Foreclosures in the DR

Expat13 · Dec 24, 2011

The results of the 2008 recession caused millions of foreclosures in the USA. Even today a large percentage of sales are foreclosures.

Just curious, you never really hear much about foreclosures in the DR. Could it be the DR Real Estate market is that resilient. I know many live beyond their means, so what happens to those who cannot pay their mortgages.

We have not really seen much of a price drop over the past few years and some actually have increased.

Any thoughts on this??

bob saunders · Dec 24, 2011

I think that most Dominicans own their houses outright, either having built them little by little as they had the money, or saved and built for cash. I believe here in Canada there have been many foreclosures but not anywhere near the numbers or percentages of the USA. I don't believe Dominican banks were foolish enough to give out the kind of mortgages that caused many of the problems in the USA.

Expat13 · Dec 24, 2011

bob saunders said:
I think that most Dominicans own their houses outright, either having built them little by little as they had the money, or saved and built for cash. I believe here in Canada there have been many foreclosures but not anywhere near the numbers or percentages of the USA. I don't believe Dominican banks were foolish enough to give out the kind of mortgages that caused many of the problems in the USA.

Possibly, but it still amazes me that a country with such a low average income could have so many "out right" property owners

belgiank · Dec 25, 2011

Those houses with mortgages on them, just were confiscated by the owners of the loan. And they are sitting on them till times get better.

To the OP, if you really are an investor, you should get another job. Prices here have been falling, regardless of the fact some still try to sell at premium prices. Just look at what is sold, and not what is on offer.

cobraboy · Dec 25, 2011

The loan qualifications by Dominican lenders are so high very few mortgages default.

Usta be that way in the US where average mortgage underwriting required 20% down, no more than 25% housing costs/income and 33% total debt/income.

And OP if you think real estate prices are rising in the DR then you are not in touch with the market. There may be a few scattered pockets of high demand and short supply, but property is just not moving in the DR. Real estate here is largely illiquid.

windeguy · Dec 25, 2011

The OP may have seen asking prices increase, but have the sales prices gone up? If so, in what area?

Expat13 · Dec 25, 2011

windeguy said:
The OP may have seen asking prices increase, but have the sales prices gone up? If so, in what area?

Granted, as there is a real lack of regulation or systems in place that list current sold prices similar to an MLS, so you are correct my very subjective remark is based solely on the asking prices, but as you say they sellers are set and stubborn and do not react much to negotiations.
FYI- Years back I held a license and played the real estae investment game in Canada, but NO, never would I here. My interest is primarily that one day I may be interested in a purchase for "live in" and when that day comes it would be nice to know where the distressed seller market is, if thats possible.

cobraboy · Dec 25, 2011

Expat13 said:
Granted, as there is a real lack of regulation or systems in place that list current sold prices similar to an MLS, so you are correct my very subjective remark is based solely on the asking prices, but as you say they sellers are set and stubborn and do not react much to negotiations.

It's a cultural phenomenon. Been that way since I can remember. Dominican sellers somehow think they need to recover the $$$ the lack of a sale creates. Don't try to analyze the logic. It's like trying to understand infinity.

Same mentality when renting a property.

windeguy · Dec 25, 2011

Expat13 said:
Granted, as there is a real lack of regulation or systems in place that list current sold prices similar to an MLS, so you are correct my very subjective remark is based solely on the asking prices, but as you say they sellers are set and stubborn and do not react much to negotiations.
FYI- Years back I held a license and played the real estae investment game in Canada, but NO, never would I here. My interest is primarily that one day I may be interested in a purchase for "live in" and when that day comes it would be nice to know where the distressed seller market is, if thats possible.

The only way for you to find a "fire sale" is to be in the right place at the right time since there is no MLS service. Some of the better opportunities happen when someone wants out of the DR and needs the money to buy somewhere else. Otherwise, since almost everyone owns their homes outright, there is much less pressure to sell a property quickly than in North America. Hence the lack of negotiation you mentioned. If you don't buy it, they will wait until someone else does. It is a very different mentality.

Castellamonte · Dec 25, 2011

As noted above, very few people actually borrow money in the DR for purchasing or building a home. The best deals are those where non-Dominican assets have been over-leveraged using a mortgage back in the home country with the proceeds then used to build/buy here in the Dominican Republic. To locate a Dominican with a desirable property in hock is not nearly as easy, look for the foreigners who are here and stretched themselves too far back home!

bob saunders · Dec 25, 2011

The best buys from Dominicans are when mom or dad has died and the property has to be divided by the children. Trying to get them altogether to decide...etc. Often they just try to unload it because they already have their own places or are scattered in different countries or cities and just want some cash. We have bought several properties in Jarabacoa this way.

