Stuff The Cash In Your Bra? How To Sell Real Estate Overseas
Around the enormous table sat five adult siblings, three with spouses, two with attorneys, one with a grown son, plus the real estate agent for the seller, his two representatives, our real estate agent, our agent’s boss, and my husband and me.
It was the summer of 2003 in Buenos Aires. Over the preceding 12 months, Lief and I had bought three apartments in this city in the wake of Argentina’s 2001 currency debacle and subsequent property crash. We arranged our schedules to be able to participate in the closing of the third apartment personally. We were purchasing from the five children of the elderly owner who had not too long before died in the apartment in question.
Argentines traditionally (with good reason) don’t trust banks. Following the 2001 collapse, they really didn’t trust banks. Real estate closings, therefore, were all-cash transactions that took place in the offices of currency houses, like the one where Lief and I sat that sunny summer morning. Papers went back and forth among siblings and attorneys, attorneys and agents, attorneys and attorneys. Then the agent for the currency house appeared. She had the cash. Lief and I had wired down our funds a couple of days beforehand so that the required cash bundles could be prepared. It was a US$220,000 transaction.
The cash wasn’t simply going from buyer (us) to seller. There were multiple sellers, each due a different percentage of the purchase amount. Into the room next, therefore, came the bill counter, the kind of machine drug dealers and casinos might employ. Sister A got US$22,000. Sister B got US$35,000. Big brother who had been living in the house with his mother until she died got more than US$100,000. The agent doing the counting passed him a plastic-wrapped brick of US$100 bills and some “change” in the form of smaller individual packages.
Each sibling had his or her own ideas about how best to transport his or her cash. Sister A stuffed much of it inside her bra. One brother had a money belt for his relatively small take. The other sister gave some to her husband, put some in her purse, and gave some to her son. The brother who got the brick of 100s had little option but to use a small duffle bag.
The real estate agents took their commissions, and the attorneys took their fees and the amount required to register the title, again, all in cash. After everyone had claimed what was due him, a small pile remained in the middle of the table, a few thousand dollars left over that belonged to the buyers (us). Lief walked out with around US$3,000 in cash in his jacket pocket. He told me later that he wondered if some local gang had figured out when real estate closings were being transacted at these currency houses so they could post someone at the entrances of the buildings and mug people as they walked out on to the street. (None of us was robbed.) The entire transaction took about an hour, with most of the time spent counting out bills.
Most closings aren’t this dramatic, although it’s not uncommon for campesinos in Central America (country folk in this part of the world) to request all cash at closing. One guy I purchased land from in Panama years ago supposedly transported his money back to his shack of a house in the middle of nowhere in a black garbage bag. He didn’t have a bank account (and probably didn’t trust banks anyway).
The particulars of closing on a real estate transaction vary by country, but more typical than all-cash is a cashier’s check and a few signatures in front of a notary. You can avoid the entire process if you’d prefer, usually, by assigning your attorney a power of attorney, allowing him to sign the closing documents and manage the closing on your behalf. I’d suggest, though, being on hand in person at least for your first one or two closings and certainly if you buy in Argentina, just for the experience.
Editor’s Note: Today’s essay is excerpted from Kathleen’s new book, “How To Buy Real Estate Overseas,” to be published by Wiley & Sons in March 2013.