Selling your home in Medellin can be complicated and stressful if you do not plan correctly. This article is written to assist Medellin homeowners with tips and ideas for selling your home promptly while getting the best possible price in the market.
When Do You Need to Sell?
The first step is to decide what date that you wish to sell and move out of your home/condo. Do you have flexibility in setting your move out date?
For some sellers the date is not flexible as they are moving to another city for a new job, while others may have a new apartment that has been under construction and will be ready to move in on a certain date. Maybe the seller needs to move into a larger home to support a growing family, or perhaps equity is needed for a business or other expense.
In any event, it is good to start with a date in mind for needing to sell and then designing your marketing/sales strategy targeting that move out date.
Setting the Sales Price
The next decision is to set a sales price. This is a critical step because if the price is too high and above the market, there will be little interest by buyers and agents, and if too low, the seller will leave money on the table.
Therefore sellers need to first get an informed idea of what their property is worth. This can be done by getting an estimate from a realtor or a knowledgeable friend.
Since there is no MLS in Medellin this can be a confusing task for some people. Fortunately there are some basic variables that can allow the seller to quickly hone in on an accurate market price.
The key variables are as follows:
- Location – Properties in Colombia are ranked and taxed based on the Estrato scale where 1-6 ranks are distributed socioeconomically. The higher the Estrato, the more expensive is the real estate, the property taxes, utilities, and certain services.
- New Construction Pricing – It is important to determine the cost per sq meter pricing for new construction properties in which the property to be sold is located. For instance, in 2022 for new construction pricing in the Estrato 6 barrio, El Poblado, the cost per sq meter is in the 11,000,000 to 12,000,000 COP per sq meter range.
- Age of building – The rule of thumb here is the older the building, the lower the cost per sq meter (cpm). Some realtors may have a chart showing a graph or curve where the cost per sq meter (cpm) is shown for the age of the building. One can reasonably expect the cpm to be about half of new construction pricing for a 15-year-old building. In the example above in El Poblado this would equate to a cpm in the 5.5M-6M per sq meter range.
- Amenities – Some buildings offer first class amenities that could include well equipped gyms, swimming pools that are large enough to swim laps, unobstructed valley views, tennis courts, luscious grounds, etc.
- Intangibles – Oversized balconies and Terrazzo’s, outdoor Jacuzzis, gourmet kitchens, oversized master bedrooms, unique locations like a Provenza location in El Poblado, near nice parks, like Parque Segundo in Laureles, etc.
Thus, the first step is to calculate an estimated cpm that is based upon the location and age of building and multiply that by the size of your unit, under air.
Under air means that you do not include uncovered balconies, Terrazzo´s and patios in your apartment size. These are intangible add-ons. Once you have determined the price estimate, you can make adjustments for any unusual amenities and intangibles that add value and buyer interest.
Once this number is established the seller should add 1-10% to the price to allow for some room for negotiations. Most buyers in normal markets like to negotiate from a list price and feel better when they can get some type of price reduction from the seller’s price.
If the seller is in a hurry to sell, they should try to price close to or on the market, or maybe a small markup of 1-2%. If not in a hurry, add 5-10% to the price.
This provides a cushion for negotiating. If sellers are able to do so, they should inquire in their own building what prices were received for sales in the past year. Often neighbors will know and sometimes the porteros will be aware of what a particular apartment sold for.
A seller may also be able to get comparables from nearby buildings of similar age. A good realtor can offer an opinion as well but if their number differs from yours, ask them why.
Some foreign buyers like to ask what the appraised price is for a particular property. Since there is no MLS in Colombia this can be a somewhat subjective process that really does not offer much more than the previous analysis above. Some appraisers even charge a percent of the appraised value as their fee. Talk about a conflict of interest!
Banks will use appraisals for mortgages and often utilize their own appraisers in the process. Since 2007 Primavera Realty Medellin (PRM) has been responsible for the sale of more than 500 Medellin properties and only in a few cases were appraisals utilized by a seller or the buyer.
All PRM buyers were foreigners and once the process was explained to them, they did not feel compelled to spend money on a questionable appraisal.
Listings Are Non-Exclusive
In Medellin the listings are non-exclusive which means sellers can list with multiple agencies, realtors, friends, relatives and even their favorite bartender.
There are no restrictions on who can be paid a commission, which as of 2022, still remains at 3% – seller paid. The United States and many other countries traditionally have exclusive listings.
Thus, sellers abroad typically do not have a decision as to whom they would like to enlist to help sell or market their property. In Medellin, it is just the opposite. The seller needs to decide how many agencies and people they wish to enlist and provide their listing information.
Many Medellin sellers will work with 1-3 agencies and their listings will be posted on multiple web sites. Some sellers will post on some mega-listing sites such as Finca Raiz and Metrocuadrado. Others let their friends and family know about their listing.
