In the Arroyo Hondo Viejo area...Problem is that I can't figure out what the heck is going on with the state of the real estate market in Santo Domingo. Made a low ball offer, but the owner just balked at it and now the property is just sitting for months on end. Seems the property owners in SD at least are going thru the denial phase like what happened in the U.S. and Europe before prices began to be marked down. Seems like the owner game me a lil' fib by saying he has another offer near his asking price...Sure...Anybody out there know what is really going on in the RE market in Santo Domingo? Thanks.
- Thread starter jimmythegreek
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Interested In Home In Santo Domingo..
I'ts Not Just Santo Domingo
It's the entire island. The single family real estate market in the DR does not behave like a market in a developed country because there is no annual property tax. Owners can sit on properties indefinately with virtually no carrying costs. Even empty houses need only the expense of a security guard. No heating costs, few have grass or shrubs, just shut off the water and electric and wait until the time or price is right to sell. When they do sell it's largely a tax free bonanza. This is also why in the DR there is such a disparity between the cost of renting a house or purchasing one. Here in the states with banks offering mortgages at around 6% a buyer with 10% down would not have a mortgage payment much different than if he were to rent. In the DR, with inflated home prices, 18% mortgages and low rents the difference is enormous. I have not encountered a single situation in the DR where it would not be in the buyers interest to rent rather than buy when houses are of equivilent value.
The lack of a annual property tax is also why the DR will be slow to feel the effects of the world wide economic slow down as it relates to real estate values. Only owners strapped for cash will sell into this market. So expect to see that same house in Arroyo Hondo still sitting there six months from now, unsold, with the owner no worse for wear.
It's the entire island. The single family real estate market in the DR does not behave like a market in a developed country because there is no annual property tax. Owners can sit on properties indefinately with virtually no carrying costs. Even empty houses need only the expense of a security guard. No heating costs, few have grass or shrubs, just shut off the water and electric and wait until the time or price is right to sell. When they do sell it's largely a tax free bonanza. This is also why in the DR there is such a disparity between the cost of renting a house or purchasing one. Here in the states with banks offering mortgages at around 6% a buyer with 10% down would not have a mortgage payment much different than if he were to rent. In the DR, with inflated home prices, 18% mortgages and low rents the difference is enormous. I have not encountered a single situation in the DR where it would not be in the buyers interest to rent rather than buy when houses are of equivilent value.
The lack of a annual property tax is also why the DR will be slow to feel the effects of the world wide economic slow down as it relates to real estate values. Only owners strapped for cash will sell into this market. So expect to see that same house in Arroyo Hondo still sitting there six months from now, unsold, with the owner no worse for wear.
Golfer, thanks for the response..Only one so far...From what I understand, the first RD$5Million is exempt from property taxation, then 1% on everything above that level. Also, certain taxes such as stamp and registry were increased recently for the buyer. In addition, I would like to know how the selling of property in DR is more or less a 'Tax Free Bonanza'. I had a long discussion about this with a friend during the weekend and I think I know what you are getting at, but care to extrapolate on this point? Best, Jimmy.
Now, isn't this something real positive about the local real estate market?
Prices just don not drop that easily because most of the owners are not in trouble.
What are the reasons:
Financing is hard to get, means only "solid" buyers are able to purchase.
Most buyers, including foreigners don't even ask for financing, another reason why it is unlikely that they get into trouble because of the "crisis".
If you are looking for bargains, look at the places where people are truly affected by the ongoing situation.
Florida is the hot spot for "vultures" at this moment!!!
Good luck!
Prices just don not drop that easily because most of the owners are not in trouble.
What are the reasons:
Financing is hard to get, means only "solid" buyers are able to purchase.
Most buyers, including foreigners don't even ask for financing, another reason why it is unlikely that they get into trouble because of the "crisis".
If you are looking for bargains, look at the places where people are truly affected by the ongoing situation.
Florida is the hot spot for "vultures" at this moment!!!
Good luck!
Mido...While a lot of your points are valid about the SD RE market, the property might not sale for another two years at the price the Seller is asking....How is that for liquidity?...
Jimmythegreek, I Can't Speak For Mido But...
I'm sure he's not refering to you as a "vulture" because you lowballed an owner in Arroyo Hondo. Lowballing is a grand tradition in the DR and most negotiations between Dominicans commence that way. I share your frustration in trying to acquire property here in paradise because buying from a local can be an arduous process. If you hone in a single property they'll almost always out fumble you. Changing the conditions, price and terms are all part of normal negotiations here. You spend a lot of time thinking you have a deal only to find things have changed. A good real estate attorney is essential once you have a hand shake agreement. Moreso than in the US the devil is in the details here. Covenents, titles, legal descriptions, even the authenticy of the person with which you are dealing can come into question. There are many excellent guidelines for these procedures right here on DR1.
I believe the tax you are refering to is not a recuring property tax but a one time transfer tax and is normaly paid by the buyer. It's my understanding that the sellor pays no tax on the "gain". The tax free nature of the sale is why many Dominicans own more than one house and make good enterprise in buying and selling properties. The stamp and registry taxes you refer to are believe are minor and non-recuring
I'm sure he's not refering to you as a "vulture" because you lowballed an owner in Arroyo Hondo. Lowballing is a grand tradition in the DR and most negotiations between Dominicans commence that way. I share your frustration in trying to acquire property here in paradise because buying from a local can be an arduous process. If you hone in a single property they'll almost always out fumble you. Changing the conditions, price and terms are all part of normal negotiations here. You spend a lot of time thinking you have a deal only to find things have changed. A good real estate attorney is essential once you have a hand shake agreement. Moreso than in the US the devil is in the details here. Covenents, titles, legal descriptions, even the authenticy of the person with which you are dealing can come into question. There are many excellent guidelines for these procedures right here on DR1.
I believe the tax you are refering to is not a recuring property tax but a one time transfer tax and is normaly paid by the buyer. It's my understanding that the sellor pays no tax on the "gain". The tax free nature of the sale is why many Dominicans own more than one house and make good enterprise in buying and selling properties. The stamp and registry taxes you refer to are believe are minor and non-recuring
Golfer...Thanks for the info...Well from what I understand, once you get over RD$5Million, there is a 1% property tax on the government assessed value of the home. Secondly, there are a host of ways to skirt around the capital gains issue on the sale of a property, but there is still a capital gains tax that exists on the books in theory.