We provide a guide to selling real estate in Colombia for foreigners including the steps involved in selling property in Colombia and typical closing costs.
The real estate market in Colombia operates differently than the real estate markets in the U.S. and other countries. And many real estate agents in Colombia don’t speak English.
We previously looked at 11 things that real estate agents in Colombia may not tell you. Buying, selling or renting a home in Colombia and working with real estate agents in Colombia as a foreigner can be challenging.
On the Medellin Guru website, we already have an extensive series of articles about renting apartments (both furnished and unfurnished), articles about neighborhoods in Medellín and articles about buying real estate but we haven’t yet covered selling real estate.
Several Medellin Guru readers have asked about selling real estate in Colombia and the steps involved. So, we now provide a Colombia real estate seller’s guide.
Selling Real Estate in Colombia
Foreigners are permitted to buy and sell real estate in Colombia. The process for selling in Colombia is essentially the same for foreigners and Colombians.
However, there are two important notes for foreigners to be aware of when selling real estate in Colombia. In Colombia there is NO title insurance and there is NO escrow (except for new construction properties).
There are several reasons that foreign investors may want to sell real estate in Colombia. Here are three of the most common reasons for foreigners:
- Moving back to home country or to another country.
- Need the funds from the property sale for another purpose.
- Want to sell a property to enable buying another property.
Note that it can take much longer to sell a property in Colombia than to buy. It can be relatively quick to buy a property in Colombia. I have met several expats that have bought properties in about four weeks after finding a place.
However, an article in the New York Times in 2015 reported that the average time to sell residential properties in Bogotá was 270 days. Fincas and high-end properties can take even longer to sell.
Preparing a Property for Sale in Colombia
Not all Colombians properly prepare real estate properties for sale or rent. For example, I have seen properties on the market for sale and rent that are dirty inside and have stained walls.
Preparing a property for sale in Colombia is similar to what is done in other countries. Here are five tips for preparing a property for sale in Colombia:
- Remove clutter – you want to maximize the perceived space in your property. If the property is occupied, the more clutter, the less desirable your property will be perceived when prospects view your property. Clear out all the non-essentials and rent storage space for your things if needed.
- Paint the interior if needed – old, stained paint makes rooms look decrepit. A fresh coat of paint is normally worth the relatively small investment. Also, remember selling your home is not about personal preferences but appealing to the masses. So, stick with off-white.
- Pay for a professional cleaner – a clean home is more inviting to potential buyers, whereas a dirty home can turn them away. The easiest way to make your home look its best is to hire a professional cleaning company. Make sure your kitchen and bathrooms are spotless. Buyers will typically pay more attention to these areas.
- Repair things your real estate agent advises – many home renovations are generally a bad investment for sellers, as it is hard to get your money back in a sale. But if your real estate agent advises that you fix some things you should do it – this is typically things like a stain on the ceiling or a leaking toilet that potential buyers will notice.
- Make sure your property photos are great – the photos used in a listing can result in more viewings and help in the sales process. Keep in mind that photos may be first thing anyone sees. If you are not skilled at photography and your real estate agent isn’t either, hire a professional. This can be worth the expense.
What are the Steps to Selling Real Estate in Colombia?
There are six primary stops to selling real estate in Colombia:
Step 1: Find a Good Real Estate Agent
The first step in selling a property in Colombia is to find a good real estate agent. Working with a professional to sell your property has many benefits, as it is more difficult to sell a property yourself.
An experienced real estate agency can usually sell your home faster, and for a better price, than you can on your own. And if you are a foreigner in Colombia it is important to find a bilingual agent.
In addition, before a real estate agent begins their work of selling your property, they can be a great source of information to ensure the property is priced correctly. Don’t be like many sellers in Colombia who put a ridiculous price on their property – resulting in it sitting there for years without an offer.
Also, keep in mind there is no licensing of real estate agents in Colombia. So, it’s possible to find real estate agents that aren’t very professional and don’t really have much experience.
Step 2: Showing the Property to Prospective Buyers
Once you have found a real estate agent, you should start to receive requests to show the property.
Make sure you have prepared the property before showings using our tips in the previous section. Also, it is best for the owners not to be there for showings and if you have pets take them elsewhere. Some people don’t really like pets.
In addition, let the sunlight in if you can for property showings, open any curtains and shades. Also, add better lighting if your property is dark inside. Small things like lighting can make a big difference when showing a property.
