The Coldwell Banker real estate company has sold its first franchises in Mexico, opening three offices in touristy, well-monied resort areas and gearing up for what almost certainly will be a major marketing campaign to convince locals to start using a foreign real estate company.

The objective, says Mexico master franchise owner Richard Smith, is to have 60 Coldwell Banker offices open in the next three years. The prerequisite is a substantial educational effort. The goal is to make money.

But it's hardly alone. Re/Max International has had offices in Mexico since 1992 and Century 21 has been there for a decade.

For Coldwell Banker to establish its beachhead, the company first hopes to attract wealthy Americans, Canadians and Europeans who are looking for vacation properties in Mexico's resort areas. Smith believes the Coldwell Banker brand name will be a major plus in those markets.

"Coldwell Banker is a name that most Americans and Canadians know and trust," said Smith. "We think foreigners will like the idea of working with a company they know."

To bring in locals will be tougher. Smith says he anticipates a television campaign and print media campaign, with support materials translated into Spanish. Also, "the Internet and e-commerce are very important, especially in a country with unreliable postal and telephone service. Marketing on the Internet will be very important to us."

Even before then, however, he expects the company to enjoy some success with local residents.

"A lot of wealthier people in Mexico have the same desires that Americans do," Smith said. "They want to have vacation homes in nice areas where there are nice golf courses and beaches."

Improving Coldwell Banker's and the others' chances of success are new laws that make it easier for foreign nationals to own property in Mexico.

"People realize the laws in the Mexico are different, but I don't think many people know what the laws are," says Smith, whose Coldwell Banker Affiliates de Mexico is actually officed in Houston. "A lot of people don't know that (foreigners) can buy land in Mexico at all."

In the past, foreigners could own Mexican land only if they had a Mexican partner whose name also appeared on the deed. Recently, however, those laws have been modified so that foreigners may own land in a zone within 100 kilometers of the border and coast lines.

Foreigners are required to set up corporate-style trust accounts with themselves listed as the officers of the trust. The home owners own the trust, and the trust owns the property. The life of the trust is 50 years, with an option to renew for another 50 years.

Real estate offerings tend to run the full range, from single family homes, resort homes, open land and even commercial property.

Financing also is different. Smith likens Mexico to the United States before Fannie Mae and Freddie Mac. Loans made by Mexican financial institutions are kept in-house. There is no secondary mortgage market. Most Mexicans pay cash for real estate. Americans typically arrange financing through U.S. banks.

There is no real estate licensure in Mexico, although Smith and others say are the pressing the government to established some kind of regulatory body that will require some type of education and sharing of some liability. "I think people are just more comfortable if they know the government is in the background looking over the agent's shoulder," Smith said.

Smith's first franchise is Coldwell Banker LaCosta Realty in Purerto Vallarta, which has one office. The second franchise is Coldwell Banker Lulu Jacobsen and Associates based in Cabo San Lucas, which has two offices.

Coldwell Banker currently has six master franchise agreements around the world, Re/Max has 25 master franchises globally and Century 21 has more than 80 master franchises sold and offices open in 25 countries.

Published: August 18, 1999

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