Tag Archive | "title insurance"

Ecuador Scams


Ecuador scams are like scams anywhere in the world… best avoided.

There are enough scams in the world that we have no control over like… Madoff…  like Federal spending… like Social Security… like underfunded pensions.

Yet we can avoid scams  that we would otherwise bring on ourselves.

Decades ago we learned that there are many scams in investment markets which is why we have always focused on working with large, experienced global firms like Jyske Bank.

Here are delegates chatting in the courtyard of Meson de las Flores with Peter Laub of Jyske Global Asset Management during an IBEZ Ecuador course.

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Yet scams go way beyond the investing community and they are everywhere… including Ecuador.

When one moves to a new place… it is hard to know all the ropes. This is a bit frightening and often leads new arrivals or investors to depend more on other expats.

This can be a huge error… because Ecuador scams… or scams anywhere are promoted as often by other expats as they are by local residents.  

People are not more honest just because they come from the same country you do.

I learned this the hard way when I moved to Hong Kong almost 41 years ago.

I had a really wonderful apartment in the mid levels of Hong Kong on Bowen Road.  “Bowen Do Ng Ho” (Bowen Road #5 – This is the last of my Cantonese!)  We had an extra bedroom we rented to a very nice American woman. She met a guy who became her boyfriend… a redheaded freckled guy I recall. He was an architect… so he said… with a San Francisco firm arriving in Hong Kong to build a skyscraper.  He was a very pleasant fellow… a “jolly chap” my British friends used to say.

Somehow, for the financing, the woman, who rented our apartment, became involved. To make a long story short… the guy (and the financing) disappeared.  Huge bills owing were strewn around town.  The woman, who rented our apartment, was devastated and left on the hook.  We had all been fooled until days after this con artist fled.  We had all felt more comfortable since we were dealing with what we thought was a “known”…someone from our own culture.

So my ears perked up when a reader wrote to me after our latest Ecuador Visa Update.

“Gary, When I read your newsletter today, I was hoping you would say something about the cost of a visa.  Unfortunately, there are people who are promising newcomers a resident’s visa for $7000.  I’ve never heard of anyone paying more than $2000 for a resident’s visa, no matter which lawyer they used.

The reader went on to say that one  couple discovered this scam and tried to back out of the contract.  This elderly couple was threatened by a lawsuit.

I do not have all the facts so cannot be sure if this is a pure scam… just really unfair pricing or if more than just a visa was offered, but $7,000 seemed awfully high if all that was provided was just a resident visa.  I immediately wrote to the three attorneys who advise us in Ecuador to check on the price.

Although we were totally unaware of any of this, it did remind us that all of us should always take care and do our research when we move or visit other countries.  This is what I wrote to the 3 attorneys that we use:

“I would like to inform readers about what is a reasonable amount they should expect to pay for a resident visa.  Could you provide this?  Regards, Gary”

The first reply came from our attorney, Dr. Andres Cordova. He wrote:  Dear Gary:  If this story is true then it’s terrible. Poor people. They can contact me immediately and I will take care of them.  I will review their case for free.  It may be possible that these possible scammers are doing things under the
table, cutting corners. This would be bad, but instilling fear on clients is beyond reproachable.

Lawyers would normally charge between $800 and $1.000 for a visa, including for a family. In some cases where there is an added complication the cost may be a little bit higher.

Some bigger law firms may charge between $2,000 and $4,000 for a visa but normally when obtained of behalf of major investors, corporate CEOs, etc.  I believe $800 to $1.500 is reasonable. We charge $800 to $1.000.  Regarding expenses, they are of about $350 per visa plus some $100 in general, for the whole family.  Best regards, Andres.

This is very kind of Andres to offer free legal assistance. He has helped so many of our readers in the past. See ways he has helped readers here.

Another excellent and reliable attorney, Roberto Moreno, wrote:   Gary,  Yes, $7000 is absolutely out of range. Depending on the visa we charge from US$900 to US$1200.  Also, it is important to inform the readers that some lawyers will just obtain visas with few requirements, especially in Guayaquil.  The risk is that the visa could be removed later on. We prefer now to obtained all the visas for our clients at the immigration office in Quito.

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Gary Scott and immigration attorney, Roberto Moreno, at Meson.

Learn more about Roberto and his firm here.

