How Not To Get Scammed Part 9: Developer's Reputation

Working with the RIGHT Developer is Absolutely Crucial When Buying A Presale/Pre-Construction Project

Verifying a developer's reputation is an important first step, especially in a rapidly developing market like ours. There's a lot of exciting growth, but also a need for careful due diligence.

Mycasa Real Estate's licensed agents do the work for you and present projects from trusted developers with a proven track record. There's more to finding the right property than staying within budget and Mycasa Real Estate will hold your hand every step of the way.

How Not To Get Scammed Series
Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9

Here's a comprehensive step-by-step guide we recommend:

1. Research Their Track Record and Portfolio:

• Past Projects: This is your strongest indicator. Ask the developer for a list of their completed projects in the Riviera Maya.
  • Visit if Possible: Rry to visit these completed developments. How do they look? Are they well-maintained? Do the finishes appear to be of good quality?
  • Talk to Past Buyers/Residents: The best insights come from those who've already gone through the process. Ask the developer for references from previous clients, or even better, if you visit a completed project, try to speak with residents directly about their experience, particularly regarding construction quality, communication, and post-sale service.
• Ongoing Projects: If they have current construction sites, ask for a tour. This can give you an idea of their work in progress and attention to detail.
• Online Presence: Search for the developer's name online. Look for:
  • Reviews and Testimonials: Check real estate forums, social media, Google reviews, and any local expat groups. Look for recurring complaints about delays, shoddy construction, or poor communication.
  • News Articles: Are there any positive or negative news articles associated with the developer? Look for reports on project completions, community involvement, or, conversely, any legal disputes or halted projects.
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2. Verify Legal Standing and Documentation:

• Property Title and Permits: A reputable developer will readily provide all necessary documentation. This includes:
  • Building Permits: Crucial to ensure the construction is legal and authorized. Be wary if they can't provide these or offer vague explanations.
  • Environmental Impact Assessments: Especially important in a place like Tulum, which has a delicate ecosystem.
  • Title Deeds for the Land: Confirm they legally own the land they are developing.
• Engage a Local Real Estate Attorney: This is non-negotiable. A trusted, independent attorney specializing in Mexican real estate will:
  • Review all Contracts: This includes the purchase agreement, which should clearly outline delivery dates (with penalties for delays), payment schedules, specifications for finishes and amenities, and what happens if the developer defaults.
  • Conduct Due Diligence: They will perform a thorough title search, verify all permits, and check for any liens or encumbrances on the property.
  • Explain the Fideicomiso: For foreign buyers, property ownership in restricted zones (like coastal areas) is typically done through a bank trust called a fideicomiso. Your attorney will explain this process and ensure it's set up correctly.
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  • We have a legal team already in place and they've helped all our clients to a successful close with impeccable due diligence. Reach out to us today and we'll schedule an initial consulation to help you get familiar with the process of buying here.
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3. Assess Financial Stability:

• Financing Options: Ask about their financing options. While some developers offer interest-free payment plans for pre-sale, be cautious of overly optimistic promises or deals that seem too good to be true. Strong developers often have established relationships with banks or have the financial capacity to fund projects themselves.
• Avoid "Too Good to Be True" Scenarios: Be wary of developers making unrealistic claims about guaranteed rental income or property appreciation that far exceeds market norms.
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4. Check Industry Certifications and Affiliations:

• AMPI (Mexican Association of Real Estate Professionals): Membership in AMPI indicates adherence to ethical standards and best practices. Ask if the developer or their sales team are affiliated with AMPI.
• Local Associations: While AMPI is the main one, some local areas might have additional professional organizations.
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5. Communication and Transparency:

• Open Communication: A trustworthy developer will be transparent and proactive in their communication. They should provide clear project timelines, pricing structures, and realistic completion dates.
• Address Concerns: How do they handle questions or concerns? Do they provide regular updates on construction progress?
• Be Wary of Pressure Tactics: If a developer or sales agent pressures you into a quick decision, this is a red flag. Take your time for due diligence.
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6. Leverage Local Expertise:

• Work with a Reputable Local Real Estate Agent: Mycasa Real Estate has a network of contacts, including other agents, attorneys, and even past clients, who can provide valuable insights into specific developers. We often know who has a good reputation and who to approach with caution or avoid altogether
• Engage Property Management Companies (if for rental): If your intention is to rent out the property, speak with reputable local property management companies. They often have direct experience with various developments and can provide insights into rental performance, property quality, and issues with specific developers.
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7. Specific to Pre-Sale Properties:

• Understand the Risks: Pre-sale properties offer favorable pricing but come with inherent risks (delays, changes in design, developer default). Your due diligence is even more critical here and its essential to work with a licensed buyer's rep from Day 1.
• Visit Showrooms/Sample Units: If available, always visit a sample unit to get a realistic idea of the finishes, layout, and overall feel of the property.
• Clear Contract Clauses: Ensure your contract explicitly addresses potential delays, what happens if the project isn't completed, and guarantees regarding construction quality.
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By diligently following these steps, you significantly increase your chances of making a sound investment and avoiding potential pitfalls in the Riviera Maya real estate market. Remember, patience and thorough research are your best allies.