HalloCasa - Colombia

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Overview of the Real Estate Buying Process in Colombia

1. You like a property

We are happy to see that you are interested in a property on HalloCasa. You will be able to use a lot of possibilities on HalloCasa in order to gain a comprehensive understanding of each property. In addition to property information itself, you will be able to do in-depth research about the surroundings and infrastructure. Furthermore, HalloCasa will illustrate available documents and other additional information.

2. You contact the seller

In Colombia, property sale occurs both via owners and via brokers. The language skills of the respective contact person will be indicated. Generally, most agents speak English. Among owners, there is a growing size of English-speakers. Additionally, HalloCasa will provide a list of translators which you will be able to contact.

3. You will receive detailed information and inspect the property

The owner will send all available and necessary documents to you. Certainly, a site visit to the property might be of interest to you. If you need help with market insights, you will have the option to contact experts on HalloCasa. Additionally, we recommend you to have a look at tour operators, also to realize how beautiful this country is.

4. You negotiate the contract and the purchase price

Contract negotiations are usually processes in which both parties are approaching each other gradually. Therefore, knowledge of contract details, which apply to Colombia in particular, might be helpful to you. Here, our notes concerning additional purchase costs in our FAQs below might be interesting to you. Certified translators can be useful to rule out misunderstandings in this phase.

5. You sign the contract and induce the payment

You’re almost there! You sign the contract, either personally in Colombia or by an authorized representative from your home country. Soon, HalloCasa will provide you with a list of notaries who you can contact. Read below also our Detailed Buying Process.

6. You become the owner of the property

Your ownership is registered in the Land Registry. Congratulations! You recognized that Colombia has a lot of potential and you had the courage to invest in this promising continent. We are happy for you! May your purchase bless you.

1. Finding the right property

For each property, you will find information about the following topics:

  • – The property itself
  • – Location
  • – Infrastructure
  • – Demographics
  • – Additional information

2. Contacting the owner / broker

Methods of contacting the owner/broker:

  • – Via E-mail
  • – Via Telefon
  • – Via Skype

Pay attention to the details of the language skills of the owner / broker.

3. Transferring Information

The property owner or the broker will send the following documents:

1. The availability Certificate (“Certificado de Tradición y Libertad”):

  • – The entire history of the property.

2. Copy of paid invoices of property tax for the current calendar year (“Ultimo Predial Cancelado”):

  • – The tax payments for the current year must be canceled. The property owner is obliged to pay the property tax once a year. Therefore, it is very likely that at the time you purchase, the owner has outstanding property tax to be paid. It is therefore important that the previous owner of the property has paid the real estate tax before the property is transferred to the new owner.

3. Copies of paid invoices of administration expenses of the property (“Paz y Salvo de Administración”) (only necessary if the property belongs to a condo with administration services / expenses are included):

  • – The legal owner needs to provide you or your broker with a declaration that the administration invoices have been paid or invoiced. This also applies to all other utilities (electricity, water, gas, telephone). In Downloads you can download examples of such documents.

4. Optional:

  • – In case you buy directly from the legal owner, ask an attorney to translate and certify all documents and ensure you have a copy of these.
  • – In the near future HalloCasa will provide you with a list of translators who you can contact.

4. In case of contacting an appraiser

In the future, HalloCasa will provide you the option to contact experts and appraisers for specific fields. You will find a list of various experts with appropriate information:

  • – Name
  • – Contact Details
  • – Languages

The professional appraiser should be registered in the Colombian Lonja de la finca raíz. A professional appraiser clarifies, among other things, any financial liabilities of the real estate, legal ownership of the property and its value.

