Tax value appraisal

In many areas of the world, the appraised Tax Value (Catastro) is the same as the Commercial Value (selling price). In Mexico, the Catastro Value is set by the county appraiser (without onsite property inspection). In the Lake Chapala area, the Catastro value of all properties is a fraction of the Commercial Value. While the Catastro value is used by the Notary (a specially licensed lawyer who performs property transfers) to determine closing costs and the annual tax payment (Predial), it is not effective for comparing Commercial Values.

Neighborhood comparatives

North of the Border, real estate values are frequently decided by "comps", the actual recent selling prices of homes in the same neighborhood. This system works very well in planned subdivisions where all of the homes are represented by a few models. Because homes in Mexico are so distinctly different, one from another, even in the same neighborhood, this method of appraisal is seldom used, except in the case of resale properties in a developer's subdivision.

Investment value

Another way of determining the Commercial Value of a property is to look at a rental income/sales price ratio. In the United States the formula of (Monthly rent x 96 months = sales price). Here, due to low maintenance costs and taxes, durable construction, and mild climate, the formula is generally adjusted to (Monthly rent x 132 months = sales price). We can help you determine a fair and accurate rental value for any property, if you want to check the Investment Value.

Replacement value appraisals

This is the preferred system of determining the Commercial Value of properties at Lake Chapala. A replacement value appraisal is determined by adding the value of the lot to the depreciated value of the construction, adding as needed for special amenities.

Existing home appraisal

To appraise an existing home, all of the above improvements are added to the cost of the lot along with the cost of all construction.

Homes in Mexico are measured from roof edge to roof edge, and include all construction, even garages, terraces, and sheds, in the total construction, unless noted otherwise. Most foreign visitors are accustomed to considering only the areas of a home that are heated and cooled in the total square footage.

Multiply the square footage x average cost per square foot. Add the lot and included amenities from the lot section.

From this total, subtract approximately 1% per year of age to allow for obsolescence of style and general wear and tear. Major defects or extremely dated properties would require a larger depreciation deduction.

To this figure, add a value for a satellite system, pool, telephone line, water pressure system, water purification system, pumps, furnishings, appliances, and other amenities

To this figure, add some space to allow the owner to negotiate with the buyer, and finally, the commission on the sale plus sales tax (IVA-16% on the commission).

This figure will be somewhere near the asking price of the property in question. Occasionally, visitors encounter homes that seem, even in light of this information, "overpriced". Buyers are always encouraged to make an offer that they feel reflects the value of the property as they perceive it.

Existing homes will range from resale’s that are just a year or two old, to a number of 15 to 30 year-old homes, the "fixer-uppers" frequently sought out by smart buyers, who realize that due to lower cost of construction labor, they can easily redo and update these still sound and sturdy homes.

It is hard for newcomers to realize just how low labor costs are here. A master mason who creatively lays brick, ceramic tile, or marble earns about $100-$150 USD per week. By utilizing the wonderful native building materials-brick, marble, stone, Mexican ceramic tile, the building or remodeling costs will be a fraction of what would be expected in the U.S. or Canada.

For more detailed information regarding appraisals, additional properties, resale’s, new construction or remodeling older properties, feel free to ask