The Practice of Real Estate in Argentina
The real estate brokerage industry in Argentina has two types of practitioners. Most of the people in the formal real estate industry are highly trained and extremely professional. Unfortunately, there are still a few “coyotes”. These are mostly part time agents who represent themselves in the transaction and are basically scrambling to make a commission.
Properly practicing real estate in South America requires not only a great deal of skill it requires a sharp intuition and a creative mind. Think of the process as building a modern building with prehistoric tools. We are used to a functioning MLS with comparables and accurate information. We are used to easy access to accurate public records of past transactions.
The records of past transactions in much of the world do not accurately reflect what happened in the settlement. In order to avoid taxes, part of the purchase price is often transferred outside of the formal transaction. Imagine how this affects the appraisal process. Appraisers try to talk to as many people as possible to determine what happened in the settlement. They compare the sales prices they trust to the offering price. Offerings are used as comparables and the ratio obtained on the trusted transactions is applied to the offering price. This is considered more accurate that the recorded information.
The lack of a formal MLS hampers the agent’s abilities to obtain exclusive listings. Many of the franchise companies have set up private MLSs and are using them as a way to obtain exclusive listings. In Buenos Aires the rudiments of a formal MLS are in place. The hinterlands are still a no-mans land where the agents all take the same listing and race to see who collects a commission.
New properties are favored above used properties by owner occupants. For this reason developers are the best buyers for used and especially free-standing homes. They are also the best clients for agents who want loyal clients that value their services.
The Smithsonian Magazine has published an article on the rebirth of Buenos Aires. That will be reviewed in my next post. http://www.smithsonianmag.com/travel/Hola-Buenos-Aires.html
David Segrest, CIPS, CCIM, CEA, TRC
It seems to me that the lack of MLS would hinder the progress and sales prices of existing and new developments. The more people that have access to the data would give properties more exposure thus resulting in higher sales prices and commissions.
I’m just taking a stab on this based on my perceptions of how it works in the U.S.
You are absolutely correct. As the agents in Argentina work to develop their MLS, they are working to help the property owners as well as the industry. One of the best things an MLS brings to real estate is transparency. Transparency can be a major reducer of risk. Risk and yield (price) are inversely related.