5. You sign the promissory sales contract

Based on,

  • – The market price
  • – The value of the appraisal (optional)
  • – The environment

You or your representative sign the promissory sales contract. The promissory sales contract includes:

  1. Verification of identification of both parties. You will need to provide your passport.
  2. Detailed description of the property including two IDs, the Matrícula Inmobiliaria and the Cedula Catastral.
  3. Value of the property and payment method. You also need to clarify a causal penalty (arras) in case one party does not comply to previously agreed-upon conditions.
  4. The notary who will be handling the transaction is stated, including date and time when the final contract (Escritura) will be signed.
  5. Finally, the distribution among both parties, the owner and the buyer, of all the expenses which occur during the buying process is clarified.

To know the fees of real estate acquisition in Colombia, see the question: “What are the transaction costs (notary fee, taxes, transfer costs)? below.

Optional:

  • – In case you buy directly from the legal owner, ask an attorney to translate and certify all documents and ensure you have a copy of these.
  • – In the near future HalloCasa will provide you with a list of translators who you can contact.
  • – In Downloads you can download examples of those documents.

6. You transfer the money to a Colombian bank account

To make a bank transfer, you need someone in Colombia with a Colombian bank account. Therefore, you need a representative, on whose account you transfer the money. This should preferably not be the owner. For this purpose, the document “Template: Power” in Downloads might be of help to you.

Fiduciary

  • – In Colombia, especially with projects which are not completed, it is common to transfer the money to a fiduciary account. The money is being held by the fiduciary until the agreed-upon conditions by the constructors are being met. In Colombia, various banks also act as fiduciaries for existing properties. In the future, HalloCasa will provide you with a list of fiduciaries. If you work with a fiduciary, it can act as the above-mentioned representative.

The representative must complete the following:

“Form 4”:

  • – This form provides the Colombian Central Bank. It states where the money comes from.

“Carta de Instrucciones”:

  • – This sheet documents the exchange rate of the day, the respective bank applies. The representative must agree to the exchange rate and sign this document. Normally, it is changed in the following way: Currency of Origin –> USD (US Dollar) –> COP (Colombian Pesos). USD will be usually directly converted into COP. In addition, banks can request additional documents. This depends on the particular bank.

In Downloads you can download the “Formulario 4”. Concerning the “Carta de Instrucciones” please contact the respective bank.

7.1 Option 1: You travel to Colombia

Before leaving your home country, make sure you plan to stay enough days in Colombia necessary to conduct the entire buying process. Take all the necessary documents with you. Ask your bank about the easiest way to transfer the money to Colombia.

7.2 Option 2: You buy from abroad

In this case you should provide a representative in Colombia with a power, making sure that this person fulfills the previously-defined requirements. Since this document should be legalized at your representative´s nearest Colombian consulate as well, we recommend you to consult the respective consulate to ensure the legal power meets all its specific requirements.

8. When signing the contract in Colombia

  1. The notary checks all documents (see Downloads).
  2. You sign the contract.
  3. You conduct the negotiated payment.

9. When signing the contract from abroad

  1. Your selected notary checks all documents.
  2. Your representative signs the contract (Escritura) and performs the negotiated payment.

10. Registration of your ownership

Once the notary finishes the process of the contract (Escritura), this document is being taken to the registry office (Oficina de Registro) where taxes are paid and a new Certificado de Tradición y Libertad is delivered. In this document you are stated as the new owner. Now, the property belongs to you.

Note:

This process is based on a general case in Colombia and might vary across regions, departments, and towns.

Transaction Costs

How much are the transaction costs (notary fee, taxes, register costs)?

Obligatory expenses:

  • Notary fees: 0.3% of the property price is paid evenly by the owner and and the buyer. Additionally, VAT (around 16%) and some administrative costs apply (duration: about five days).
  • Payment of registration tax (Impuesto de Retención en la Fuente): 1% of the land price is paid by the owner.
  • Payment of registration tax (Impuesto de Beneficencia y Registro): 0.5% of the land price is paid by thebuyer.
  • Certificate that no property taxes and no administrative costs are outstanding (Paz y Salvo de de Valorización): about 7 € / 10 $ (20,000 COP) (duration: approximately one day) is paid by the owner.

