International House Hunting Requires Time and Patience

If you’re thinking of investing in a house or condo in a foreign country, understand that what you see on TV about buying real estate is often fiction scripted for entertainment. International house hunting is not something most people should do quickly or on a whim. 

Back in 2007 I wrote a blog post about a relatively new HGTV spin-off show called House Hunters International. While I wasn’t thrilled with the format and the false urgency, I did like the idea that it was giving credibility to the idea of purchasing a home outside of your birth country and comfort zone. The people making the leap to living abroad—or buying a second snowbird home—were surprisingly varied in background and income level.

Plus it gave us a peek into what prices were like in foreign lands. In some cases you watched one about France and said, “Two million for that fixer upper?!” Then you watched one about some country in Eastern Europe and said, “Wow, that’s less than people pay for a car!”

Here we are 18 years later and the show is still running. You can get it on cable but it’s also on MAX and many episodes are on YouTube. There’s just one problem with this long-running success: House Hunters International is mostly fake. 

Entertainment, Not an International Real Estate Buying Plan

A friend of mine who was on it had already lived in his place for six years but they still filmed a tearful goodbye with his family back home. His “real estate agent” was a visiting friend who could speak English well enough to be on camera. Nobody local who really had that job could. 

The producers are hiring participants based on whether they have already purchased a house or not. They don’t want to waste money filming if a deal doesn’t happen and there’s no closure. But of course that means everything the people say on screen is fake and they’re weighing the options of three different properties when they have really already decided on one.

A couple I know was on the show while supposedly looking for an apartment in a popular expat spot in Southeast Asia. On the show they looked at three places before choosing one. In reality they looked at more than 30 apartments and by the time filming started, they’d been in the one they picked for months. 

There have been some reported cases of the furniture being switched out and the walls painted over and then painted back so there can be a dramatic “before and after” reveal. Sometimes the houses for sale are really friend’s houses that aren’t for sale at any price. An HGTV spokesperson confirmed for Entertainment Weekly years ago that lots of, ahem, liberties are taken:

We’re making a television show, so we manage certain production and time constraints, while honoring the home buying process. To maximize production time, we seek out families who are pretty far along in the process.

This means that the stars of the show have already bought or rented their place and all of the dialogue is just acting. Participants are forced to retake scenes several times if there’s not enough drama or conflict and they are asked to use certain phrases like “outdoor living space” instead of “yard.” One house hunter said they told him to say he really wanted a house with crown molding—even though he wasn’t even sure what that was—so the couple would have something to disagree about.

To their credit though, they don’t usually fake the prices (if the place is actually for sale that is), so the show is still worth watching for that reason. Hopefully you can fast-forward through all the redundant parts where they’re repeating the conflict dialogue over and over.

How to Do International House Hunting Right

It’s an entertaining show as long as you know the whole premise is fake and you are just watching to be entertained. My main problem with it is the whole premise of looking at just three houses in a very short period and then deciding right then to buy one of them. Half the time it’s the first visit to the destination by the episode stars and they know nothing about the real market or even which neighborhoods are solid. 

Looking at three places to buy in one or two days and making a fast decision on that alone would be downright stupid. Here’s what to do instead:

1) If possible, rent there first.

Ideally you know this international location where you’re buying real estate really well before you commit your hard-earned money. If you have lived there already for a year or more, you know which neighborhoods are best. You have a decent feel for what other people paid.

You know what the rental potential is when you’re not there. You know all the ins and outs of transportation, schools, and local shopping. You know what it’s like at night and during the day, what the risks and potential rewards are for that location in the future, and how long places are sitting on the market if you have to sell. 

It’s hard, if not impossible, to work this all out in a weekend or two. International real estate can be less risky than buying where you are now, but plenty of people have gotten burned by being in a hurry. 

2) Ask a lot of locals

Your sense of worth is probably warped by living in a wealthy country, especially if you’re coming from a place like San Francisco, New York City, Vancouver, or London. What may seem like a screaming bargain to you may be an outright rip-off locally.

A guide in Panama once told me a story of how a woman was going to buy a house in Boquete for a certain price from a real estate agent. The guide knew the owner and said, “He’s asking half that much. Let’s go talk to him directly.”

Turns out the shady real estate agent was listing it for an inflated price, hoping a clueless gringo would buy it. He was going to pay the owner what he was expecting and pocket the rest. The woman ended up buying the house directly. After the closing, she remembered the guide complaining about his old smartphone with a lousy camera. She took the guide to a cell phone store and said, “Pick out any phone you want. I’m buying.”

I’ve also seen people overpay where I live in Mexico, usually because they don’t know what’s “normal” in the market. In many foreign countries there’s no multiple listing service and certainly no Zillow.

So to find out what’s normal, you have to ask a lot of people who have already gone through the process. Then they’ll probably lead you to a trustworthy real estate agent who will give you some actual comps for what has sold in the past year. Facebook groups can speed this up, but other expats are more likely to help you out if they know you’re willing to invest the time to look around and do your homework. 

3) Do your local real estate market research

You will rarely be able to just pull up a web page online to see what people have paid for condos and houses where you’re looking, even in popular expat hotspots like Guanacaste or Cuenca. You have to view a lot of places for sale and ask around about what places have sold for. If you don’t have at least a general sense of the market, it’s hard to know what is a good deal.

There also may be extra quirks and charges, like a land trust fee if you live near the coast—or in Guatemala on a lake even. You also have to look at as many properties as you can. Probably more than three!

When we walked into our Guanajuato House, we had enough knowledge to know it was a steal. It had four bedrooms, two baths, a great layout, a big sun room with a view, roof expansion space, and an easy walk to the center. For about $85K. We ended up buying it. It didn’t need much work, but we redid the kitchen:

Remember that each town or city is its own market, especially in a big country like Mexico. High-end properties in Los Cabos starts at two million bucks and can go exponentially higher. Spend more than a million on luxury real estate in Huatulco, however, and you’ll have one of the best houses on that coast. In much of central Mexico outside of the capital city and San Miguel de Allende, it’s hard to even find something listed for seven figures. 

Prices in Antigua are double or more what you’d pay elsewhere in Guatemala. Condo prices I saw listed in Zaragoza, Spain when I was there were roughly one-third what comparable units were listed for in Barcelona. You won’t know if the latter are still a good value without doing your homework. 

4) Have a heap of cash

I seldom see anyone mentioning this on house hunting TV shows, but you normally need to pay in full when you buy property in developing countries. If there’s a mortgage available, it will have a short balloon period and high interest. Plus that’s often only available to you as a foreigner if you’re buying through a condo developer on a new build. That’s often a risky proposition because the development is still under construction when you start paying for it.

So most buyers are either taking the proceeds from a sale back home, taking out a home equity loan on their other house, or using savings of some kind. You can set up an IRA to enable you to buy real estate. Get an accountant who does this regularly to help.

Having said that, I made my first real estate investment in Mexico (pictured above) for $35,000, then put another $10,000 into it for renovations. Unfortunately we sold this little beach house for just $55K eight years later, so it wasn’t exactly a slam dunk investment. We used it a good bit for family trips and rented it out a good bit to vacationers though, so we knew there wasn’t much downside to investing such a small amount.

I don’t plan on selling the second house I bought in Guanajuato, but it’s probably worth at least twice what we put into it we wanted to. We felt strongly that this would be the case over time because we were prepared. We actually lived in the city for a year before going international house hunting…see #1.

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