Expat13 · Dec 25, 2011

bob saunders said:
The best buys from Dominicans are when mom or dad has died and the property has to be divided by the children. Trying to get them altogether to decide...etc. Often they just try to unload it because they already have their own places or are scattered in different countries or cities and just want some cash. We have bought several properties in Jarabacoa this way.

Bob, great idea! where is the website for such?

bob saunders · Dec 25, 2011

Expat13 said:
Bob, great idea! where is the website for such?

haha. This is found out through word of mouth, family connections. Someone in the Barrio will tell someone else that they know of a property...etc. Each person is hoping for a little commission for finding a buyer. The secret is to show no interest, and get a price that they are going to charge a Dominican. Jesus Saves, Moses invests.

tropical · Dec 25, 2011

When JJ and I purchased our home in 2004 we had to purchase outright. After living in the US all my life, the interest rates in the DR shocked me. When we sold in '08' it was thru word of mouth and our neighbor purchased it from us. He did however obtain a loan from the Associacion Cibao. As already posted, so much of the RE there is bought with Foreign Currency from either Dominicans themselves building block by block over a period of time, buying outright to 'retire' in the DR or foreigners wanting to make an investment and either live or rent out.

Many a time there is the 'inheritance' factor. That could go both ways...We've seen properties sitting for years because no one could get all of the beneficiaries together to either sign the paperwork or agree to sell the property. We see that alot here in North Carolina as well, even though this past year there has been an influx of RE signs being posted in tons of vacant land that had been sitting for years with old falling down houses.

Even though things are still tight in the DR it seems that their is still alot of investing going on there. I posted this article a while back it shows a promising future for the DR!

Record year expected for tourism in Dominican Republic - Business Monday - MiamiHerald.com

Rocio R

Castellamonte · Dec 26, 2011

bob saunders said:
The best buys from Dominicans are when mom or dad has died and the property has to be divided by the children. Trying to get them altogether to decide...etc. Often they just try to unload it because they already have their own places or are scattered in different countries or cities and just want some cash. We have bought several properties in Jarabacoa this way.

...er...be a little careful with this. Often there are children involved who are not 'in the picture' at the time of death can come back to bite you in the nether regions. Always, always, always have a great legal mind help to ensure that the sellers are the ONLY sellers who have the right to sell and they ALL agree to a division of the spoils. Otherwise it can get pretty messy pretty quickly (and expensive).

I prefer to locate the old man/old woman who want to spend the next few years of their lives in much more relative comfort and know that the 'family' will rip the property to shreds otherwise.

bob saunders · Dec 26, 2011

Castellamonte said:
...er...be a little careful with this. Often there are children involved who are not 'in the picture' at the time of death can come back to bite you in the nether regions. Always, always, always have a great legal mind help to ensure that the sellers are the ONLY sellers who have the right to sell and they ALL agree to a division of the spoils. Otherwise it can get pretty messy pretty quickly (and expensive).

I prefer to locate the old man/old woman who want to spend the next few years of their lives in much more relative comfort and know that the 'family' will rip the property to shreds otherwise.

Good advice, but I am married to a Dominicana with intimate knowledge of the local goings on and the history of most property is traceable. Her Lawyer is also a long time resident with very good knowledge of the locals. My wife's mother and aunts seem to now everyone and who's daughter, son, grandson...etc is whose. I totally agree with your last sentiment.

ctrob · Dec 27, 2011

bob saunders said:
Each person is hoping for a little commission for finding a buyer. .

What is an "average" finders fee for something like this? I realize it could be all over the park depending on the circumstances, but does some kind of range come to mind when thinking about "finders fees"?

bob saunders · Dec 27, 2011

ctrob said:
What is an "average" finders fee for something like this? I realize it could be all over the park depending on the circumstances, but does some kind of range come to mind when thinking about "finders fees"?

No idea because this is between the seller and the finder. I would suggest only a few 1000 pesos.

zoomzx11 · Dec 27, 2011

It seems to me that in the DR there is not the direct connection between sales and prices that exists in the US. Sales or no prices have continued to climb. Just cuz it does not sell does not mean the Dominican owner will consider reducing the price. The right person has not come along and they will wait nearly forever. There are cases where you may luck out and find a desperate owner but they are few and far between. Once you own the house there are very few monthly costs associated with ownership. Most are no taxes, no mortage thus no fire, flood, or homeowners insurance. Costs are lights and water so they can afford to hang on till hell freezes over and do. Even the cost per meter of land has gone up in the last few years on the North Coast. Building your own has gotten more and more expensive with the rise in prices for rebar, concrete and block.

Foreclosures in the DR

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