Many Colombian sellers do not consider trying to reach foreign buyers, while most local Medellin realtors only deal with local buyers.
When considering that 99% of Medellin sales are to locals and Latinos, this is not surprising. Even though foreign buyers, especially from the US, Canada, Europe and Australia, make up less than 1% of the Medellin marketplace, it is still a good segment to reach out to as they are cash buyers who can close quickly.
Additionally, sellers can avoid some of the problems of typical local buyers who often wish to insert contingencies like payments over time, trading in a car, lot, or some other asset, as a part of the sales contract.
Thus, it makes perfect sense to list with realtors like Primavera Realty Medellin (PRM), who specialize in foreign buyers. Since the listing with PRM will be non-exclusive, free to list, and the standard 3% commission, why not list with them as well?
Gringo pricing shows up a lot on some of the social media blogs that cater to foreigners.
This concept is much abused and can be confusing for the uninformed. The facts are that the sellers set the pricing for the sale of their homes, not the realtors. Sales prices are publicly posted so sellers and realtors cannot hide if they are posting different prices to the disadvantage of foreign buyers.
In fact, with 99% buyers being more local in nature, why would the typical seller even think of this? Companies like Primavera Realty Medellin have policies if a seller lowers their price then they must inform the listing company of the price reduction or run the risk of being delisted.
Preparing the Listing Information
At this point the seller has a sales price, has found an agency(s) to list with and is ready to start showing the property and entertaining offers. There are two key parts of the listing package that need to be prepared: the information about the property and the appropriate photos.
Basic Listing Information
- Sales price in COP, not USD
- # Bedrooms and Bathrooms
- Size in sq meters and sq ft (sq ft is suggested if interested in foreign buyer market)
- Size should be under air
- Separately, show size for an uncovered Terrazzo, patio or balcony
- Age of Building
- Zone (Barrio) – i.e., El Poblado, Laureles, Envigado
- Neighborhood – i.e., San Lucas, Provenza, Castropol
- Strata – specify 1-6
- HOA Fees
- Quarterly Taxes
- How many floors in Building?
- What floor is the property being sold on?
- How many apartments per floor?
- Furnished Price if applicable
- Description of Amenities
- 24-hour security?
- Location comments in regard to access to shopping, restaurants, entertainment
- Rental and Airbnb information
- Any special features, especially outdoor Jacuzzis
- Noteworthy views
- And any other insights as to why the property is a great deal
It is somewhat amazing how many listings have poor and insufficient photographs when it is such an easy task to perform with today’s excellent cell phone cameras.
Quality photos will help sell your home/condo quicker! Here are some general guidelines that should be taken into consideration when sending Listing Information to be posted on a web page:
What should the photos include?
- 12-20 photos are usually sufficient (for larger homes and country estates perhaps more)
- 2-3 photos from the outside of the house/building (try to capture the entire building in the photo
- 2-3 good view photos for condos especially from balconies
- 2-3 landscaping/grounds and views photos for homes and fincas
- 1-2 photos of living room, dining room, kitchen, bedrooms, office/den
- 1- 3 amenity photos only if special (gardens, jacuzzi, sauna, etc.)
- 1-2 photos of the swimming pool
- 1 photo of a closet but only if it is a very nice walk-in closet
- 1 bathroom photo but only if nice. If really nice then two different bathroom photos
If you have the ability to make a video, it can also be displayed on listing websites
Photo taking tips
- Avoid having cars, people, se vende signs, or electrical wires in the shot. Pets are OK.
- Showcase the views! This is a big selling point, especially with foreigners. Try to take a photo that gets the perfect viewpoint, especially from the balcony or rooftop.
- No photos of dirty dishes in a sink, brooms or mops on balconies, and clothes hanging indoors or outdoors. Likewise, do not take photos of messy beds. A clean house and having beds made will help to better show the property.
- Photos taken directly into sunlight can come out dark. Lighting is important! Open blinds or curtains to let sunlight into a room. Turn on all lights when taking photos.
- Photos of laundry rooms, maid’s quarters, parking lots and parking spaces are not needed.
- Horizontal photos are preferred over vertical photos.
In taking photos you have a choice of taking them with a nice cell phone camera or to employ a professional photographer with a higher quality camera where staging may be employed.
The negatives of using professional photos are that there is a cost involved and sometimes the photos can look too good so that buyers actually are let down when they see the actual property for sale. If a realtor is involved then this can be discussed and sometimes professional photo shoot costs will be split, or even absorbed by the realtor.
Once the seller’s listing package and photos are ready, it can be sent to more than one agency or realtor for posting.
Some other tips for marketing your property
1. Put a large ‘Se Vende’ (For Sale) sign in your window.
All you need is the phone number in large numbers that can be easily read from street level. You have a decision to make as to what phone number you wish to use.
Your personal number
- Positives for doing this are you get to make first contact with a potential buyer who might see your sign and call your number. If you make a sale you do not need to pay a commission.
