Soft Closing vs. Hard Closing in Cabo

Buying a condo or home in Mexico is an exciting moment. Many buyers want to move into their new home as soon as possible, but the closing in process in Mexico does take longer than it does in the United States or Canada. In some cases, buyers can take early possession of their new property if the seller agrees to a soft closing. Here, Cabo realtor Jeff Schmidt discusses the soft closing process versus the hard closing process in real estate transactions in Mexico.

How Long Do Hard Closings Take?

Typically, hard closings, also known as normal closings, take a minimum of three months in Cabo. In some cases, it can take longer to obtain the necessary documents to close; this can occur when the seller’s bank delays reviewing deeds, clearing liens, and transferring the title. Unfortunately, bank delays do happen, making soft closings a good option for buyers that want to get into their new homes, and sellers that want to receive a portion of their money.

How Long Do Soft Closings Take?

A soft closing can take in place in as little as two weeks after the opening of escrow, as long as the buyers and sellers come to mutually agreed upon terms.

What Is Involved in the Hard Closing Process?

A hard closing takes place when the closing agent has secured all necessary documents for the legal transfer of the property. In addition, all purchase funds, including closing costs and property acquisition tax, are held in escrow.

When all of the documents are ready and title is ready to be transferred, the closing agent will schedule a closing date with the buyer, seller, or their designated Power of Attorney (POA). Once the signing is complete, the escrow funds are released to the seller, and the new owner receives the keys to their home, completing the closing process.

What Is Involved in the Soft Closing Process?

A soft closing occurs when the seller grants the buyer immediate possession of the home, while the buyer transfers a significant portion of the purchase price (typically around 80%) before the official title transfer. This arrangement, known as a “Promise to Trust,” allows the buyer to move in right away while giving the seller access to most of the funds.

To finalize the process, both parties must grant Power of Attorney (POA) to the closing agent, enabling them to complete the hard close on their behalf once all required documents are in place. The combination of the POAs and Promise to Trust Agreement ensures that neither party can withdraw from the transaction after possession has been transferred.

A soft closing is always followed by a final hard closing, during which the official title transfer is completed and the remaining funds are disbursed to the seller.

When Is a Soft Closing Ideal?

A soft closing might be right for your real estate transaction in the following cases:

• You want to take immediate possession of the property.
• You are concerned about delays in processing paperwork, relieving liens, and delays from the trustee bank to transfer the title. In some cases, even if paperwork is settled, the bank is unable to release the title right away.
• If the seller’s financing paperwork is tied to the title transfer, a soft closing is recommended.

Hire an Agent Who Works With a Trusted Real Estate Attorney

An experienced real estate attorney will review the terms of your soft closing agreement to ensure that you are getting fair terms. They will check to make sure that all liens on the property will be paid by the seller, make sure a reliable notary properly oversees the transaction, and looks out for your best interests.

Contact Jeff Schmidt to Request a Showing

Jeff can discuss soft closings versus hard closing in Cabo and set up a virtual or in-person showing at your convenience. He is also always available to answer questions via email, a phone call, or text. When you work with Jeff, you benefit from an agent that has:

• More than a decade of real estate experience
• Personally bought, sold, and built homes in Cabo
• Lived in Cabo for several years
• Been featured on several episodes of House Hunters International and Mexico Life on HGTV

(408) 607-8349 (U.S.)
(624) 165-9553 (Mex)
jeff@cabobeachrealty.com