Buying real estate in El Salvador is difficult. It’s a mess of a process. The legal infrastructure here is limited, the market isn’t well established and cultural norms make it difficult to find and buy any real estate. I’ve been going through the process trying to find a property and I haven’t even begun the actual purchasing part.

The purchase of this blog post isn’t to complain. It’s to lay out the challenges that the real estate market here faces. Maybe another buyer will find this helpful to prepare themselves for the long process.

Most sellers don’t use an agent or listing service.

Salvadorans and Latin Americans generally are very much “do it yourself” (DIY) kinds of people. They don’t want to pay anyone for anything that they absolutely don’t have to pay. While this might seem like it’s because people are cheap, it’s actually for a different reason.

Salvadorans tend to be less trusting towards other people and therefore they prefer to do things themselves because they don’t want to get screwed over. And that makes sense, because there is in-fact very little legal infrastructure here and trust tends to run in short supply.

Lawsuits are very expensive, resource-intense and time-consuming here. A lawsuit will probably take 10 years, so nobody here wants to risk that. Additionally, crime and scams are fairly common.So naturally, this risk-averse mindset rolls into the real estate business in El Salvador, which means that nobody here wants to pay the extra price for any real estate listing services.

Real estate agents are seen as a service that’s used by the very elite sellers and buyers (read: deep pockets). Any property thats valued at less than $100,000 will probably not have a sellers agent. In other words, 80%+ of all property owners that want to sell their property much prefer to just slap a sign on the front gate of the property and hope someone calls them. People do things old-school here. That creates a lot of challenges for potential buyers.

There is no consistency in seller set prices.

Property sellers here usually just choose a price in their mind that matches whatever they think is reasonable to sell the property for. They completely ignore market prices because they don’t know market prices and they don’t want to deal with what “someone else thinks their property is worth”.

It’s a little odd. In fact, it leads to problems in the market. People that want to sell there properties ask for prices that are crazy-high (and will never sell) because nobody will pay their asking prices. It can be annoying, but it really comes down to a matter of lack of education on real estate markets. You can see the thought process…”I’ll just raise the initial price considerably high and if someone takes it, great! And if not, I’ll just negotiate to a lower price.” I mean…yeah, they can try that. I have a pencil for sale for $100, want to buy it? It’s a waste of time.

So, searching for property is a pain in the ass. It’s really annoying for buyers. Similarly, I don’t want to negotiate with someone that seems to be already trying to screw me. Or maybe they don’t want to screw me over, they’re just lazy and don’t want to consider reality in their pricing. If that’s how they’re playing the game, then it makes me want to play the game harder…I’ll want to low-ball my offer price so low that they’ll see that I’m contending with them (and being a little bit of a dick)…after all, they were too lazy to publish a reasonable offer price, why shouldn’t I be lazy in low-balling them? Fair is fair.

In this market there’s fewer dollars chasing a rather large supply of available land for sale in El Salvador. Why? Because there’s less expensive land in safer nearby countries like Nicaragua and Panama. Buyers that are willing to put in the leg work have the upper hand. That brings me to my next point…

Buyers have to do so much leg-work and due dilligence.

Since sellers don’t want to use a listing service or (portal de casas en venta), this means that buyers need to do a lot of searching. Hard…manual…searching. While looking for properties, I’ve contacted about 30 different land owners from signs I’ve seen on the side of various roads. When driving down the road, I’ll see a sign, pull my car over for a moment grab a photo of the sign, send a message to the property seller and maybe/hopefully get a response within a couple of days. Most often I don’t even get a response.

Also, usually I don’t even know if the sign represents the actual land that the sign is placed on. The dirt roads on properties often go miles/kilometers deep into these properties…it’s a complete guess to know where the piece of land for sale is actually located.

Land records have been maintained poorly.

Even if I have the luxury to find a suitable and reasonably-priced piece of land, I still need to research the property title. El Salvador has gone through a lot of economic and political transitions over the last 100 years, especially after their civil war in the 1980’s. And their government property registry database was only recently implemented. That means, in most cases, it’s a challenge to figure out the actual ownership of the property.

Even if the property owner has physical property records in-hand, it still needs to be verified. As I previously mentioned, trust in itself is not sufficient in El Salvador, sometimes the owners themselves don’t know if someone else has a claim to their land, or if the National Registry has recorded the owner information properly.

Verifying property ownership requires submitting physical paper requests in person.

This is a real pain in the ass. There is no email address or online form to submit requests to local manicipalities. You literally have to go to the local registry office and submit a physical document (while praying the address was written down in proper format) in order to to submit a request to get property records. Imaging looking at 10 properties – this will likely take 3-4 days of time, simply to submit paper requests.

The advantages of being a buyer

All of these complications means opportunity. Property owners that are motivated to sell know that the buying process is a huge pain in the ass for a buyer. This means that they’ll be motivated even more to lower to price because they just want the problem (of selling their property) to go away. This makes the price more negotiable.

There is nothing more powerful than having cash to buy property. Property sellers have been known to post a price at $50K, lower it to $25K, then sell at $19K….ridiculous, right? Yes, it’s absolutely crazy. If you tried that in the USA, you’d be laughed out of the industry. Nobody would take you seriously. But that’s how things often work here. It’s a very inefficient market. So, if that’s how it works in El Salvador when there’s cash in hand, then so be it. If all of these sellers want to jack the price up, just to knock the price way back down, that’s ok with me. In the end, they can either accept or reject my offer.

In my opinion, this market needs more structure. And it will mature with time. One challenge is, trust in general in El Salvador is suffering. Real Estate agents don’t really have much regulation here, which means people don’t trust them, nor should they. And there’s very blurred lines too…developers are sometimes agents, sometimes they’re flippers and sometimes they’re wholesalers. It’s a free-for-all. Therefore, agents don’t exist for smaller size transactions because sellers see them as sharks in the water.

Anyway, these were just my musings. It’s been very interesting to learn about the market. Currently I’m looking for land and I’m also interested in one or two-family homes. I want to build a hostal for travelers and a home for my family here.

Feel free to send me any questions. Living and building a life in El Salvador has been an incredible experience and I love every second.

Casas en Venta

Plataforma para bienes inmuebles