Chile Forum

My wife and I are officially looking to buy our primary residence sometimes in 2009 (our current lease ends in November so we'd like to buy 4-7 months from now after we've completed our sale in France and higher summer prices are gone). We're hoping to benefit from the high Euro and USD and what looks like a buyer market right now. We hope we can get a lot of house for the money and plan to spend 150M-200M to get a 300+ square meter house / 600+ square meter lot. From early discussions it seems it might be possible to bid 180M on houses listed around 240M and actually have a chance to close a deal. Of course we'd like to have it all: view on the ocean, quiet neighborhood with no graffiti, walkability, close availability of micros/collectivos, ... Obviously we'll end up with a compromise but we want to make sure we get this purchase right.

So far, here's what we've heard/observed, subject to more due diligence and asking for any additional input from Allchileans familiar with the areas and its market dynamics:

* From south to north, nicer neighborhoods include the older Cerro Castillo and (to a lesser extent) Recreo in downtown Viña, to the Mauco Mall area on Libertad (if you're looking for an apartment) to Reñaca Bajo/Jardin del Mar/Los Almendros, to Las Golondrinas, Los Pinos on the way to ConCon, to Bosque de Montemar in ConCon itself, as well as the coast next to the dunes.

* It's harder to find large apartments in Reñaca and ConCon than in Viña itself because the seaside buildings there are really marketed as second homes for weekends and holidays.

* Land in these areas is valued between 2 and 4 UF per square meter. Decent construction costs 15 to 25 UF per square meter. If you combine these two criteria I can't fathom how apartment builders in ConCon (there's couple new high buildings underway there) can ask for 45-55 UF per square meter with a straight face. We've visited one and the quality of the materials they use (for instance for flooring) is not that high-end.

* Some of the bigger houses have been listed for more than a year and are now listed at cheaper (though still possibly inflated) prices.

* At similar prices you run into construction standards that are quite different (i.e. ugly kitchen and bathrooms that look right out of the 70's vs. brand new and classy ones).

* It's a buyer market because higher interest rates and a higher UF have squeezed some home owners. Also, you have more people retiring or at least with their kids leaving home and more divorces, which puts large homes on the market.

* Many properties are not listed, you need to hear about them from the grapevine.

Again, that's what we've seen after a spending a bit more than a year in this area, but any input will be greatly appreciated as we're still early in the actual research process to buy, and it's not easy to really assess real estate value here. It's a big move for us and we don't want to lock most of our savings (+ get into debt) into something that might lose value in the future.

Since you intent to purchase a piece on property with "cash on hand" you may want to keep an eye on posible "remates" land auctions, as is not unusual to find a good property in such a manner, and at that point you are reallysaving money.

They should have listing from those in El Mercurio.

Yes we have remate judiciales in mind. Some banks list properties they're selling too.

This looks nice and has been on the market for over a year.Perhaps they would be open to offers.

http://www.portalinmobiliario.com/propi ... 1&IdCom=71

We visited that house last year when we were looking to rent. It's close to the Radisson, and looks quite nicer on these pictures than it really is. You gotta be careful in that area in ConCon as a) there's a lot of humidity pouring down the rocks along the coast and b) I'm told there are talks of widening the road, which might lead to eminent domain expropriations.

otravers wrote:We visited that house last year when we were looking to rent. It's close to the Radisson, and looks quite nicer on these pictures than it really is. You gotta be careful in that area in ConCon as a) there's a lot of humidity pouring down the rocks along the coast and b) I'm told there are talks of widening the road, which might lead to eminent domain expropriations.

I've wondered about the road and the need to eventually expand/widen it. I doubt they will be able to widen it there as the cost of purchasing those houses would be too great.Even if eminent domain meant the seizing of the propertys without fair market value compensation IRRC the Euromarina and other high rises are built too close to the road edge and will surely not be knocked.I think it is safe to say that eventually a highway will be constructed up the hill to release the congestion of this road.

As for the house example I displayed, It had no pics of the front and that is usually a sign I guess

Please keep us posted on your progress if you don't mind, Im very interested in your findings.
Thanks and good hunting.

We have been having some good luck with remates for Clients this year. We picked up a house in Pucon/villarrica over the lake that was on the market for 120 million for 57 million at auction. The news papers seem to be adding about an extra page a week to the remate section. Mostly construction equipment (this is an indication of perhaps better prices to build also), but also about half a page of land and home auctions.

