Disclosure Offers Hope for a Healthier Market Observers are understandably surprised at the recent drama over the topic of real estate disclosure discussed in last month’s Gringo Gazette. "How could there possibly be opposition to real estate disclosure!?" they ask incredulously. Unfortunately, there is a wide gap between buyers’ expectations, and the level of disclosure that the real estate establishment is currently providing. Real estate disclosure in Baja is here to stay, and everyone will have to embrace it sooner or later. The buyers that come here from North of the border want it now. Disclosure and openness is not a significant burden to an individual agent who is free to select which properties to offer to a client, and which properties to avoid. If the agent offers solid properties, disclosure is a simple act of filling out a short form and getting all parties to sign it. It is also no big deal for an individual home seller in one of the existing coastal communities. Disclosure becomes a problem, though, for local real estate franchises. These companies often sell newer and pre-construction developments, and they compete among themselves to represent the new developments. Many of the new developments are plagued by problems such as conflicts, lawsuits, property invasions, Federal Zone violations, water shortages, lack of utilities, financing problems, liens, erosion, and sewage issues. Selling these projects to Americans means that these problems get covered up. The local real estate franchises need to redefine how they do business, because transparency will inevitably affect the desirability of the projects that they want to promote to foreign buyers. Regrettably, the real estate culture cultivated by some prominent local leaders has been that problems must be silenced and hidden, instead of addressed. I personally observed this often as an insider working for the real estate establishment. The first time that I observed a cover-up occur was within one hour of starting my new job as a real estate agent at a well known local franchise. I realized that the franchise that I had just joined was selling "lots" in the Federal Zone. The problem is that such sales were illegal because the Federal Zone is national property and cannot be sold. I immediately warned my broker of the problem in writing, escorted a colleague to a Federal office, and showed my broker certified documents proving that the lots in question were the Federal Zone. I was then stunned when my broker, sales manager, and office colleagues pressed ahead to collect client deposits and their own commissions anyway. Hundreds of thousands of dollars were ultimately "lost", and the ethics of the issue has still not been raised within the general body of the real estate association after nearly two years. Recently, the Baja Fair Trade proposal for mandatory disclosure that was open to all agents was summarily condemned by the same group within hours of being proposed. The marked contrast between actions that go against the public interest and real estate ethics is simply irreconcilable. The Baja real estate clubs attempt to pretend that their practices conform to an American concept of standards by arguing that Baja real estate agents possess local licenses. Really, what is "real estate licensing"? It is about what an agent knows and what that agent discloses in order to protect the public interest, not the agent’s financial interest. It has nothing to do with franchise names, association logos, special sales techniques, or popularity contests. Licensing is 100% about knowledge and mandatory disclosure, which is the true core of the real estate professional. A license that does not represent these concepts means nothing. Since the Baja real estate establishment openly opposes disclosure, it is now the responsibility of the public, individual agents, and independent minded agencies to help advance the cause. Ethically minded individuals should not allow pressure from the real estate establishment to compromise their ethics. One tool to help the market communicate is the Baja Fair Trade Disclosure Team on Google Groups. Participation is open to both real estate professionals and the general public alike with a free registration. Credible disclosure items will be added to the growing Baja Fair Trade disclosure database on Google Earth and utilized by Baja Fair Trade agents as part of their mandatory disclosures to new buyers. Informed buyers make betters decisions and will experience fewer surprises. The end result will be a healthier Baja real estate market. In the absence of a culture of disclosure in the Baja real estate market, seek out a highly knowledgeable and transparent representative when you buy. The rest is simply style over substance. Brian Flock is degreed and certified broker in Mexico real estate. Founder of the Baja Fair Trade registry (www.bajafairtrade.com), he may be contacted at brian@bajaoceanrealty.com, www.bajaoceanrealty.com, or (619) 793-5224.
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