Escrow in Baja
The greatest differences between escrow services in a Baja Real Estate transaction and a U.S. real estate transaction are the timing and paying of escrow. In the U.S., escrow services are generally paid at the close of the transaction with funds from the sale. Here in Baja, most escrow companies charge escrow fees at the start of the transaction and require that they be paid with separate buyer funds.
Contingencies in Baja Real Estate – Controlling Buyer Costs
If the buyer has contingencies, the real estate transaction should be structured in a way that allows the buyer to control costs, protecting him in case the transaction doesn’t close.
Let’s say the buyer has several contingencies, with two of them being a property inspection, and approval for owner financing. In this case the buyer should write up the offer to purchase stating that the buyer will open escrow AFTER the property inspection is accepted and the seller has approved the buyer’s financials, extending him credit.
In this way, the buyer does not risk the cost of escrow in case he is not approved for owner financing. Also, if the property inspection reveals that the property needs a lot of work and that there is a lot of room for negotiating, the buyer can freely negotiate without having any money at risk.
The down side is that in the Baja real estate market, sellers usually want escrow to open as soon as possible. If you choose to postpone escrow in your offer until buyer contingencies are removed, you should make a cashier’s check or bank check payable to the escrow company for a significant amount, and send a copy of this check to the seller to show them that you are serious. Without this show of good faith, you will find that some sellers are not willing to take their home off the market while buyer contingencies are being removed, and you may lose your chance.
Escrow Costs in Baja
Escrow services in the Baja real estate market run from $550 and up. If the seller is firm and wants escrow to open immediately, then set up the offer so that they pay the initial escrow fees which will be credited to them once the initial contingencies have been removed. While the seller will probably not accept this arrangement, it may help him to realize that money is at stake, thus getting the seller to accept the buyer’s offer of opening escrow after certain contingencies have been removed.
by Mario Restrepo