Chile Forum

You need to place that in the classified section, and please do not publish your emails in forum posts.

We have one house in our shortlist that's located on Cerro Castillo. The place would need remodeling because of humidity problems but we definitely like the neighborhood. We're getting closer to make bids (ofertas) but we've lowered our budget quite a bit. For one, the peso has gained back about 20%. Second, we really want to avoid getting into long term debt here. If high inflation comes back we don't want to be stuck with a 15-year loan in UFs.

We did it! We finalized the purchase of a house on the shore in ConCon yesterday (well, not the first row of houses behind the road, just one row behind it because the road might be widened eventually and we didn't want to be at sea level for fear of tsunamis). We're pretty happy though we're a bit scared too because significant renovation is needed to bring it to decent standards and we'd like to have done most of it by the end of August. We're talking to contractors right now to get started quickly (our maestro will do a lot of stuff too) and hopefully not make a mess of it.

Here are a few notes if they can help others in any way, with the usual eeuunikkeiexpat caveats: DYOD, YMVA, IANAL, plus my own: I Don't Know What I'm Doing (IDKWID), Following My Advice Might Lead To An Early Painful Death (FMAMLTAEPD) and so forth. Disclosures aside, here's what we went through these past months:

- Many real estate agents are full of it and don't understand that a market is where supply and demand meet. Clue for these guys: if there's no demand at the price you're asking, then you're too expensive. Hello, prices from 3 years ago do NOT justify prices today. As has been said on this forum already, agents typically behave like they're representing only the seller (even though the buyer pays half of their commission) and they do a pretty poor job of it because they're letting sellers build entirely unrealistic expectations (especially in this severe, lasting recession that DOES affect Chile, even if less than other countries). Some realtors are better than others though. We found one that was willing to argue with an owner in favor of our aggressive "offerta" instead of bullshitting us about phantom bidders also interested in the property (like there are lot of 150M-250M property transactions happening in Viña right now... riiiiiight.) We've seen people who won't bulge of their 250M price because they're selling a large house in Cerro Castillo. Well guess what, if all your floors and some walls are ruined by water damage and you have crap going on like calefons within the house, your house is NOT worth USD450K, safe historical district or not.

- Low ball how much you're willing to spend when you talk to agents (or anyone for that matter). The upper number in the range you'll give will magically become their starting point. Gringo tax at work I guess. Just play hard ball and make sure you have time on your side. We ended up at a price we're quite comfortable with relative to the location and size of the house. Remember that 100M pesos is already quite significant money here. Repeat after me: 100M is a lot of money outside of Santiago. Laugh at anyone pretending that 200M is a decent price to pay for anything but outstanding property. I can guarantee houses are not moving at that price right now - we've been looking at listings and talking to people in the area for 18 months straight. Some owners have had their house on the market for two years yet raise prices. LOL!

- Do NOT make an offer on a house before seeing its "escrituras". You'll now how much it was last bought for, and you'll know its value as assessed by local tax authorities. Paying 1.2-1.3x that value is usually a pretty decent deal. Paying 2x is, as far as I'm concerned, a scam totally out of touch with the current economic reality, land and construction costs, and how slowly houses are moving in the market for larger houses in the area. Do not let speculators dictate pricing to you. People WILL try to bullshit you. Find a seller that's willing to hear it like it is and needs the money. You'll find that some agents actively try to prevent that discussion from happening. It seems they prefer to get 0% of 200M rather than 4% of 120M.

- Understand that total built space is significantly higher than livable space. It includes things such as terraces or garages. Houses listed at 300 square meters are more like 200 square meters of real livable space (at least the way is defined in France which is legally defined and pretty strict). Make sure to know what your space requirements are or you'll end up wasting time visiting houses too small for you (well, at least in our case, space was a big requirement because we both work from home and have two young kids - do the math).


To get your money from abroad to the seller, what we did was:

1) Open a simple cuenta prima at a Chilean bank (the most barebone, debit card based type of account). A RUT and not much else was necessary at the time we did this in 2007. You're not really going to use that account, except for step 2.

2) Wire euros/dollars to the bank which will hold the money for you for 30 days. They wouldn't even need you to have an account with them, but US/Euro banks will insist on having an account number to proceed with a SWIFT wire. The money is not actually going to be stored on your cuenta prima.

3) Ask the bank to do a vale vista which is somewhat like a "bank check." It can be done either in your own name (but then make in "endosable" by a third party) or in the name of your property seller. We did the former which was useful because our transaction involves lifting the seller's mortgage - he won't actually see the money until that's taken care of, in the meantime the notary has the money.

