Broker Fees
There are three kinds of real estate sales commissions in Mexico: co-brokering, referrals, and split broker's fees. Generally, a broker's fees are set by the listing company on the written listing agreement. However, average commissions in Mexico range between 5-10%. Co-broker's fees are an MLS phenomena, requiring membership, and the fees are listed with the MLS.

Mortgages
Mortgages in Mexico are known as hipotecas. As of 1994, only 14% of Mexico's housing stock were financed with mortgages. These were most commonly dual index mortgages. A dual-index mortgage functions by having two rates: a payment rate and a debiting rate. The payment rate calculates the basic installments and is inflation liked. The debiting rate is short-term and calculates the interest on the outstanding balance. Through this method, banks can acquire refinancing every month when loan debits exceed the payments. On the other hand, if the payment exceeds the real interest of the debit amount, then the principal of the loan is reduced in real terms. It is a system obviously designed for lending in a high-inflation environment. In Mexico, real mortgage interest rates from 1989-93 averaged 16.5% in comparison to 6% in the U.S.

As recently as 1994 a secondary mortgage market, i.e. the securitization of mortgages, was still largely a theoretical discussion in Mexico, while in the United States roughly two-thirds of residential mortgages have been securitized for over two decades. The creation of Mexican secondary mortgage market will greatly benefit the Mexican real estate market. The ability to create and sell mortgage-backed securities on the global market would expand the amount of capital in the Mexican banking system and thus enlarge the credit systems. This will create greater mortgage financing that is needed to meet the considerable shortfall in supply of housing units. Another obstacle to the development of a strong domestic mortgage market is the fact that Mexico lacks a developed system for obtaining credit risk information on individuals.

In fact, the barriers to home ownership are so high that most of the citizenry are not in the mortgage pool. Most of the Mexican population actually saves to buy a piece of land, then saves for each type and amount of construction material needed, thus gradually building their home in what is called the "pay and build as you can plan."6

A specific franchiser's experience
Century 21 has been in the Mexican market for 8 years. In 1998, the company had sold 100 franchises, and planned to sell 50 more in 1999. The Managing Director of Century 21 for the region as of 1998, Ruben Ramos, has stated that 75% of all personal property transactions in the Valley of Mexico were direct deals without an agent of any kind. Century 21 Mexico itself has 8,000 "associates" who must pass a three-month course that includes ethics, property tax knowledge, and technical education including on-line databases.

The company claims it handles 25% of professional home sales, with 80% of their business located in the residential sector. The company has adjusted itself to the real estate practices indigenous to the region. One example is the popular Mexican custom of buying with a tanda, which is a 'round-robin' savings pool that is the only way lower income Mexicans can purchase homes. Century 21 and Habitat 2000 have jointly formed a financing company called Habifin 2021 to serve this traditional system of home financing.7