- By making first contact you get a chance to develop chemistry with a buyer and cover some basic questions like why are you selling and what are the key features. You can then set up a showing at your convenience.
- You may receive calls from other realtors/agencies who see your sign and wish to list your property on a non-exclusive basis. Since you already have a Listing Package ready, this is easy to do and broadens your ability to market to a wider variety of prospective buyers. In the case of Primavera Realty, it could put your listing in front of foreign buyers.
- If you use an agency or realtor´s phone number, you have no idea what they will say about your property or even if they will even try to show it as they may have other properties they prefer to push.
- You have to take the time to take calls, talk to prospects and arrange showings.
- You may not feel confident about your sales and social skills to speak with strangers.
The Realtor or Agency Phone Number
- The agency/realtor takes all the calls, screens all prospects, sets up showings and handles the clients. This saves you time and stress.
- Agencies/realtors may be more proficient in selling your property than you are.
- Agencies may refuse to allow access to other realtors so additional exposure is lost.
- Agencies may have other sales priorities other than selling your home.
- Agencies may not be representing or marketing your property adequately.
- Agencies may not follow up with all inquiries in a timely manner, if at all.
2. Talk to all your friends, contacts, associates, porteros, etc. and let them know your place is for sale.
3. Prepare sales flyers and give to the people noted above.
Getting Ready for Showings
If you have a showing that is not being set up through a realtor then it is wise for you, the owner, to be there to answer questions and help sell the unit.
A seller should not leave that up to a maid, portero or friend to do this. However, if a realtor is bringing a prospective buyer, the seller does not have to be there. Questions that the buyer will have can be handled by the realtor, who should be able to answer most of them.
Plus, it is always wiser to have the sales agent conduct negotiations between the buyer and seller. However, if an agency is representing the seller, and the buyer has an agent, then the two agents will interface to negotiate an offer.
The house/condo needs to be in tip top shape for all showings. This means the house is clean, beds are made, lights are on in every room, curtains are drawn, there are no kitchen odors (although some smells like the baking of bread can be a plus), maybe some flowers are arranged, closets are neat, etc.
By now you have done your homework, you know what your property is worth in the current market, and you know what is the minimum price that you would take for an all-cash offer.
Of course, as time moves on, you might start dropping your price. If you have set your price 5-10% above the market price, or the price that you would like to receive, you will hopefully be able to make a counter offer that is still above your desired price.
If you are using a realtor who is representing you, not the buyer, you may wish to get his or her opinion of what counter offer to make and how long to wait, before making that counter offer. Sometimes buyers may feel that you are over anxious if you make an immediate counter offer. You may wish to wait 1-2 days before countering.
It is also helpful to know the buyer’s motivation for purchasing. Is it a new job, is the buyer a foreigner who is looking for a second home, is it an investor who plans to rent your unit, is the buyer downsizing or upsizing, etc.?
If the buyer is highly motivated, or has a required purchase horizon, then the seller may have some negotiating leverage. For instance, the buyer has children that need to be registered in a school within a certain period of time.
One interesting strategy is furniture and appliances. Perhaps you are selling your home unfurnished and the buyer will be buying all new furniture and appliances, and is not bringing his personal household items.
If that is the case, and the price negotiations are close but not finalized, then sometimes throwing in a refrigerator or patio furniture can close a deal.
The Deal is Done
You have reached an agreement with the buyer and now it is time to prepare the Promesa (sales contract which is legally binding and normally requires a 10% down payment).
For many Colombian buyers and sellers, a real estate attorney is not used and the buyer and seller simply go to a notaria (notary) and have the notaria prepare the Promesa and later, the Escritura (deed) at closing.
However, for foreign buyers, probably 99% choose to employ a real estate attorney to prepare and review all documents for the entire process. In this case, Medellin sellers will save the costs for the preparation of the Promesa and Escritura by the notaria, as those costs will be borne by the buyer with his attorney.
The real estate process in Medellin works amazingly well.
Closing costs are low (1.8% each for both buyer and seller). Title insurance is not needed which saves buyers money. Buyers and sellers can also bypass the Promesa and go straight to closing if both are prepared to do so.
The vast majority of the time buyers and sellers are honest and professional and the handshake confirming the acceptance of an offer is still good until the Promesa is signed, which then makes it legally binding.
Since 2002, the Medellin real estate market has been solid averaging 7% per annum and there has not been one year with a price decline, including 2007-2008.
Much of this has to do with the fact that less than 10% of Medellin properties have mortgages so most purchases are in cash and carrying costs are very low.
Thus, there is little pressure on sellers to have to dump properties or have distress sales. On a risk adjusted basis, Medellin continues to be one of the best real estate values in the world.
Therefore, Medellin sellers should have very little problems in obtaining fair market prices for selling their homes by utilizing the tactics and ideas noted within this article.