Foreigners can buy property in Colombia without major legal restrictions, as the process is fairly easy, albeit time-consuming. However, it is still not very common, and foreign buyers account for 1-2% of the real-estate market in the country.
Buying property is also marked by the country's spoken word culture, and it is customary for negotiations and early steps of the process to be verbal. However, scamming is prevalent, so it is important to obtain as many written guarantees from the seller as possible. Striking a good balance between adapting to the local culture in order to negotiate a good deal, and following a rigorous process is essential.
Prices vary greatly depending on the location, the type of residence, year of construction, furnishings and the estrato of the building, but expect to pay up to USD 2,000 per square meter for a residence in a good district of the city. Discounts of 5-6% are possible if you are willing to negotiate, but don't expect that to be the norm. Hard discounts are not common even if the property has been on the market for a long time.
In some circumstances, buying a house in Colombia may qualify you for a residence visa. Ask your lawyer for the additional documentation for this process.
One of the easiest ways to start your search are online listings. Classifieds websites will give you an idea of the housing market, the properties available and the respective prices. Some of the most popular classifieds pages include:
Newspapers are a popular source for listing real estate in Colombia. You can try the print version or the online classified pages such as Clasificados El Tiempo for postings.
The most common way to find a property in Colombia are, however, big posters ("Se Vende"), visibly placed on the property itself. Alternatively, if you are interested in apartments or houses in a gated community you can simply walk around the area and ask the building watchman if any of the properties are on sale.
Places such as universities, cafes, grocery stores, bakeries or shops may also have boards in which people can post ads. Real estate listings are not very common there, but you can find some, especially in the places catered to expats.
It is important to use the services of a real estate agent, especially as a foreigner. A good real estate agent will give you invaluable advice and assistance on every step of the process, from searching for a suitable property to navigating through the paperwork requirements and closing the deal. They can also recommend a trustworthy lawyer to help with the complicated legal matters.
A real estate agent will also ensure that the property has a clean title, with no mortgages, liens or pledges, and that the seller is the true owner of the residence. He or she can also examine the historical record of the building and give helpful advice based on local knowledge and experience. Colombia has many buildings that have in the past been used for money laundering purposes, and it is best to avoid them.
Nevertheless, there is no special certification or training in Colombia for official real estate agents. It is important, therefore, to select your real estate agent carefully, based on personal references, but also on company history.
Some of the real estate agencies in Bogota are:
The initial step is to make an offer to settling on the final price, amount of the deposit and other details. It is good to make the offer through your real estate agent, who will pass the information on to the seller. The seller may accept the offer or answer with a counter-offer. Expect the process to last some time, before you can proceed with the purchase.
However, before you make any written commitment, it is crucial to do some background checks and verify that the person is the legal owner of the property and has the right to sell it. Unfortunately, property scamming in Colombia is very common. It is important to hire a knowledgeable and trusted lawyer for this part of the process and to obtain the documents independently from the authorities, not from the seller, in order to verify their authenticity.
Documents you need to check before making a written offer include:
Once the parties have agreed on the terms of the transaction, a Buy-and-Sell Promise (Promesa de Compraventa) is prepared and signed, with the details. A non-compliance penalty that may be as high as a fifth of the negotiated value is generally included. The document should be drafted by the lawyer and signed in the presence of a notary.
The contract is the most important document you will have for the transaction. It should clearly identify:
Any subsequent litigation or dispute over the transaction will be solved on the basis of the contract.
The contract will be prepared by your lawyer and verified by both parties before signing. It will be signed in the presence of a public notary on the date of the purchase established in the Promesa.
As the country's financial system is not very sophisticated, payments are generally in cash, so it is important to make sure you have sufficient funds available in Colombia or readily-accessible, including to cover up any foreign exchange variations. Please note that in order to brig funds into Colombia over USD 10,000, specific forms should be filled in with the Banco de la Republica. Please contact your bank with regards to this.
Payment generally consists of an advance payment for up to 30% of the negotiated price, and the final payment.
If your funds are insufficient, you may contract a mortgage. However, mortgages are not very common in Colombia, and they are even less for foreign citizens. In order to obtain a mortgage, you need to have Colombian residency, proof of a solid income, a credit history in the country and pay taxes regularly. Being married to a Colombian citizen may make it easier to obtain a mortgage loan.
The fees to be paid by the buyer when buying property in Colombia are:
The real estate agent fees are generally paid by the seller and amount to up to 5% of the property value plus VAT. Local government taxes are usually split between buyer and seller.
Real estate transactions are exempt from VAT, except for sales of new property that exceed 26.800 fiscal units, which are taxed at a reduced rate of 5%.
The final property deed should be drafted by a notary after the payment has been completed. He or she also checks the signatures of both parties. After signing, the property deed should be registered with the Registry Office.
Payment of the registration tax is due on upon registration.
Buying property at an auction (subasta) is also an option, as it offers rates that are more attractive than regular market ones. Usually, auctions are organized by banks for residences where the owners are unable to repay their mortgage loans. The procedure is not for the inexperienced, however, and it is advisable to contract a lawyer if you intend to participate in an auction.
A list of the current auctions in Colombia is available online, on ColSubastas.
In order to participate in an auction, you need to register on the ColSubastas website, and decide on the property you want to buy. It is most likely that residences are not available for visiting, as they are still occupied by the current dwellers. A 40% advance of the initial auction price should be deposited beforehand in the bank account specified in the auction notice. Photocopies of the Colombian ID and proof of payment should be presented on the auction day.
Once the property has been sold in the auction, the successful bidder needs to deposit the remainder of the amount. All the other participants will have their advance payments reimbursed.