Still, make sure you get someone that really really knows how to handle auctions. Just because you buy it at auction, does not mean the title is clean. You might have just bought a whole bunch of legal trouble. You still need to do the title search, and all other checks. Who ever is handling it needs to really be on top of the proceedings. A lot of paper gets shuffled fast during an auction, and you need someone camping at the court house, the banks, and under every bush both before and after the proceedings.

Yea, we are getting a lot of those central region developers, especially those guys with apartment buildings under construction, being very user friendly these days. They are making concessions to our clients in negotiations that they never would before.

The second home market is what you are after. That is the one that is going to implode in 2009 along the central coast. We just had an appraisal done on a 260 meter house on a 400 meter lot near the beach in the central region (sorry, can't share more that right now), U.S. standard construction, and it came in at a rebuild value of about 115 million pesos but a liquid value in the market of 70 to 80 million pesos. The other compariable homes where all floating around the 80 million.

Cash is king in this market as the banks have just clamped down on mortgage loans that include down payments, and reduced the mortgage they will give to about 70% of the value. So, take your time. It is going to take people about another 3 months to start realizing their properties are not worth those imaginary figures they have in their head, they are not moving as fast, and they need to unload their vacation / investment home on the beach to better be able to pay for their day to day life in Santiago or wherever.

Remember also, summers are terrible time to buy in Chile with all the summer tourist running around. People get an inflated idea of what their property is worth simply because of all the window shoppers. In the winter when the beaches are empty, that is the time to take your cash and revisit some of your favorite houses or the new ones that will come on the market from summer impulse buys.

Keep an eye on your per square meter building cost also. The export of things like lumber has dropped, builders are in trouble, and I suspect they will be more willing to play 'let's make a deal' if you want to go that way.

Good post boss.

I also want to mention that I see alot of propertys listed twice by diffrent real estate offices and with different asking prices.

As for remates and legal questions, I would assume that the abagado would take care of those issues?
I'm also assuming that one can use the services of spenserglobal in that area? (even thow I know that you deal primarily in the Sur).

*First to Otravers, sorry for hogging your thread but I think this question is relavant to the subject*

Charles,
In the event that property in that region declines in value as seems likely, will banks who now seek a minimum of 70% LTV. seek additional monies from existing mortgage holders to bring their mortgage ratios up to said 70% LTV?
If so will this not force more mortgagees into default?

murf wrote:I also want to mention that I see alot of propertys listed twice by diffrent real estate offices and with different asking prices.

Yes, we've seen that too. You can also sometimes see the same property listed twice at its old (higher) and its new price on the same real estate portal!

First, banks I don't believe in Chile will make you pony up a bunch of money if the value drops. If you default, it goes to auction, and the value drops then they will come after you for the difference.

Yes, we do handle auctions. My wife Zandra Valenzuela, when she just was getting going after law school worked in a court room in Santiago for a few years. They handled thousands of auctions every year.

By the way we are located in the South, but we handle deals across Chile. We have association agreements with three law firms (we just added the largest in Southern Chile to our roster), plus a couple dozen attorneys in solo private practice. We also have consultants in other areas such as appraisers, agricultural experts, and so on spread around Chile.

The only place we really don't actively pursue projects are in Santiago. We do handle work in Santiago for clients by special request or necessity (all roads lead to Rome after all), just not a market we are terribly interested in Chasing because Santiago is fairly user friendly for foreigners. It is a big international city, with most everything ready to go. It is the rest of Chile that people need help. So, don't worry about our geographic limits.

In fact, now that I think about it I do not believe we have ever handle a property purchase in Temuco where we are located. In fact, it was only last year that we started to get a good number of clients even in the region. Places like Vina del Mar are easy to reach in comparison to places like Futaleufu in the Patagonia. I don't need to ride a horse in to the mountains for a day to check the property.

We bought in Cerro Castillo last year and are very happy with our decision.

An area that will always do well - with prices that depend upon long time locals rather than second homers. Some nice character proerties. Walking distance to everything but in a very quiet neighborhood. No through traffic at all. Police headquarters on the hill deters the type of visitors you dont want or need. Houses built on granite (ask locals about the 1985 earthquake - not sure I would want a property built on sand). High enough in case of flooding or tsunami. Buying a house should be in an auction with a big discount is tempting but also remember that you are planning on calling this home for a long time.

Either way - happy house hunting, WorldCitizen