The real estate market in Uruguay is expected to be an attractive option for both investors and homebuyers in 2023. As Uruguay’s economy and population grow, it’s an ideal time to take a look at the country’s real estate market. Today, we at Team Haverkate explore how best to approach this market. This includes information on the current real estate landscape and market trends, as well as tips and advice on navigating the Uruguayan real estate market. Stay tuned to learn what you need to know if you want to be active in the Uruguayan real estate market in 2023!
The Uruguayan government is and has been very open toward foreigners who are investing in local Real Estate. Buyers from all over the world have the same rights as Uruguayan citizens and are granted the same economic advantages when they buy Real Estate in Uruguay.
With whom should I buy Real Estate?
First of all, make sure you have a good local real estate broker who also speaks your language, knows the market, and can guide you through the whole buying process and a good notary, which is a type of buyer attorney “Escribano” in Uruguay. This combination guarantees an unproblematic transaction. Team Haverkate at Engel & Voelkers offers you a choice of very good “Escribanos” at special rates.
Watch out for Brokers or Agents who practice “Dual Agency.”
Many Real Estate firms in Uruguay are practicing “Dual Agency”! Dual Agency means your agent has an existing direct relationship with the Seller of the properties he offers for sale.
“Dual Agency” is in many countries not forbidden by law but can create a dilemma for a professional agent and maybe a severe disadvantage for the client as well. Primarily a problem when it comes to the negotiation part of price and repairs.
As a California trained Real Estate Broker, we are very aware and sensitive of this worldwide industry flaw, which easily can create a conflict of interest. We think we can work the most effective and best for our Buyer and his interests if we don’t have a direct relationship with the Seller of a property. Even many educated buyers are not aware of this situation. We suggest you always ask your potential agent before you start working with him how he or his firm handles this problem.
Running around with different Brokers
We see many buyers coming to Uruguay to shop for properties and running around with various brokers, who are showing them only their inventory. Especially the houses they would like to sell because they have an existing relationship with the owner of the property, while the Buyer does not realize that that agent is not only working for him.
A buyer should much rather work with one representative and a real “Buyer’s Agent” who has, at the same moment, access to the entire local market.
We have resolved this by not taking on listings directly. We work mainly with one of the largest inventories of a worldwide firm like Engel & Voelkers. We offer the same commission conditions and prices to the Buyer but make sure that always an Engel & Voelkers listing-agent represents the other side. Of course, we know the entire inventory but can herewith avoid direct contact with the homeowners when it comes to a transaction.
All the displayed properties you find on our www.realestate-in-uruguay.com are properties represented by Engel & Voelkers listing agents, where we have direct access but no direct relationship with the sellers.
In cases where we don’t find what the Buyer is looking for in the E&V inventory, we are free to look outside with other reputable brokers. That way, we can ensure to cover the entire market and find the best properties for our Buyer. All properties will be offered to our clients at the same or better prices shown on other websites. Also, in this case, we are only representing the Buyer.
Since there is no Nationwide Database in Uruguay (like the MLS in the USA), many foreign buyers don’t realize that many brokers offer the same properties. The client could end up seeing the same property with different agents, which creates a mess for everybody. Buyers would be much better off in this market to work with one chosen “Buyers Agent.” You give your criteria only to your trusted real estate agent and can establish a loyal relationship. After all, real estate is a personal relationship business.
It will not matter to us personally, which Seller sells his house, but it does matter which property is best for our Buyer. We can much more effectively negotiate the best possible price for our Buyer looking out for his best interest if we only represent one side. One agent alone can’t get the best deal for a buyer and at the same time for the Seller!
If you choose to work with Team Haverkate, you can be assured that we only work for you and guide you through the whole buying process and beyond. Moreover, we can represent you on any transaction in Uruguay and show you any property on the market.
How does the purchase process work in Uruguay?
The Buyer selects a property with its real estate agent, and Buyer and Seller agree verbally on a price through their agents. The Buyer selects his “Escribano” and the buyer Escribano contacts the Escribano of the Seller. The Escribano which is a mix of notary and lawyer drafts a “Boleto de Reserva” based on the verbal agreement of the Buyer and Seller to secure the purchase terms. At that time, the Buyer has to deposit 10% of the sales price with its Escribano, and this deposit stays in the trust account “Escrow.” A fine of usually 10% of the purchase price is set in case either party breaches the purchase contract, called the “Escritura de Compraventa.” The Seller, for his part, hands over all the documents related to the property, including the title deed, which rules out any possibility of selling the property in question to a third party. Then it takes about 30–45 days to study the title, chain of history, and tax situation. A “Closing Date” is set for the balance to be paid, signing the final documents, transfer of the property, and public registration.
Learn what to consider when buying and selling real estate in Uruguay in our comprehensive guide. In this informative guide, you’ll gain insight into unwritten laws, regulations, and tips for a smooth entry into the Uruguayan real estate market.
How much negotiation room is there at the indicated prices?
Due to the absence of a general MLS system showing the history and per m2 price of a property, it is much more difficult to come up with easy comparables like in the USA. Therefore, it is even more important for you to work with a full-time real estate professional who knows the inventory, market values, and comparables. Properties are usually sold as is or seen and we advise – even if the profession of a “home inspector” doesn’t exist like in the USA – to send a reputable contractor out to inspect before drafting the written offer through a notary.
The prices are not always as negotiable as back home, and it depends on each property and seller’s situation. You have to be cautious and professional about it in order not to offend the Seller. If the Seller has the feeling that the Buyer does not take his offer seriously, he might reject any further negotiations. Here, it is customary to conduct price negotiations only when there is a real intention to get to an agreement, and you are well-advised to let your professional Realtor do that work for you.
What are the purchase transaction costs for the Buyer in Uruguay?
Real Estate Agent Fee: 3% plus VAT (22%); Notary Public Fee: 1.5% plus VAT (22%) (if the notary/law firm we recommend is used as it is usually 3% plus VAT); Notarial Taxes (“Montepios”): 0.55%; Expenses approx. USD600 – 800 (obtaining all Certificates, Deed Registration Stamp Duties & and all payments to government agencies).
Real Estate Transfer Tax (ITP): 2% of the Fiscal Cadastral Value of the Property (which is usually substantially lower than the market value. This amount can vary slightly due to exchange rate fluctuation and will be determined at the time of closing date).
Altogether, the transaction costs for the Buyer total approximately 7%.
Please see also our Q and A for more buying-related Questions.