In explaining why we moved to San Miguel de Allende, many adopted sanmiguelenses share an old local adage: “You move to Miami to die, you move to San Miguel to live!” Our city has the largest English-language social and cultural infrastructure of any destination in Mexico; it’s like a summer camp for adults. Unlike most other expat hubs in Mexico, the social scene here does not revolve around which bar has the best happy hour: it’s an educated and active demographic that finds a new life in San Miguel. What you need, is an insiders guide to real estate in San Miguel de Allende, and lucky for you, that’s exactly what we’ve got.

Given that Mexico is likely a foreign market to you — with none of the Zillow, Redfin and Trulia-like tools available up north to assist your research — be sure to connect online before arriving with a reputable Realtor who demonstrates a lengthy history in the real estate market here. Without the knowledge typically available stateside, you’re overly reliant here on your Realtor when it comes to assessing pricing history, appreciation expectations, rental possibilities and neighborhood safety. Choose only one Realtor, but choose wisely: you’ll need a reliable and knowledgeable agent who responds quickly to your needs.

Neighborhood overview: Location is critical

When beginning your home search, assess your personal needs and desires carefully. Location is critical in San Miguel. Property values are based on the walking distance and sightline to the Parroquia, the world famous, Eiffel Tower-like cathedral that anchors the Jardín de Allende, the main plaza of our Historic Center. Many residents here love the European-like walkability of our dense little village and most want to be within a 15 to 20-minute flat walking radius of the Jardín, since that’s the center of activity. A bulk of the town’s more than 550 restaurants fall within that area, as do the art galleries, shops and gathering places.

However, the Historic Center is not San Miguel’s only walking-distance neighborhood. Investigate others still walking distance like Guadiana — an upscale alternative — or San Antonio and Guadalupe, two historical neighborhoods that have been gentrifying rapidly over the last two decades. Better values can be found in some of the newest neighborhoods to begin that gentrification process, like Obraje and Azteca.

If walking distance is not critical to you, homes in the uphill eastern neighborhoods and further away from the Jardín can often offer better value, more bang for the buck, more land for pets to roam and often more privacy. For example, a home in the tony Beverly Hills-style uphill neighborhood of Ojo de Agua will certainly be pricey, but the cost per square foot value will be better than the Historic Center.

Assess your tolerance for the look of an older neighborhood where a seven-figure estate can sit adjacent to a raw-brick home with rebar sticking out of the roof. If that’s not to your taste, tell your realtor to focus on gated communities that boast underground utilities, all-finished construction and a more consistent upscale appearance. 

Although several gated communities are available in town, including two golf course communities, a plethora of new gated communities have sprung up on the outskirts of town, especially along the northern road — soon to be a full-fledged highway  — leading to Dolores Hidalgo as well as along the highway to Querétaro. Some, like Zirándaro, are master-planned communities with several different sub-communities built by different developers. Others, like Pila Rica, have a master developer but offer a mixed-use concept including hotel and retail. Several vineyard communities exist already, providing a Tuscan-like lifestyle and environment — some with hotels and restaurants on site — while others focus on an equestrian theme and events. 

Found your dream home? Here’s how to secure the real estate of your dreams in San Miguel de Allende

Homeownership in San Miguel de Allende is not restricted, unlike in Mexico’s beach and coastal communities, where homes owned by foreigners are held in a trust instead of actually being owned outright. Foreign buyers own their home here with a deed, just like in the United States and other countries. That makes the offer and purchase process much more like what expats are accustomed to back home.

Although newer financing options now exist in Mexico, mortgage interest rates here run about 300 basis points above mortgage rates in the U.S. and require 40% equity from the buyer. This means that the overwhelming majority of purchases here are all cash. Buyers can often take out a home equity line of credit (HELOC) on a low-debt home stateside or borrow a margin loan against an investment account to acquire purchase funds at a lower rate than a Mexico-based mortgage.

Reputable agencies all work with bilingual contracts — only the final deed must be only in Spanish, as a government-recorded document — but the Spanish side is the legally-binding language should a dispute occur. The traditional closing period is 30 days from offer to closing, and especially unlike the U.S., earnest money deposits are nearly always ten percent of the purchase price. And yes, negotiating down on pricing is often expected, but be sure your Realtor gives you advice on an appropriate negotiation range given your home’s pricing history, location and condition. Vulture investors are always disappointed here: since homes are held debt-free and carrying costs are so low, sellers are seldom pressured to sell at vulture pricing.

Two things should happen immediately once you have a dual-signed offer: have your Realtor’s legal team send you the no lien certificate (certificado de libertad de gravamen) so you know your home is lien-free. And watch for the closing cost estimate from the Notario (notary) — he’s like the title company and closing company rolled into one entity. Closing costs here in San Miguel run roughly 5.1% of the purchase price. 4% is the city-wide acquisition tax, commonly called a transfer tax in other parts of the world.

Home inspections are standard here, but industry protocol is that inspection negotiations focus on habitability issues only, not things like sticky doors, scratched floors or a missing doorknob. Protocol is that you have adjusted your offer pricing for visible deferred maintenance: the inspection only covers issues you cannot see.

Like in the U.S., once you have removed your inspection contingency, you then fund your earnest money deposit knowing it becomes nonrefundable. Be sure your Realtor directs you to an insured and bonded escrow company, since historical escrow companies here in Mexico state your funds are at risk of loss in the boilerplate language.

An experienced Realtor will have an outstanding legal team at their side guiding you through additional legal paperwork like the required Foreign Ministry (SRE) permit — all non-Mexicans are required to apply, do so immediately upon acceptance of your offer — or the power of attorney (Poder, in Spanish) that allows buyers to be absent at closing should travel or family emergencies arise. Unlike the U.S., either the actual buyer or their POA must be physically present at closing.

You’ve bought it! Now what?

Your Realtor should have directed you to a reputable property management company: they’ll be your bilingual contact for emergency repairs, paying staff in person and paying utilities and property taxes. They’ll have a team of subcontractors for any remodeling you may wish to do. They can even find you staff should existing staff not stay with the home you purchased. Additionally, most property managers can manage the short-term rental process for you should you choose to rent your home when not physically occupying it. Many homeowners make a substantial return on their investment by renting their home for a few months of the year.

Expect your deed in about six weeks after your closing — your Realtor can help with this. Be sure you receive the physical, city-stamped copy, if you did not, something has gone awry. And remember, your property taxes — now roughly US $270 per $100,000 of value — will be due every spring. Ask your property manager to pay it by January 31 for that 15% discount!

Once you’ve settled into your new home, you’ll find the only thing you love even more is the lifestyle here — that’s why we’re awaiting San Miguel’s 6th nomination as the Best Small City in the World!

Greg Gunter has been a full-time homeowner and resident expat in San Miguel de Allende since 2009 and is the Broker and Co-Owner of the Warren Buffett-led real estate brand Berkshire Hathaway HomeServices, having opened the first and flagship office for the brand in Mexico.