Last updated on April 24th, 2024 at 04:06 pm
Buying homes or land for sale in Ecuador can give you a place to travel to for getaways, a home to live in during your retirement, or a property you can rent to vacationers to gain a steady stream of supplemental income.
Whatever your reasons for exploring the Ecuador real estate market, this guide created by our team here at Remitly will introduce you to the process, help you weigh the pros and cons of buying homes for sale in Ecuador, and provide you with tips and resources that can come in handy while researching your options.
Can foreigners buy property in Ecuador?
In many Latin American countries, laws restrict the property ownership rights of foreigners. Some countries require foreign buyers to lease property from the government or mandate that a citizen be listed on the deed. Others will allow foreigners to buy property only if they set up a trust in the country.
Ecuador doesn’t have any of these restrictions. Foreigners can purchase land, condos, and houses for sale anywhere in Ecuador and receive the same rights as citizens. Real estate transactions involving foreigners in the country are fee simple, meaning you own the property and any improvements you make to it outright.
Why buy property in Ecuador?
There are many good reasons for choosing Ecuador when purchasing international real estate. Here are some of the biggest benefits of buying property in the country.
Full ownership
As previously mentioned, foreigners enjoy full ownership of any property they buy in Ecuador. Since you don’t need to establish a trust, the process is simpler than in other countries, and because you have complete rights, you benefit from any increases in the value of the home or condo if real estate prices go up in the future.
Low real estate prices
While real estate prices are soaring in the U.S. and many other countries, homes are still affordable in Ecuador. A beachfront condo that might cost more than $1 million in the U.S. can be purchased for around $100,000 in the South American country, and the diverse geography of Ecuador gives you the freedom to live everywhere, from high in the mountains to along the coast.
Affordable cost of living
Ecuador is an affordable place to live, making it a popular spot for retirees and families looking to move internationally. Compared to the U.S., Ecuador is 65% less expensive. The country ranks 112th on the list of the most expensive countries to live in compared to fifth place for the U.S.
The low cost of living is also beneficial for those looking to purchase an investment property in Ecuador. Since the country is more affordable, the prices you’ll pay for things like housekeeping services, ongoing maintenance, and necessary repairs will be considerably less than if you bought a rental property in the U.S.
Growing tourism
Prior to the COVID-19 pandemic, tourism was on the rise in Ecuador. From 2016 to 2019, the tourist industry grew by around 30%. Now that the world has reopened, experts predict that the number of tourists visiting the country each year will continue to rise.
Welcoming communities
Ecuadorians are known for being welcoming to foreigners, whether they’re visiting while on vacation or moving in next door. In one survey of expats, Ecuador ranked among the top five countries that allow foreigners to feel at home.
Ability to buy from abroad
Foreigners don’t need to travel to Ecuador to close on a property. The entire transaction can be completed remotely, so you can plan a trip to tour the property in Ecuador for sale in the area where you’d like to purchase and then handle the rest of the process in your home country.
What’s the real estate market like in Ecuador?
Although tourism is increasing in the country, Ecuador has yet to attract foreign real estate investors en masse. As a result, prices tend to be affordable throughout the country.
During the 2010s, an oversupply of residential properties led to a drop in prices, and economic hardships caused by the global pandemic stymied real estate growth even more. As of 2023, the market was only beginning to rebound, and the supply of condos and houses in Ecuador remained large, making it a good time to buy.
What are the legal requirements for buying real estate in Ecuador?
To purchase real estate in Ecuador as a foreigner, you’ll need to present a valid passport to verify your identity. Once your offer on a property has been accepted, you’ll need to obtain a solvency document from the Ecuadorian Property Registry to verify that the seller has all rights to the property and that there are no liens on it.
After the purchase, you must complete additional paperwork. You’ll need a notary to sign off on the deed and then register it with the municipality and the Property Registry Office.
If you don’t want to travel to Ecuador for the closing, you will need to take an additional step and select someone to represent you during the transaction. You can name a trusted individual, like a real estate attorney, as your Power of Attorney, so they can sign documents on your behalf or designate someone in Ecuador as an official agent (agente oficioso) to purchase the property for you.
How much does it cost to buy property in Ecuador?
Many things factor into the cost of buying property in Ecuador, including all of the following considerations.
Condo and home prices
As in any other country, the prices for condos and homes in Ecuador vary from region to region. Prices will generally be higher in areas where the demand is greatest and lower elsewhere.
The hottest real estate market in the country is Cuenca. The city in the Andes mountains is a popular destination for tourists due to its status as a UNESCO World Heritage site. Yet, real estate prices in Cuenca, Ecuador, remain affordable. You can buy a large condo in the heart of the city for around $400,000, and three-bedroom homes in the surrounding areas range in price from $200,000 to $350,000.
Outside of Cuenca, home prices will likely be lower. Check out the latest listings on Realtor.com to get a feel for what’s available and what the current selling prices are.
Transaction costs
In addition to paying the price of the home or condo, you’ll also be responsible for fees related to the closing. These include:
- Transfer tax: 1% of the purchase price
- Provincial transfer tax: 0.11% of the purchase price
- Notary fee: 0.10% of the purchase price
- Legal fees: Typically around 1 to 3% of the purchase price
- Registration fee: 0.10% of the purchase price
Based on this breakdown, the additional costs of buying an Ecuador property for sale at a price of $100,000 range from $2,310 to $4,310, depending on the legal fees.
