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Nicaragua In the News

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For Sale in... Nicaragua - NY Times Article


RESTORED COLONIAL HOUSE IN THE HISTORIC DISTRICT OF GRANADA

A Spanish Colonial in Nicaragua $599,000

This three-bedroom three-and-a-half-bath home is just behind the main cathedral in the center of Granada’s historic district. Built at least 250 years ago, it was restored in 2006, with conveniences like central air conditioning and wireless Internet access.

Many of the historic district’s colonial houses have been turned into hotels; this house, currently used as a vacation rental, could still function as a single-family home.

A typical Spanish colonial, it is made of adobe, with an unadorned 12-foot-high exterior wall facing the street. Visitors pass through two sets of wooden doors into a courtyard at the heart of the house, where a tiled swimming pool is crossed by a wooden bridge. A poolside bar opens into the kitchen, which has a view of the bells and stained-glass windows of the cathedral. The main floor also has a dining area, a living room and a gym. Upstairs, the master bedroom has a street-side terrace and a second patio overlooking the pool. The en-suite bathroom has a shower and a bidet; the other two bedrooms also have en-suite bathrooms.

The house is within walking distance of the open-air market in the town square. The shores of Lake Cocibolca (also called Lake Nicaragua) border the city. The house is about an hour’s drive from the international airport in Managua. The popular beach town of San Juan del Sur is an hour and a half away.

MARKET OVERVIEW

Volume has slowed since the market peaked in 2008. The number of transactions has decreased 30 to 35 percent in the past year. Turalu Brady Murdock, a vice president and counsel for the Managua office of the First American Title Insurance Company, said orders for title insurance in Nicaragua began dropping even earlier, in 2006. Foreign buyers are much more likely than locals to buy title insurance. "Title insurance is a United States product," she said. "Most people who ask for it are from the United States or Canada."

A typical restored colonial home in Granada costs $250,000 to $350,000, though in the 5,000-square-foot range, the cost can reach $700,000. In Nicaragua, interior open-air courtyards and patios are often factored into the square footage of the home. Houses that need to be modernized cost much less.

San Juan del Sur is the primary coastal hub for tourism and real estate development. But sales have slowed somewhat in the vacation-home developments spreading along the coast. Completed homes along the coast are hard to find, and cost anywhere from $500,000 to $1 million. Instead, she said, most people buy preconstruction homes or raw land, paying as little as $150,000 to $200,000 for ocean-view condos.

WHO BUYS IN NICARAGUA

Most of Nicaragua’s foreign buyers come from the United States and Canada, But there are increasing numbers of European buyers as well. We are seeing an ever-growing number of retirees needing to find places to retire that they can actually afford.  Nicaragua’s popularity as a retirement destination had increased since property values skyrocketed in Costa Rica, Mexico and Panama.

BUYING BASICS

There are no restrictions on foreign ownership of property in Nicaragua, but some rules will be unfamiliar to foreign buyers. Agents rarely get exclusive rights to advertise properties in Nicaragua, and that there is no multiple listing service. This means sellers can market their properties through several real estate agents simultaneously.

Buyers pay a transfer tax equal to 1 percent of the purchase price. An additional 1 to 1.5 percent in legal fees goes to the lawyer who researches the title and draws up the closing documents. The seller usually pays the real estate agent’s commission, which is 3 to 6 percent for a home, but 7 to 10 percent for raw land.

Many foreigners choose to buy title insurance, although this is not required. Ms. Murdock says her office acts as a liaison and interpreter for foreign buyers, helping them understand the process. She said many foreigners like the protection afforded by title insurance — in case, for instance, it turns out that the seller does not actually have the legal right to sell the property. Ms. Murdock estimated that three-quarters of the foreign buyers in Nicaragua buy title insurance, which also protects against mistakes made by local lawyers. "From a buyer’s standpoint," she said, "it’s a lot better to rely on a company with a deep pocket than a local attorney."

The title insurance company can also advise foreign buyers about unfamiliar rules, like inheritance laws that disallow certain kinds of joint property ownership, Ms. Murdock said. Title insurance costs 0.5 percent of the purchase price, but she said the minimum cost is $850. (Real estate costs are usually priced in United States dollars in Nicaragua.)