Optional expenses:

  • Certificado de Libertad y Tradición: about 5 € / 6 $ (12,930 COP) (duration: approximately one day) is paid by the owner. This document can be ordered at the registry office (Oficina de Registro).
  • Attorney’s fees for the preparation and certification of real estate documents: about 380 € / $ 540 (1,100,000 COP) (duration: Approximately two days).
  • Brokerage fees: varies between 3% and 10% of the property price. Usually there are 3% for urban properties and up to 10% for very rural properties, pays the the person who signs the contract with the broker.
  • Appraiser, if desired: fees for the appraiser, pays the the person who signs the contract with the appraiser.
  • Translation costs, if necessary, pays the the person who signs the contract with the translator.

Additionally, please refer to the DoingBusiness link in our Research section.

Where can I find Colombian real estate financing?

Since you’re probably not a customer of a Colombian bank, you need to handle all the financial matters with your bank in your home country. If you have a Colombian identity card (“Cedula”) which, among other things, you get when you invest more than 210,000.00 US dollars, you can become a client of a Colombian bank. You can then make an appointment with your preferred bank. The bank will assess your creditworthiness and based on that they can offer you possible financing.

About the Colombian real estate market:

How liquid is the market?

This depends on the property you buy. Urban real estate tends to be sold easier than rural property. The real estate sales volume in Colombia in 2014 amounted to USD 9.72 billion and grew in 2014 by 4.5% Check out the National Administrative Statistics Office (Colombia) or the BBVA Real Estate Outlook 2015. in our Research section below.

Source: tradingeconomics.com

How has the Colombian real estate market developed in recent years?

Within the last 10 years, the value of some properties in Colombia has doubled. Especially in Bogotá, property prices have risen. In regards to this topic read our interview with Mr. Edwin Schuh here. Additionally, you will find statistical documents in our Research section below.

Residing in Colombia

The following types of housing are common in Colombia:

Apartment:

  • Many families and singles living in apartments on the upper floors of houses (complexes). Especially in big cities, this is very common in Colombia. In addition, many homes have rooftop terraces where tenants can relax.

Detached and semi-detached housing:

  • Homes that do not belong to a residential complex, are located both within and around the centers of major cities as well as in rural areas (“Estratos” 1-3).

Shared residence:

  • In large cities, it is very common to live in a condo, which provides a property manager, and other services. The administration fee is generally higher than that of a detached house which is important to take into account.

What is a “social stratum”?

In Colombia, areas and neighborhoods are separated into “Estratos” (social strata). The scale runs from 1 to 6, with 1 being the lowest and 6 being the highest. Estratos define the following things:

  1. The socio-economic stratification is the classification of residential real estate and determines how many subsidies for utilities are obtained. The aim is that residents with better financial stability pay more money for public services thus contributing to the fees of the lower classes.

The socio-economic strata are divided into six different segments:

  1. Very Low
  2. Low
  3. Medium-Low
  4. Average
  5. Medium-High
  6. High

Due to this classification the quality of life can vary significantly within one town. In our Research section below you can find several links which redirect you to respective information.

Here are two maps of Bogotá and Medellin where the “Estratos” are highlighted.

Bogotá:

Medellín:

Legal Matters:

Do I need to declare my rental income at the Colombian tax office (DIAN)?

This depends on various aspects. The decree 2974 Article 6 can help you learn more about taxes. In addition, see the Research link to the tax office. For further information consult a professional accountant.

Is there a limit of investments in quantity or price?

There is no limit.

What kinds of properties are foreigners allowed to buy in Colombia?

Foreigners can buy all conventional types of land.

What immigration policies apply to foreigners? In an emergency can I take my family?

If the value of your property is less than $ 210,000, you have no right to obtain a permanent visa and you need to apply for a 90-day tourist visa. However, this can be extended.

Is there a reliable property manager on site?

On HalloCasa, you can find property managers.

Can money be transferred from Colombia to my home country?

