Housing market situation

Buying, Selling, Building, Tax issues, anything regarding real estate or properties in Chile.
Forum rules
NO DISCUSSION OF SPECIFIC REAL ESTATE AGENTS BY NAME, LINK, OR RECOMMENDATION ANYWHERE ON THE CHILE FORUM.
Baltimore
Rank: Chile Forum Citizen
Posts: 55
Joined: Tue Oct 02, 2018 3:13 pm

Re: Housing market situation

Post by Baltimore » Tue May 19, 2020 5:26 pm


PXYC
Rank: Chile Forum Citizen
Posts: 91
Joined: Sun Jan 27, 2019 9:09 pm

Re: Housing market situation

Post by PXYC » Tue May 19, 2020 11:50 pm

Commercial buildings?, sure. Residential not so much in my opinion.
The only lowest than average prices I've seen in Santiago are the total remodel apartments with granny furniture (or in other words, motivated families trying to unload inherited appartments into the market), and only a very few probably not even related to this pandemic.
There will maybe exist a forced-to-downsize wave for the unfortunate unemployed in the middle of 2021 - when things kind of get back to normal, the financial aid is progressively withdrawed, but the old good paying job does not get back for some. Maybe. I'm more optimistic than pessimistic.

User avatar
admin
Site Admin
Posts: 21537
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: Housing market situation

Post by admin » Wed May 20, 2020 9:38 am

There is an mega tsunami of foreclosures and auctions coming.

even setting aside the crisis we are in, no one has been able to move foreclosures and collections through the courts for months now. Just regular ones. courts were in emergency mode. bank attorneys were working from home. notaries and registries were closed or backed up. basically all the things you need to make a forclosure proceeding was broken.

our little regional paper, typically on any given day would have somewhere from 3 to 12 auction notices. prior to seizure and auction, the banks also have to validate the debt in court. so, there is typically 3 to 10 early legal notices, for things like unpaid consumer loans, etc, before they start the forclosure process on property or other assets.

well, there has been almost no legal notices for months now. without those, that means the early process of collecting is all jammed up in the courts. Finally, this week I seen a couple early legal notices, and the first notice of an auction; but, just one. compare that to say 60 days x 5 auction notices a day, is 300 properties, under normal circumstances. That is just the regular flow waiting in the wings to go through the process.

Also, the legal notices slow down in December, January, February, for summer vacation; that does not even include all the auctions caused by the social crisis that were still working their way through the courts from October.

so, forclosures interrupted, everywhere.

The thing is, the banks in Chile have to dump these properties. The dirty secret to why banks in Chile are so loose with their credit, is that it is extremely fast and easy for them to foreclose and send a property to auction. It keeps the banks liquid, and the regulators are on them hard to get all their none-performing loans off the books ASAP. which, works fairly well under normal circumstances. banks, in a hurry, typically can go from start of collection procedures to auction in about 3 to 6 months. perhaps a year; but, they need to keep that flow going or they start getting in to trouble. The regulators will not let them make new loans, if they have a bunch of unresolved deadbeat loans on their books.

so, normal flow of forclosures interrupted by social crises + summer vacation + pandemic + global financial crisis = about a 6 month backlog of forclosures and auctions in the pipe; and we are not done with this by a long shot.

A lot of people that lost their jobs, their buisness, etc, are just starting to hit the bottom of their savings after 3 months of being out of work. many, are just being notified now that they are out of work, as buisnesses tried to weather the storm and keep employees around. the music, in that musical chairs game, has just stopped.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

User avatar
snobrd4life
Rank: Chile Forum Citizen
Posts: 219
Joined: Tue Aug 02, 2011 9:28 pm
Location: South Florida

Re: Housing market situation

Post by snobrd4life » Wed May 20, 2020 10:30 am

snobrd4life wrote:
Mon Jan 20, 2020 11:53 am
Just to give a bit of our experience selling real estate during the "estallido"...

