Trust: The Most Important Tool for Buying Property in Latin America
Doing business in Latin America can be tricky. Not everyone is forthright, and there are a lot of scammers just waiting to take advantage of an unsuspecting gringo. The good news is that there are a lot of honest professionals who want your trust as well as your business. The key is making sure those are the ones you’re trusting with your time and money.
So is Central America a bad place to do business or invest in property?
Josh: Absolutely not. Most people in Latin America are good folks. But there are a few out there who have literally built their business model around taking advantage of people. And we’re not talking about souvenir vendors here. They can be quite organized and sophisticated.
Park: This is no different than in any other country. But if you’re coming down here as a greenhorn, just be aware that you can be easily identified as a target.
How do I avoid getting mixed up with the wrong person or company?
Josh: If you have never done business in a foreign country before, it’s best to stick with the reputable companies. They’re easy to find. It just takes doing some internet research and sending a few emails.
Park: Josh is right. It’s a lot harder to be a long-term scam artist these days. If the company’s been in business a decent length of time, you can easily find out if they’ve ticked anybody off.
I like to do searches for the company name with the words “scam” or “rip-off” tacked on. You can even try “Don’t ever do business with…” and then the company name. It’s surprising what you can find.
And always talk to more than one source. I like to make sure I get the same answers from several different references before I truly put my confidence in someone.
That sounds like a lot of research. Do I need to do this for every different category of professional I’ll be dealing with?
Park: Not necessarily. From our experience, we’ve found the whole “birds of a feather” concept to be very true in the Latin American business culture. So when you find someone who’s proven to be trustworthy, they are going to be connected with other people who are also reliable.
For instance, if I find a credible attorney, I might ask him to recommend another professional, like an architect.
Josh: This goes both ways too. Get mixed up with the wrong company, and before you know it you could find yourself in a whole nest of crooks.
Park: There are also some other good resources out there that require less homework on your part. For instance, try Martindale.com when searching for an attorney. A good attorney is a key player in Latin American real estate transactions, so that isn’t the place to try to save a buck.
I’m not saying you have to go with the most expensive attorney in the country, but–even if you did–that’s a very small investment for the peace of mind it buys.
What’s the best litmus test for determining if someone can be trusted?
Josh: A good rule of thumb is to make sure you’re working with someone who shares your interests and will benefit when you do. Buying from a reputable property owner is a good place to start.
If you’re buying a piece of land in a project where the owner has a vested interest in the development, then what’s good for you is good for them. And vice versa. The last thing they need is an unsatisfied customer.
Park: A classic example of misalignment is the relationship between a buyer and the listing agent on a property. They hold all the answers to disseminate as they see fit. And they only get paid if you buy. After the transaction’s completed, they get to walk away without any further responsibility to you.
Just be aware of that.
Is it possible to over-think things when determining who you can trust?
Park: It is. One thing that helps me when starting business relationships is to ask myself, “Exactly what is it I’m trusting this person for?” If they’re selling me a piece of land, I have to trust that they own it and have the right to sell it to me. If they’re an escrow agent, I need to believe that they aren’t going to run off with my money.
It helps put things in perspective for me. When I’m choosing a surveyor, I don’t have to find someone I could trust to raise my first-born child. I just need a guy who knows how to put the dang stakes in the right spot.
Josh: On the flip side, don’t be too relaxed with this. Just know that you are responsible for your actions. Don’t let yourself think you can rely on other people or on the government to bail you out. At the end of the day, you’re on your own.