It’s important to note that there will also typically be real estate agent fees of 4 to 6%. Although the seller pays the fees, some people may increase the asking price for homes and condos to offset the costs.
Taxes
As a property owner in Ecuador, you’ll be subject to certain taxes. You must pay a municipal tax equal to .015% of your total assets annually.
In addition, local governments require property owners to pay an annual municipal real estate tax. The amount of the tax varies by location and ranges from 0.025 to 0.5% of the total value of the property.
To determine this value, local governments perform tax assessments. It’s a good idea to find out the last assessed value of a property and the current property tax rate before you buy to budget for the annual tax payment.
Insurance
Purchasing a structure and contents insurance policy is important for protecting your investment. These policies cover the cost of damages due to fire, theft, and natural disasters.
How much you can expect to pay for homeowners insurance varies. Insurance companies in Ecuador base the premium on the value of the home only, so they deduct the assessed value of the land from the purchase price of the house when making calculations.
The location of the property will also help determine the cost. If you purchase real estate in Manta, Ecuador, which is prone to earthquakes, you’ll generally pay more than in other areas of the country. However, even in this region, the prices for homeowner’s insurance tend to be lower than in the U.S.
To estimate the cost of homeowner’s insurance, get quotes from a few insurers before you buy.
Where is the best place to buy property in Ecuador?
In Ecuador, property for sale in certain cities and regions is especially desirable for foreigners. Here are some of the top places to consider:
- Cuenca: A popular tourist destination located in southern Ecuador in the Andes Mountains
- Quito: Ecuador’s capital, which is currently in the midst of a major restoration project to improve the old colonial center
- Manta: The only major city in Ecuador located on a coast, making it a popular vacation spot for beachgoers
- Canoa: A smaller beach town located on the northern Pacific coastline
The pitfalls of buying property in Ecuador
For all the benefits of buying property for sale in Cuenca, Ecuador, and other popular locations in the country, there are some potential drawbacks that you need to be aware of before you enter the real estate market. Read on to explore them.
Language barrier
Spanish is the official language of Ecuador. If you’re not fluent in the language, understanding contracts and negotiating with sellers can be complicated.
Lower construction standards
In Ecuador, construction standards and safety codes are more relaxed than in the U.S. and Canada. As a result, homes may require more frequent repairs. However, the cost to make necessary fixes will generally be lower than what you would expect to pay in other countries due to the cost of living.
Vulnerability to natural disasters
As previously mentioned, Manta is prone to earthquakes, and there are threats of other natural disasters within the country. Landslides and extreme weather events have been occurring more frequently in Ecuador, and experts predict things to continue to worsen in the decades to come due to the effects of climate change.
Risk for political unrest
In any country, political unrest can have a negative impact on the economy, causing currency values to drop and tourists to stay away. In 2022, Ecuador saw large, violent protests over the economic policies of Guillermo Lasso’s administration. There was also widespread unrest in 2019, sparked by a reduction in fuel subsidies.
Tips and resources for buying Ecuadorian property
Although there are some potential pitfalls to buying Ecuador real estate, you can mitigate some of the risks and take steps to ensure a smooth transaction. Follow these tips as you begin the process.
Visit the property
Although you can complete an entire real estate transaction without ever setting foot in Ecuador, it’s a good idea to travel to the country and tour properties for yourself. Even the best virtual tours are no substitute for inspecting a home with your own eyes. Plus, visiting in person gives you a chance to experience the neighborhood and the home through a tourist’s eyes, so you can be sure that your investment is appealing to international travelers.
Know the tax implications at home
We’ve discussed that you’ll be responsible for paying property taxes when you buy property in Ecuador. However, owning a home abroad may also open you up to new tax liabilities in your home country. If you earn income from renting your property, you may be subject to income tax, and other taxes may be assessed on your international real estate assets as well.
To ensure you pay what you owe and comply with tax laws at home and abroad, consult a knowledgeable tax professional before buying.
Work with knowledgeable pros
Speaking of professionals, it’s wise to have a team of them on your side on the ground in Ecuador. Be sure to choose a professional real estate agent who can help you find properties that fit your budget and lifestyle and is able to negotiate with the seller on your behalf. Also, hire a bilingual real estate attorney who can represent you during the transaction.
When hiring attorneys and real estate agents in Ecuador, do plenty of research. Ask for recommendations in online expat communities and read online reviews for professionals. Interview a few attorneys and real estate agents before deciding on one.
Get everything in writing
In Ecuador, it’s customary for buyers and sellers to make verbal agreements rather than written ones. However, this can open you up to a number of risks, from fraud to losing out on a property. Insist that all agreements be spelled out in writing and have your attorney translate all documents into English for you to review.
Consider alternative financing
Financial institutions in Ecuador are unlikely to grant traditional mortgage loans to foreigners because they have yet to establish credit in the country. Your real estate agent and/or real estate attorney can help you explore alternative financing, like direct seller financing, where you pay for a home in installments rather than upfront.
If you prefer a traditional mortgage, apply for loans in your home country. Not only are you more likely to be approved since you have an established credit history, but the rates may be lower, as banks in Ecuador often charge 12% or more.
Resources for buying property for sale in Ecuador
As you continue to research property for sale in Ecuador, the following resources may be of help to you.