The third attorney, Floridalva Zambrano wrote:

Hi Gary, This is a terrible thing!!  Your reader is correct,  the cost of obtaining a resident  visa, including attorney fees,  fluctuates between $1,200 and $2,000, being this last one a very high one.  We usually charge  about $1,300.  Checking with other attorneys  from Quito this is the the standard cost.  Hope this helps!!

Here is one of our Ecuador real estate tours meeting with our attorney, Floridalva Zambrano.

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Flori is one of the few attorneys with such experience that when she conveys a property, a US title insurance company will provide US title insurance.

Learn about Flori’s law firm here.

There you have it… three very reliable Ecuador law firms charge about $1,200 for a resident visa.  Whether you feel someone charging much more is a scam or not is up to you… but when you move to Ecuador or anywhere that is new… you are more vulnerable so watch out for price gouging and scams.

Gary

One benefit of an Ecuador Living subscription is that we do not take commissions or kickbacks on real estate, legal work, hotel or tour reservations… or anything.  There are no hidden agendas.   We even donated our hotel to a foundation to help promote employment in Ecuador so we do not even make a penny from the income at Meson de las Flores.    Our goal is to help our readers enjoy safe, easy, profitable, low cost journeys to Ecuador.  Learn more about our Ecuador Living Service here.

The greatest asset of all is the ability to earn wherever you live, which brings everlasting wealth.

This is why we offer our course Tangled Web… How to Have an Internet Business.

A clear mind and healthy body are also a vital assets… plus a second language is a powerful diversification tool.

This is why I am willing to pay you $300 to attend either our Ecuador Super Thinking plus Spanish seminar in September or our North Carolina International Business & Investing seminar in October.  Sign up for either seminar and I will email you our Tangled Web… How to Have an Internet Business Course (offered at $299) free plus I’ll knock an extra dollar off your seminar fee…. to round up the $300 savings.

Here are comments from a reader about the way we help:  Merri, I am sitting here with a smile on my face.  I am always amazed at the turn around that I get from my emails to you.  I know you are busy with all of the projects that you and Gary address on a daily basis and appreciate very much you making time for mine.

Sept. 17-21 Ecuador Super Thinking + Spanish Course

Sept. 23-24 Imbabura Real Estate Tour

Sept. 25-28 Ecuador Coastal Real Estate Tour

Learn more about global investing, how to have an international business and diversification in Ecuador at the seminar.

Oct. 9-11 IBEZ North Carolina with our webmaster  David Cross & Thomas Fischer of JGAM

October 16-18 Ecuador Southern coastal tour (early sign up before Sept. 1, $499 per person).

Oct. 21-24 Ecuador Import Export Tour

Oct. 25-26 Imbabura Real Estate Tour

Nov. 6-8 IBEZ Ecuador Seminar

Nov. 9-10 Imbabura Real Estate Tour

Nov. 11-14 Ecuador Coastal Real Estate Tour

Attend any two Ecuador seminar or tours in a calendar month…$949 for one.  $1,349 for two.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799

Ecuador Property Insights


Yesterday’s message looked at insights on patience and value. If  you missed that message click here.

Patience and the never ending quest for value are vital in investing and buying real estate in Ecuador or anywhere.

Value is really hard to understand in the real estate and equity market now because the bubble of 2007 created many false illusions.  This creates the need for even more patience.

The value of a house is twofold… the value of a roof overhead and the value of whatever price it can be resold.

These are unpredictable times.   Basing a potential resale on previous inflated bubble prices can be a great error.

For example,  after months of searching, Merri and I made our first offer for property in Florida.  Our offer is half the seller’s asking price.

This was really hard for me to do, but after looking at everything I had to come in with this price.  Here is the note I sent to the broker with the offer.

We appreciate your help and attach our offer for the property.

In today’s market, value is really hard to determine because of the economic instability and uncertainty of when markets will rebound. History suggests we won’t see a full recovery for six to ten years… but there is no guarantee.   Because our offer is substantially less than the asking price, I have tried to apply some logic looking at this as a value oriented investor.  So here are the seven reasons for our offer price.

First, our main goal is as investors and we expect to buy at good value. Since there is so much uncertainty we will err on the low side rather than take risk.  We are in no hurry and there are plenty of houses we have seen that we could enjoy for our winters.  If this offer does not work we have several more houses we are ready to make an offer on.    A really fair value is an important part of our offer and in this market we expect to get one.

Second, this property is valued at an even lower by eppraisal.com at realestate.yahoo.com.

Third, we offered more than the lowest appraisal.

There are two other higher internet appraisals but we have gone with the lower of the three for the reasons above and below.

