Ecuador’s low cost of living, affordable real estate and the relatively easy purchase process add value to a country whose natural beauty and biodiversity are already world-renowned. Ecuador has been identified by the United Nations Environment Program as one of 17 countries thought to host most of the world’s biodiversity. With four significantly varied regions—the coast, the Andes, the Amazon and Galápagos Islands—it attracts beach bums and mountaineers alike. The country’s rain forest and highlands are also growing as eco-tourist destinations. The vibrant and culturally diverse indigenous communities that live in these areas add to the attraction.
“Ecuador is one of the most desirable locations in the world. It has a very nice climate, exceedingly low cost of living, a good economy, excellent health care and a very rich local culture,” said David Workman, manager of The Greater Ecuador Real Estate Investment Fund, which sells homes through Ecuador Homes Online.
Ecuador in brief
Located in Northwestern part of South America, Ecuador borders Colombia, Peru and the Pacific Ocean. The fascinating Galápagos Islands where Darwin made his famous observations that lead to his theory of evolution also belong to Ecuador. The country covers an area of 98,985 square miles—roughly the size of Colorado—and has a population of around 14 million.
Ecuador was home to many ancient civilizations and the history of human activity in the country stretches as far back as 3500 BC. The country was part of the Inca Empire—the largest of its kind in at the time. During the 300 years of colonization, indigenous populations that were not wiped out by diseases brought by the Spanish suffered under the oppressive thumb of their rulers. It was in Ecuador’s capital Quito that the first independence call in Latin America was made on August 10, 1809, inspiring independence movements through out the region. The city’s central role in the region’s history has earned it the nick name “Luz de América” which translates to “Light of America.”
Ecuador uses the U.S. dollar as its currency. It has abundant natural resources, including oil, fish, timber and gold. Ecuador produces a wide variety of agricultural products including coffee, cacao and tropical fruits. Estimates released by Ecuador’s central bank showed that the economy grew by 5.3 in 2008. It is expected to grow another 3.2 percent in 2009, according to Reuters. The slower growth rate is attributed to an export slump resulting from the global economic crisis, among other things.
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The International Living Magazine has ranked Ecuador second in the world’s top retirement spots for its affordable cost of living and real estate, and second home buyers find the country attractive for the same reasons. According to Gary A. Scott, an investment publisher with forty years of experince who now resides in Ecuador, the country is more inexpensive than other popular destinations, such as Mexico. It is a short flight from the U.S., has well developed infrastructure and is safe. The past several years have registered “a large growth in North Americans buying [real estate],” according to Scott.
Despite the global economic crisis and the credit crunch, real estate professionals seem to remain optimistic. “The real estate market in Ecuador continues to be fairly strong, with modest price appreciation. The biggest growth areas are in Cuenca, Quito, and on the coast between Mantanita and Manta,” said Workman, who himelf lives in Cuenca with his wife and two children.
Real estate prices vary widely from the countryside to towns and cities. “In some areas you can still find very nice homes starting at about $50,000—but it will be double that in cities like Cuenca and Quito,” said Workman. “Larger homes with better construction quality and higher end finishings (real hardwood floors, granite counter-tops, etc) will start at about $150,000. Luxury condos in the best areas currently sell for $600 per sq. meter and up.”
Buying real estate in Ecuador
There is no restriction on foreign ownership of property in Ecuador. “Ecuador’s constitution guarantee’s equal rights for everyone regardless of nationality or residence,” said Scott, who lives with his wife in Cotacachi.
Workman added, “All that’s really required is that you have a valid passport for identification. Foreigners have all the same rights of property ownership that locals do. Foreigners get full title to property, the same as locals.” For those who still feel uncomfortable and want to secure their peace of mind further, the option of buying title insurance is available.
The process of purchasing property in Ecuador is not overly complicated, according to Ecuador Homes Online. Once you have agreed to a price for a property, you have a lawyer perform a title search and write a purchase contract, which is typically done in one or two days. “If the title is clean, then you go to the Notary to complete the transaction. If there is no financing involved, the buyer pays the seller in full at the time of signing the transfer documents. The notary will then take the signed documents to the municipality for registration,” added Workman.
It takes only ten days for the deed—also known as the escritura—to be registered and returned from the municipality, according to Workman. If the seller is offering financing, then there is another step involved. “Promesa de compra vente” or “promise to purchase” is a binding agreement that is signed, notarized and registered with the municipality allowing the title to remain with the seller until the money owed is paid in full.
Fees paid by the buyer can include legal fees, transfer taxes, registration taxes, notary fees, and agents’ commissions. “Note that the buyer typically pays for all transaction costs,” said Workman.
Just as anywhere else, buyers need to be careful when purchasing property in Ecuador. To begin, buyers should ensure that their lawyers have done a proper title search. “[In cases where] properties were inherited from an owner who died without a will, the heirs have different ownership rights and claims can be made for up to fifteen years after the original owners death,” said Workman.
Gary Scott advises potential buyers to keep in mind that most brokers are not licensed. Asking prices usually start off high and escrow is not absolute. It is best to not rush and to carefully wade into the process through a reputable agent. “[The] legal system is cumbersome to recover funds lost or to correct errors after the fact,” said Scott who also writes at Ecuador Living.
Most international property buyers in Ecuador are interested in living part-time or full-time in the country, and the country has been sheltered from many problems that arise from too much speculation, which has lent its property market more stability.
“The real estate market in Ecuador should continue to climb, and our prediction is that it will follow the pattern that you have seen in countries like Mexico, Costa Rica, Honduras, and Panama over the last 15 years—with very good appreciation on the coast and in the larger cities,” said Workman.