We entered into contract with our current tenant to sell our apartment in Nunoa at X price in CLP at the beginning of October 2019. Peso was at 715. Because we are selling from abroad we had to go to the Chilean consulate to sign a POA (shout out to Spencer Global) to facilitate the transaction. Ironically, that was October 18th and we were watching the Santiago Metro being destroyed live on the TV in the waiting area of the consulate.

Over the course of the following few weeks, things were pretty difficult as many of the certificates that are not available over the internet had to be requested in person at municipal offices. Many of those places were either closed or operating on very limited hours during the state of emergency.
Eventually our buyer told us that his bank had doubled the interest rate for his loan due to the uncertainty and that he would not be able to proceed with the transaction due to the unexpected increase in monthly payment vs pre-estallido estimate. At the time, my wife and I weren't sure if he was just bluffing trying to negotiate down the sale price, was no longer interested in buying due to the chaos and uncertainty, or just needed to find another bank to quote a mortgage. Our stomachs were flipping as the peso was blowing past 800 even as the Central Bank was trying to calm things down with little effect. The news broadcasts were reaffirming everybody's belief that Chile was not just suffering a quick cold, but a much more serious illness...

Since our buyer is our current tenant, I had nightmares of him getting cold feet about the deal and then wanting to just continue renting, negotiate a reduction in rent (which we already know is happening everywhere in Santiago), or moving out all together. We decided to be proactive and introduce our buyer to a few bank executives that were recommended to us by some close friends in order to quote a few more rates. Fortunately both banks came back with reasonable numbers. We are in the middle of January right now and fortunately we are still on track to close at the same X price that we agreed upon in the beginning of October. Peso is still not great sitting at ~770, but who knows where it will be by the end of February. We are still not in the clear, but we consider ourselves pretty fortunate that the whole transaction has not fallen completely apart.

Will update once all is said and done.
May 20, 2020 update...

Add the regular summer vacations and pandemic to the mix... our buyer's new bank has dragged their feet at every step of the way. The quarantines have been excuses for the banks to not move any processes along. Bank executives, processors and lawyers (not Spencer Global, they've been wonderful to work with) have excused themselves from accountability of any kind. Supposedly there is no "home office" structure even though the buyer's bank is a well known Canadian multinational.

I won't bore you with too many details, but answers and progress to any step in the process seem to take 3-4 weeks even with legal support. Feedback has been that employees are dragging out the process as much as possible to avoid making any judgments or decisions without superiors nearby to pat them on the back.

I can only imagine what is going on with the rest of the economy that depends on the banks as a part of doing business in Chile. You could say they are covering their asses which is how they have come to be the idols of Latin America banking, but at the same time I would say how much opportunity are they really leaving on the table by essentially doing nothing at all?

Supposedly we might be able to sign the closing papers next week if all goes according to plan, but seriously never thought this whole process would take 7+ months...
ese ruido blanco es una alarma en mis oídos
Not in Chile for now, but still lurking.

User avatar
41southchile
Rank: Chile Forum Citizen
Posts: 1754
Joined: Mon Jun 12, 2017 2:39 pm
Location: Lakes Region

Re: Housing market situation

Post by 41southchile » Wed May 20, 2020 11:12 am

snobrd4life wrote:
Wed May 20, 2020 10:30 am
snobrd4life wrote:
Mon Jan 20, 2020 11:53 am
Just to give a bit of our experience selling real estate during the "estallido"...

We entered into contract with our current tenant to sell our apartment in Nunoa at X price in CLP at the beginning of October 2019. Peso was at 715. Because we are selling from abroad we had to go to the Chilean consulate to sign a POA (shout out to Spencer Global) to facilitate the transaction. Ironically, that was October 18th and we were watching the Santiago Metro being destroyed live on the TV in the waiting area of the consulate.