Fourth, as you can see at http://www.trulia.com/real_estate/Eustis-Florida/
The median sales price in Eustis has dropped over 35% in the last year and there are 496 properties for sale.

This page says:  “Average price per square foot for Eustis FL was $71, a decrease of 45.8% compared to the same period last year. The median sales price for homes in Eustis FL for Feb 09 to Apr 09 was $122,000 based on 115 home sales. Compared to the same period one year ago, the median home sales price decreased 35.3%, or $66,600, and the number of home sales increased 42%.

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Fifth, we are buying into a market with falling prices so prices may go even lower as you can see in the zillow.com estimate below. This chart estimates the five year value of this house.

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Sixth, we are buying into a market with a large inventory.

There are currently 496 resales and new homes in Eustis according to Trulia, including 299 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.

All of this means that this property could be hard to sell and that any price rise could be a long period of time away.

Seventh, this offer is more than the current debt the owner holds so though it leaves them with a loss on their purchase price, it does provide a mortgage payoff and leaves them with some cash. Otherwise they could be holding this property, and all the expenses,  for quite some time.  In a year’s time the property could still be unsold with a lower value and the owners would have had to outlay more in cash.

This places the sellers’ (who bought in 2004) position in a better circumstance compared to having invested in the Dow Jones Industrial Index.
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As the chart from finance.yahoo below shows had they invested in the Dow instead of the house in 2004 the index was 10,410 then.  The Dow rose to 14,093 by late 2007.  Had they sold then in 2007 they would have gained a 40% profit. Then within a year the index fell to 6,626, 36% below the 2004 level.  A 36% loss in the Dow instead of real estate their investment would be worse then the loss they will take if they sell at the price I am offering.

This stock market comparison is important. As an investor, I have a choice. I can buy property or equities.  If I buy equities they are about 50% less than they were and they are mostly lower than five years ago. 

Now we will be patient.

Before I made the offer, I reviewed the deal with a close friend who has been a real estate broker and developer for many years.

He wrote something worth reading:

“Gary, As a realtor, I rarely find a fellow realtor who has good appraisal methods. The research and valuation methods you have employed in your study are in the 98th percentile of methods used by professional realtors.

If a seller wants to sell, there are three things that do not affect the selling price: (1)What they paid, (2)What they owe, and (3)What they want. Try to explain this to a seller though.

Please stick to your guns because as you pointed out, this is a buyer’s market. Don’t get emotionally attached.  The key is to be ready to offer on numerous properties. As you evidently are. Sometimes walking away and coming back a few weeks later puts the seller in a different frame of mind. Sometimes another property is waiting around the corner.

It is always a good idea to have a neutral party representing the transaction, if not an agent representing your interests only.

Make sure that you choose the title company, not the selling party. This will avoid many conflicts of interest.  Any deposit money should be held in escrow at that title insurance company. Do not give earnest money to any other party. Never give any money directly to the homeowner, no matter what they might request in the contract. Real estate companies should not hold the deposit money because I have seen them try to get a piece of the leftovers if a transaction fails to close. Oftentimes it is not their fault that a transaction does not close. They figure they have already done their work. They still want their fees. Don’t let that become your problem.

Whoever gets the deposit money, ask them specifically if they have any fees due if the transaction does not close. Ask what those fees are. Neither me nor any of my clients have ever paid a fee if the transaction does not close.

This is good advice when you buy property in the USA, Ecuador or anywhere!

Gary

Join us at an upcoming Ecuador or North Carolina course or tour.

July 3-6 Ecuador Import Export Expedition

July 8-9 Imbabura Real Estate Tour

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it is in a quiet place and it has a garden directly below the house.

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Here are Ecuador real estate tour delegates checking the house.

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We also look at property around Lake Quicocha for sale.

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July 10-13 Ecuador Coastal Real Estate Tour

July 24-26 IBEZ North Carolina

Sept. 17-21 Ecuador Spanish Course

Sept. 23-24 Imbabura Real Estate Tour

Sept. 25-28 Ecuador Coastal Real Estate Tour

Oct. 9-11 IBEZ North Carolina

Oct. 21-24 Ecuador Import Export Expedition

Nov. 6-8 IBEZ Ecuador

Nov. 9-10 Imbabura Real Estate Tour

Nov. 11-14 Ecuador Coastal Real Estate Tour

Attend any two Ecuador courses or tours in a calendar month…$949 for one.  $1,349 for two.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799 for two.