Bank Loans!! What a nightmare!!

Wow!  Obviously the bank has no interest in making loans, at least not to your buyer.  Is the buyer Ecuadorian?

My bet is that your prospective buyer is also a foreigner.

I think you will find that the situation is pretty much the same in all South American countries. First of all they have very rigid and restrictive banking regulations imposed by their Central Bank. In many of them (particularly Brazil) you can't even open a bank account unless you have a Permanent Visa or are a citizen.

To compound problems, traditionally in most South American countries personal credit is something that is really not popular with banks (other than credit cards for which they have astronomical interest rates). In many it's very difficult to get financing for real estate even if you are a born in the country.


You're going to find that almost every country in South America has the same problem, suffocating bureaucracy for everything. This is a hold over from the Spanish or Portuguese colonial eras of the respective nations that remains to this very day.

Countries have passed from having at one time or another been dictatorships to being so-called democracies, the problem with most of them is that they have never changed the way things are done.

Cheers,
William James Woodward - Brazil Animator, Expat-blog Team

Yes, The buyer is Ecuadorian. So far he has submitted over 150 pages of requirements. If we had another place to go we would move the loan but after all we've done so far, we can't quit now.

Hi ecuachic54,

Your situation begs a few questions. First of all is this a up close and personal deal for you or long distance transaction? In other words are you still in Ecuador or are you conducting the transaction from back home?

Secondly, if it is a long distance transaction, do you have someone upon whom you can rely completely handling it locally?

Thirdly, exactly where is this "no turning back" attitude originating from? Is it you who insists on not changing banks or the potential buyer?

It appears that you are so focused on the problems with financing that you've lost sight of the BIG PICTURE. Which is the transaction itself and maximizing your profits while getting the transaction finalized quickly.

You're ignoring the main point of the sale, which is property value. Property values do not remain static ever! Historically they don't drop much either, generally speaking property values appreciate steadily. So unless you have a clause in the original purchase agreement your potential buyer has a vested interest in the deal getting stalled as long as possible. It's the pot of gold at the end of the rainbow for him/her. In your case since you are selling a hotel, which is also a business venture you also need to consider what has happened with the value of the business over the last 2 1/2 years. Has it increased in value too?

If the property values have increased and the value of the business has increased then you're taking a real loss, since your potential buyer is about to purchase the hotel way below it's present market value. If this were NOT the case your buyer would have walked away from the deal long ago.

At some point in time you've got to do the math and decide whether your insistance not to change banks is hurting you more than it is helping. From my point of view that should have happened long ago. Banks have no interest in land transactions outside their financial gains. The only legal necessity they have is that the transaction is legal, the transfer complies with laws and that the property is not somehow incumbered. They have no legal standing whatsoever to delay a transaction for this long. They have only two options, deny the loan and tell the prospective buyer to look elsewere for financing or to approve the loan and complete the transaction. This also must be done within a reasonable length of time, usually stipulated by law.

Finally, have you personally been in contact with the bank to seek explanations as to what the problems are that are causing this delay; or are you just taking your prospective buyer's version of things? To me it looks like your buyer is simply stalling as long as he possibly can to either tell you he simply can't qualify for financing or alternatively that he's playing you for a fool, watching the value increase by leaps and bounds while you're stuck with a deal to sell at what is now well below market value. Think about it!

Cheers,
William James Woodward - Brazil Animator, Expat-blog Team

Hi William,
I appreciate you taking time to answer my post. Yes, I live here in Ecuador and personally keep in touch with the bank's employees involved in this loan. My buyer and I make trips every 3 months to personally meet with the bank to review everything (mainly to update me that things are really moving). Before the loan was started, both the buyer and I visited every bank to see which would be the best (there's not a lot of banks here). For what we are trying to accomplish in the sale this was the only bank we were able to use. Most don't give business loans or loans over a certain amount. Some have short terms (like 5 yrs only), finance only to $150,000 or have high interest (15%). Even if we could start over with a different bank, we would have no guarantee that another could close any faster. I've encountered all over Ecuador that this is a common practice of asking for one thing at a time. It's done a lot to guarantee people work and a job. If people finish faster, the business needs fewer employees. I am renting the property while waiting for the loan so I don't feel I'm losing money and property value here in Ecuador doesn't increase at a fast rate. I priced my property at top dollar and didn't accept a lower price so I just bite the bullet and keep waiting for that final "one more thing".