Step 3: Negotiation and Verbal Offer
This is when a buyer negotiates with the seller for the price and terms.
This is when a lawyer will check a certificado de tradición y libertad, which is a history of the property, and a certificado de paz y salvo predial that states municipal property taxes have been paid and a certificado de paz y salvo de valorización that verifies that taxes related to increases in value of the property have been paid.
Also, if the property is located in an apartment building or gated community, a lawyer will check if there are a lot of unpaid administración fees (like HOA fees in the U.S.). Some apartment buildings or gated communities do not do a good job of collecting administración fees from owners resulting in not having sufficient funds for maintenance.
If everything checks out, it is time to negotiate price with the prospective buyer. Nothing is binding at this point.
Step 4: Promesa de Compraventa – the Purchase Agreement
After negotiation, a lawyer will draw up a purchase agreement, known as a promesa de compraventa.
This is a binding contract where you state the intention to sell at a given price and the buyer states the intention to buy.
Keep in mind that Colombians are sophisticated negotiators. So, it is not uncommon for Colombians to be renegotiating right up to signing the promesa de compraventa at a notary. You can also make changes if you feel they are needed before signing the purchase agreement contract at a notary.
What is Included in a Typical Promesa de Compraventa?
There are several common clauses in typical real estate purchase agreements in Colombia, including:
- Price and what items are included– is the parking, storage, stove, curtains, etc. included? Keep in mind that parking may have a separate title. Also, the owner can remove anything not physically part of the apartment including light bulbs and appliances. So, make sure what you want is included in the contract.
- Down payment– anticipo – this is essentially a down payment to secure the deal and is usually 30 percent but can lower. This is negotiable.
- Penalty Clause– cláusula penal – the penalty clause covers if the buyer does not proceed with the deal and could lose the down payment of 10 to 20 percent. And if the seller does not proceed, the seller can be sued for a lien on the property for the penalty amount agreed to, usually 10 to 20 percent.
- Settling of mortgages and liens– it is not possible to transfer property in Colombia to a new owner unless it is free of mortgages, leans, taxes and administration fees (HOA fees).
- Commercial and declared value– valor comercial, valor catastral – in Colombia and many other countries in Latin America there is a gap between commercial values (what a buyer pays) and declared value (what the government thinks the property is worth for taxes).
- Taxes, HOA and rent are prorated– this is just a calculation that depends on the purchase date – taxes are paid yearly and prorated, administration (HOA fees) are paid monthly and prorated. If a rental property, rent should be prorated.
- When to sign at the notary– the promesa de compraventa will included a date, time and location for the final closing when all parties exchange final payments (typically by Cheque de Gerencia issued by a bank or a bank transfer – keep in mind there is no escrow in Colombia), and the title is signed over from the previous owner to the new owner.
Step 5 – Closing at a Notary
If things go as planned in the promesa de compraventa, the closing happens on the date specified in the purchase agreement with signing of titles, exchanging of funds and the new owner receiving keys to the purchased property.
However, sometimes issues arise and this closing date may slip.
Step 6 – New Owner Gets the Title
If all things go smoothly with the closing, a lawyer will take steps to ensure everything is done correctly with the Registro de Instrumentos Publicos, which handles titles in Colombia.
Once the new Certificado de Tradición y Libertad is issued, the new buyer can rest assured the property is his/hers. It typically requires about week for a new Certificado de Tradición y Libertad to be ready.
What Are the Closing Costs Involved in Selling Real Estate in Colombia?
Selling real estate in Colombia involves closing costs, which include paying some taxes and fees. Closing costs at the time of purchase include notary and registration fees as well as legal fees and real estate agent commissions.
Closing costs in Colombia include:
- Withholding (Retención en la Fuente) – 1 percent, paid by seller
- Registration (Registro) – 1 percent, split 50-50 by seller and buyer
- Government tax (Rentas) – 1.05 percent, split 50-50 by seller and buyer
- Notary fees – usually less than 1 million pesos, split 50-50 by buyer and seller
In addition, there is the real estate commission of 3 to 5 percent normally paid by the seller. For a lower commission, this is typically with less services provided by a traditional Colombian real estate agency.
Also, there are legal fees paid by the buyer for a title study, purchase contract and closing/title change, which are typically a fixed price regardless of the value of the property. Two lawyers we contacted quoted on average 2 million pesos.
For a 300-million-peso property, the closing costs would be roughly:
- 6 million pesos for the buyer
- 7.5 million pesos for the seller
In addition, the seller would be responsible for paying at least a 3 to 5 percent commission to the real estate agency. And the buyer would be responsible for legal fees.