Over the course of the following few weeks, things were pretty difficult as many of the certificates that are not available over the internet had to be requested in person at municipal offices. Many of those places were either closed or operating on very limited hours during the state of emergency.
Eventually our buyer told us that his bank had doubled the interest rate for his loan due to the uncertainty and that he would not be able to proceed with the transaction due to the unexpected increase in monthly payment vs pre-estallido estimate. At the time, my wife and I weren't sure if he was just bluffing trying to negotiate down the sale price, was no longer interested in buying due to the chaos and uncertainty, or just needed to find another bank to quote a mortgage. Our stomachs were flipping as the peso was blowing past 800 even as the Central Bank was trying to calm things down with little effect. The news broadcasts were reaffirming everybody's belief that Chile was not just suffering a quick cold, but a much more serious illness...

Since our buyer is our current tenant, I had nightmares of him getting cold feet about the deal and then wanting to just continue renting, negotiate a reduction in rent (which we already know is happening everywhere in Santiago), or moving out all together. We decided to be proactive and introduce our buyer to a few bank executives that were recommended to us by some close friends in order to quote a few more rates. Fortunately both banks came back with reasonable numbers. We are in the middle of January right now and fortunately we are still on track to close at the same X price that we agreed upon in the beginning of October. Peso is still not great sitting at ~770, but who knows where it will be by the end of February. We are still not in the clear, but we consider ourselves pretty fortunate that the whole transaction has not fallen completely apart.

Will update once all is said and done.
May 20, 2020 update...

Add the regular summer vacations and pandemic to the mix... our buyer's new bank has dragged their feet at every step of the way. The quarantines have been excuses for the banks to not move any processes along. Bank executives, processors and lawyers (not Spencer Global, they've been wonderful to work with) have excused themselves from accountability of any kind. Supposedly there is no "home office" structure even though the buyer's bank is a well known Canadian multinational.

I won't bore you with too many details, but answers and progress to any step in the process seem to take 3-4 weeks even with legal support. Feedback has been that employees are dragging out the process as much as possible to avoid making any judgments or decisions without superiors nearby to pat them on the back.

I can only imagine what is going on with the rest of the economy that depends on the banks as a part of doing business in Chile. You could say they are covering their asses which is how they have come to be the idols of Latin America banking, but at the same time I would say how much opportunity are they really leaving on the table by essentially doing nothing at all?

Supposedly we might be able to sign the closing papers next week if all goes according to plan, but seriously never thought this whole process would take 7+ months...
Your experience sounds exactly as it always as been, pre rona and pre 18Oct , nothing really sounds that unusual in what you describe, the banks here are as inefficient as the government 9 times out of 10.
“Facts do not cease to exist because they are ignored.”

User avatar
snobrd4life
Rank: Chile Forum Citizen
Posts: 219
Joined: Tue Aug 02, 2011 9:28 pm
Location: South Florida

Re: Housing market situation

Post by snobrd4life » Wed May 20, 2020 11:15 am

I'm not saying it was perfect before, but we definitely didn't go through as much bs with the banks as when we bought the apartment in the first place.
ese ruido blanco es una alarma en mis oídos
Not in Chile for now, but still lurking.

User avatar
41southchile
Rank: Chile Forum Citizen
Posts: 1754
Joined: Mon Jun 12, 2017 2:39 pm
Location: Lakes Region

Re: Housing market situation

Post by 41southchile » Wed May 20, 2020 11:24 am

admin wrote:
Wed May 20, 2020 9:38 am
There is an mega tsunami of foreclosures and auctions coming.

even setting aside the crisis we are in, no one has been able to move foreclosures and collections through the courts for months now. Just regular ones. courts were in emergency mode. bank attorneys were working from home. notaries and registries were closed or backed up. basically all the things you need to make a forclosure proceeding was broken.

our little regional paper, typically on any given day would have somewhere from 3 to 12 auction notices. prior to seizure and auction, the banks also have to validate the debt in court. so, there is typically 3 to 10 early legal notices, for things like unpaid consumer loans, etc, before they start the forclosure process on property or other assets.

well, there has been almost no legal notices for months now. without those, that means the early process of collecting is all jammed up in the courts. Finally, this week I seen a couple early legal notices, and the first notice of an auction; but, just one. compare that to say 60 days x 5 auction notices a day, is 300 properties, under normal circumstances. That is just the regular flow waiting in the wings to go through the process.