Yes, you can. We recommend you to talk directly with your property manager in order to discuss the easiest way to do so.

Links

Research:

Auswärtiges Amt – Ministry of Foreign Affairs Germany – German

Banco de La Republica – Colombian Central Bank – English, Spanish

Banco Interamericano de Desarollo – Inter-American Development Bank – English, French, Portuguese, Spanish

BBVA Real Estate Outlook Colombia – BBVA Real Estate Outlook Colombia – English

Central Intelligence Agency – Country Profile – Various Languages

Colombia Energia – Energy Service – Spanish

Dane Colombia – Department of Statistics – Spanish

Doing Business – Colombia Country Profile – English

Doing Business – World Bank – Statistical Data – Chinese, English, French, Portuguese, Russian, Spanish

EuroMonitor International – Global Market Research Solutions – English

Gate Germany – Colombia Country Profile – German

Global Property Guide – Global Property Guide – English

Happy Planet Index – Happy Planet Index – English

Instituto de Desarollo Urbano – Urban Development Institute – Spanish

Instituto Geographico Agustin Codazzi – National Geographic Insitute – English, Spanish

IxPos – The Foreign Trade Portal – Country Profile Colombia – German

Min Salud – Department of Health – English, Spanish

Numbeo – Cost of Living – English

The World Bank – Country Profile – Various Languages

Trading Economics – FDI into Colombia – English

Transparency International – International Corruption Index – English

Latin American Network Information Center – English, Spanish

Trade:

AHK Colombia – German Chamber of Commerce in Colombia – German, Spanish

Colombia.co – Offical Webpage Colombia – English, Spanish

DIAN – Tax Office – Spanish

Invest in Bogotá – Business Information – English, Spanish

Invest in Colombia – Economic Information – English, Spanish

Invest Pacific – Economic Infomation Pacific Area – Spanish

InviertaEnColombia – Economic Information – English, Spanish

ProExport Colombia – Economic Information – English, Spanish

News:

Colombia Report – News – English

Latina Press – News – German

The Bogota Post – Newspaper – English

Travel:

CafeteraTours – Travel Agency – Dutch, English, German, Spanish

Colombia En Tour – Travel Agency – Italian, Spanish

ColombiaFacil – Travel Agency – English, Spanish

ColombiaTravel – Official Travel Website – Chinese, English, French, German, Portuguese, Spanish

DeUnaColombiaTours – Travel Blog – Dutch, English, German, Spanish

Netpunto – Travel Agency – English, German, Spanish

SeeColombiaTravel – Travel Blog – English

TheColombianWay – Travel Blog – English – German

Blog:

Auslandsblog – List of Foreign Blogs – German

Best of Colombia – Lifestyle Blog – English, Spanish

BlogExpat – List of Blogs – English, French, German, Italian, Spanish

Bogota Brilliance – Travel Blog – English, French, German, Spanish

Caracolade – Travel Blog – French

Discovering Ice – Travel Blog – English

Don´t give Papaya – Travel Blog – English

Dreamy en Colombie – Travel Blog – French

Flavors of Bogota – Travel Blog – English, Spanish

Hola Colombie – Travel Blog – French

Jay en Colombie – Travel Blog – French

Kolumbienblog – Travel Blog – German

Konni in Kolumbien – Travel Blog – German

La Vida Colombiana – Travel Blog – French

Latino Portal – Colombia Forum – German

Medellin Living – Medellin Blog – English

Mikes Bogotá Blog – Travel Blog – English

Ostrovok – Travel Blog – Russian

Reise nach Kolumbien – Travel Blog – German

RichardMcColl – Travel Blog – English

Routard – Colombia Forum – French

Un año en Colombia – Travel Blog – German

Une Parisienne a Cali – Travel Blog – French

VivereEnColombia – Travel Blog – Italian

Voloshy Travel – Travel Blog – Russian

Wandering Trader – Travel Blog – English

MeetMedellin – Travel Blog – German

Sarepa – Travel Blog – English

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