You might need several vale vistas since they max out at 49.99M pesos. They cost 8,000 pesos each. BCI's exchange rate was about 10 pesos below xe.com's rate on that day, plus a small flat fee. You'll fill in a statement relative to the origin of the funds that they'll forward to Chilean tax authorities, but that's not holding you back from moving forward with your purchase. With the vale vista(s) you can pay your seller. The whole thing is relatively easy, but you still want to budget an hour or two going through paperwork at the bank to get your money converted in pesos (Euros seemed slower to handle than US dollars), turned into vale vistas and so forth.

The best part for us: we paid most of the house upfront, have a no-interest deal to pay the rest over the next 15 months to the owner, and then we'll fully own our property (well we'll probably keep making improvements over several years, but on our own terms). No damn credit involved - banks just don't know how to work with foreigners here anyway as far as credit is concerned.

Great information. Congratulations on your new house.

Bravo, and I would pretty much say everything you said is how it is as far as our experience. Even the minor details I might pick at are often case by case deviations given, that we run in to also. Like everything in Chile, lighting rarely strikes twice and in exactly the same way.

We are on our way to Santiago this week for meetings with the banks and the Central Bank exactly because of the complete lack of knowledge exhibited by branch managers regarding the fundamentals of international banking. You just would not believe the stuff we recently had come out of the mouth of regional manager at a recent meeting. The ignorance of the basics of buisness, economics, and law was shockingly bad. I am not even talking about international versions, just Chilean versions. It was to the point where we simply could not have a conversation with them, because their frame of reference for how buisness functions was about at what I would expect from say a high school student with a checking account and part time job. Again, I am talking about a regional manager here of a major bank. Hell, I could likly have a more in depth conversation with an assistant manager at McDonald's down the street.

How does someone get to the regional manager position in Chile? They have a word for it... pitutos.

Business culture is weird in Chile; from what I have been told and based on the experiences of in-laws most companies don't like to hire relatives. At my wife’s last teaching jobs she was specifically told that they will not hire any one from her family at the school. And more recently may brother-in-law was fired from a job because my sister-in-laws husband used to work there and was fired over a he said he said mix up with the manager. But to get off the bottom rung of the later you basically have to be related to the president of the company. So in one instance it is frowned up on... but necessary to get any where with your career. Go Figure.

Very interesting thread thank you for sharing and congratulations - well done!!!.

Beautifully detailled posting! Thanks, Olivier, for good, solid, genuinely useful guidance.

I've but one question. When you write,

otravers wrote:. . . . 3) Ask the bank to do a vale vista which is somewhat like a "bank check." It can be done either in your own name (but then make in "endosable" by a third party) . . . .

do you mean to say that (if the vale vista be payable to oneself) the draft should simply be endorsed on its back? If so, to whom? (I'd be fearful of making an endorsement in blank -- that is, payable to bearer.)

Thanks, very, for your patience.

RWS wrote:do you mean to say that (if the vale vista be payable to oneself) the draft should simply be endorsed on its back? If so, to whom? (I'd be fearful of making an endorsement in blank -- that is, payable to bearer.)

Yes the vale vistas were endorsed at the back, payable to the seller but they were physically kept by the notary until all the paperwork cleared. You're right, moving around with an "endorsable" draft whose back is still blank is not the brightest idea, but hey, I held them close to my chest and didn't tell anyone! Obviously it's best to have all the details about the people you're making the vale vista for readily available when you go to the bank. Well it was fun carrying almost 200 grand of quasi-cash on me for a couple of hours. Once in a lifetime I guess.

Thanks, Olivier. I suppose Chilean notaries to be ethically bound, much as lawyers in the northern hemisphere, so am relieved to read your reply. Not that I've any immediate likelihood of purchasing . . . .

After more than 5 months of work we have finally moved into our house a week ago. Quite an extensive remodeling was needed, and there's still a lot left to be done (which was expected buying a large, old house). When the dust settles I'll try to post pictures and what we learned in the process. What the maestro means with "si claro" or "al tiro" is not what you think he means! It's been quite a ride, but the ocean view is priceless.

Always amazes me how peoples projects plod on in silence for months and years, and then out of the blue either on the forum or in email we suddenly get another update. Projects we thought were dead.

Thus, why my poor office server needs to be able to search 60+ gigs of email at any moment. Most companies just archive 5 or 6 year old email and forget about it. We still have clients contacting us everyday about stuff.

Would love to see the photos.