Also, the legal notices slow down in December, January, February, for summer vacation; that does not even include all the auctions caused by the social crisis that were still working their way through the courts from October.

so, forclosures interrupted, everywhere.

The thing is, the banks in Chile have to dump these properties. The dirty secret to why banks in Chile are so loose with their credit, is that it is extremely fast and easy for them to foreclose and send a property to auction. It keeps the banks liquid, and the regulators are on them hard to get all their none-performing loans off the books ASAP. which, works fairly well under normal circumstances. banks, in a hurry, typically can go from start of collection procedures to auction in about 3 to 6 months. perhaps a year; but, they need to keep that flow going or they start getting in to trouble. The regulators will not let them make new loans, if they have a bunch of unresolved deadbeat loans on their books.

so, normal flow of forclosures interrupted by social crises + summer vacation + pandemic + global financial crisis = about a 6 month backlog of forclosures and auctions in the pipe; and we are not done with this by a long shot.

A lot of people that lost their jobs, their buisness, etc, are just starting to hit the bottom of their savings after 3 months of being out of work. many, are just being notified now that they are out of work, as buisnesses tried to weather the storm and keep employees around. the music, in that musical chairs game, has just stopped.
Yeah a real shit show coming, although I don't know about the statement that it is easy for them to foreclose and send a property to auction, especially not on consumer loans and being Chile they always look for the workaround to avoid it. Even mortgages I know people that have not made a mortgage payment for nearly a year and the foreclosure process took nearly a year, even then it involved police. And also consumer loans are just that, they dont have collateral of a property, so they cant come and foreclose your family home, if you didnt pay off the 20 million peso loan you got for a new pick up, especially if you made a couple of payments before not paying anything else.
Chileans have a million and one ways for working the system to their benefit, but yeah there probably is a lot of distressed mortgages out there, true, but the effects of that wont be seen till the end of the year or 2021, it will keep getting kicked down the road a bit more yet .
“Facts do not cease to exist because they are ignored.”

User avatar
41southchile
Rank: Chile Forum Citizen
Posts: 1754
Joined: Mon Jun 12, 2017 2:39 pm
Location: Lakes Region

Re: Housing market situation

Post by 41southchile » Wed May 20, 2020 11:26 am

snobrd4life wrote:
Wed May 20, 2020 11:15 am
I'm not saying it was perfect before, but we definitely didn't go through as much bs with the banks as when we bought the apartment in the first place.
Yeah it's possibly worse now, bullshit is the middle name for the banks, you must have struck it lucky first time around and had someone competent in the bank, there are a couple of them out there.
“Facts do not cease to exist because they are ignored.”

User avatar
admin
Site Admin
Posts: 21537
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: Housing market situation

Post by admin » Wed May 20, 2020 12:14 pm

well, if it makes anyone feel better, the government is suffering from the same bullshit with the banks; and the government is the one guaranteeing the loans.

https://www.df.cl/noticias/mercados/ban ... 05912.html
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

PXYC
Rank: Chile Forum Citizen
Posts: 91
Joined: Sun Jan 27, 2019 9:09 pm

Re: Housing market situation

Post by PXYC » Wed May 20, 2020 11:29 pm

So Chile won't implement flexibilization of loan payments like, hm, almost all other countries? That would be adding insult to injury to existing social claims, and also creating a bigger economic problem than the NPL portfolio increase if it causes economy to contract on itself more than it already is.

User avatar
admin
Site Admin
Posts: 21537
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: Housing market situation

Post by admin » Thu May 21, 2020 10:55 am

they are bypassing the banks and starting direct loans to pymes now.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

Post Reply