So, the seller would be paying 5.5 to 7.5 percent of the purchase price for closing costs and the real estate agency commission. And the buyer would roughly be paying around 3.0 percent of the purchase price for closing costs and legal fees.
Are You Looking to Buy or Sell Real Estate in Colombia?
Medellin Guru partnered with RE/MAX Coffee Realty to offer real estate services to foreigners and Colombians interested in buying and selling properties in Medellín and Colombia.
Several Medellin Guru readers have asked about real estate and advice about buying and selling real estate. So, we partnered with RE/MAX Coffee Realty to offer reliable real estate services to readers.
We decided to partner with RE/MAX Coffee Realty for services for buying and selling real estate for several reasons:
- RE/MAX is the largest real estate company in the world and is a well-known brand for foreigners.
- RE/MAX is one of the largest real estate companies in Colombia with 35 offices in four cities (Medellín, Bogotá, Cali and Barranquilla). So, RE/MAX can offer real estate services to readers in several locations in Colombia.
- In Colombia, RE/MAX has over 350 real estate agents including more than 70 agents in Medellín. Also, RE/MAX has agents that are bilingual and speak both English and Spanish.
- RE/MAX ensures properties are not overpriced by performing a study of market property prices known as an ACM (Análisis Comparativo del Mercado).
To use this real estate partner service from RE/MAX, just click on the button below.
Fill out a very short form and RE/MAX offers a free consultation to provide information about the local market, current pricing information and tips for buying or selling properties.
Medellin Guru’s Guide to Buying, Selling and Renting Apartments and Choosing a Neighborhood
On the Medellin Guru website, we have a comprehensive and up-to-date guide to buying, selling and renting apartments and choosing a neighborhood in Medellín found in several articles, including:
Buying and Selling Apartments
- Medellín Real Estate: 2020 Property Buyer’s Guide for Foreigners
- Selling Real Estate in Colombia: A Guide to Selling for Foreigners
- Top 17 Mistakes Foreigners Make When Buying Real Estate in Colombia
- Current Costs to Buy New Apartments in Medellín – 2019 Update
- Rent vs Buy: Downsides of Renting and Buying Property in Medellín
- 11 Things Real Estate Agents in Colombia May Not Tell You
- How to Obtain an Investment Visa for Investments in Real Estate
Renting Unfurnished Apartments:
- Apartment Rental Guide: Renting Unfurnished Apartments in Medellín
- Guide to Finding Unfurnished Apartments in Medellín and Casas
- Guide to Overcoming the Fiador (Cosigner) Requirement in Colombia
- 2019 Unfurnished Apartment Rental Costs in Medellín
- 6 Inexpensive Neighborhoods for Unfurnished Rentals in Medellín
- Furnishing Apartments: A Guide to Furnishing Apartments in Medellín
- Apartment vs Casa (House) Rentals in Medellín: Pros and Cons
Renting Furnished Apartments:
- Furnished Apartment Rental Costs in Medellín – 2019 Survey Results
- Guide to Finding a Furnished Room for Rent in Medellín
Choosing a Neighborhood in Medellín:
Also, we have several articles that can be used to help foreigners choose a neighborhood in Medellín:
- What are the Safest Neighborhoods in Medellín and the Aburrá Valley?
- 5 Best Neighborhoods in Medellín: A Guide to Choosing a Neighborhood
- 8 Downsides of El Poblado: Living in Medellín’s Expensive Neighborhood
- Estratos: A Guide to Understanding Estratos in Colombia
- El Poblado vs Laureles: Which is the Better Neighborhood to Live in?
- El Poblado vs Envigado: Which is the Better Neighborhood to Live in?
- El Poblado vs Sabaneta: Which is the Better Neighborhood to Live in?
- El Poblado vs Belén: Which is the Better Neighborhood to Live in?
- 2018 Unfurnished Apartment Rental Costs in Medellín in 5 Neighborhoods Popular with Expats
- 6 Inexpensive Neighborhoods for Unfurnished Rentals in Medellín
The Bottom Line: Selling Real Estate in Colombia – A Guide to Selling for Foreigners
Investing in real estate in a foreign country can be exciting and rewarding but also involves some risks.
If you are a foreigner buying real estate in Colombia, it is also important to understand the steps involved in selling real estate in Colombia plus the closing costs required, which are covered in detail in this article.
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