Buying Real Estate Overseas For Cash Flow (And A Better Life)

22Negotiate the Purchase

The actual real estate purchase process varies by country, but, generally speaking, there are three steps:

• First: Make an offer.
• Second: Sign a sales agreement.
• Third: Sign a sales contract.

It might seem that the sales agreement and the sales contract should be the same thing, but, in most countries, they aren't. In most of the world, the first one is not a purchase agreement but a “promise” to sell; the second one is the closing document that results in the property being titled in the new owner's name. Specifically, here's how this typically works:

You make an offer. Most offers are made in person or by telephone, either directly from the buyer to the seller or through a real estate agent. Offers are not typically conveyed in writing. Depending on the market, your offer can be a starting point for a price negotiation. You should seek some advice in advance from others with experience in the market as to what's culturally acceptable on this front. Should you make a lowball offer with the intention of meeting the seller midway between that number and the asking price? Should you offer 10% less than is being asked? Should you expect a counteroffer? If the seller accepts your offer, are you bound to follow through, if not by law perhaps by local custom? And so forth …

You execute a sales agreement (promesa de compraventa in Spanish or compromise de vente in French). This can be an optional step depending on the country and whether you're ready to move ...