sure there are no concerns, handle all the paperwork associated with the sale, and then register your property once the transaction is complete.

4. Taxes and fees are pleasantly low.

Annual property taxes in Ecuador are typically 1% of the value of property as assessed by the local municipality, which is usually lower than the actual purchase price. And the total closing costs for someone buying property in Ecuador is between 2.3% and 4% of the price paid for the property.

Here’s how that breaks down. The transfer tax is a flat rate of 1% of the home’s value. There’s also a provincial transfer tax, which is $510 plus 0.11% of the value, and a registration fee that’s generally around 0.10% of the property value.

The notary fees can vary, but they’re generally 0.10% of the property’s value. These are all paid by the buyer. The seller only pays their realtor’s fee. Later on when you get ready to sell your property, you’ll also pay a capital gains tax of 10% of your profit.

Canoavilla

5. The transfer of cash looks very different.

Again, while you’re probably familiar with buying real estate via an escrow account, there’s no such thing in Ecuador. Instead, sellers will usually ask for a refundable deposit (as much as 10% of the purchase price). However, this should only be paid after all due diligence is done and there’s a signed and notarized promissory note.

Another hurdle involved in the buying process is the issue of transferring money into Ecuador. You’ll want to begin this process well in advance as wiring money into the country can take as long as 30 days.

Obtaining a mortgage is not out of the question. However, most financial institutions in Ecuador prefer very short-term financing in order to limit their exposure.

Buying property in Ecuador is a great proposition. However, before you start the process, make sure your head’s in the right place. Don’t be disillusioned by thinking it will mirror the same process in the U.S. Do your homework, and start your search today!