10 Red Flags When Buying Property in Los Cabos: What I Have Seen Go Wrong

In 20 years of real estate — including brokerage across 12 US states and now Los Cabos — I have seen every way a deal can go sideways. Fraudulent developers, phantom amenities, ejido land sold as private, agents who disappear after closing, HOA boards hiding financial problems. Most of these problems are preventable if you know what to look for before you sign.

1. The Agent Has No Verifiable Track Record

Mexico does not have a national real estate licensing system like the US. Anyone can call themselves a real estate agent and start selling property. This means that the Los Cabos market includes experienced, professional agents with decades of transaction history alongside people who arrived three months ago and hung up a shingle.

What to check:

• AMPI (Asociación Mexicana de Profesionales Inmobiliarios) membership — not required by law, but indicates professional standards and continuing education
• Physical office location — not just a WhatsApp number and a Facebook page
• Verifiable references from past foreign buyer clients
• Years of experience specifically in the Los Cabos market
• Association with an established brokerage (Ronival, Engel & Völkers, Snell, Cabo Properties, etc.)

If the agent cannot provide references, has no physical office, and cannot demonstrate a transaction history, find a different agent. See our guide to choosing an agent for the full framework.

2. The Seller Wants Funds Wired Directly

This is the brightest red flag in international real estate. If a seller, developer, or agent asks you to wire earnest money, deposits, or purchase funds directly to their bank account rather than through a licensed escrow company, stop immediately.

All funds in a legitimate Los Cabos transaction should flow through:

• A licensed escrow company (Stewart Title Mexico, First American Title, or Fidelity National Title all operate in Los Cabos)
• The notario publico's trust account (the notario holds funds as part of the closing process)

Escrow protects both parties by holding funds until all contractual conditions are met — title is clear, permits are verified, the fideicomiso is established, and the closing is ready to proceed. Direct wire transfers to a seller offer zero protection. See our escrow process guide for details.

3. Missing or Unverifiable Building Permits

Every new construction project in Los Cabos requires permits from the municipal government. A legitimate developer will have:

• Licencia de construcción (building permit) posted visibly at the construction site
• Manifestación de impacto ambiental (MIA) — environmental impact assessment filed with SEMARNAT
• CONAGUA water rights permit — confirming legal water supply
• CFE electrical connection — confirming power infrastructure

If a developer cannot produce copies of these permits — or claims they are "in process" while construction is already underway — that is a project being built outside the legal framework. Any structure built without proper permits is subject to demolition orders, and the buyer inherits the problem.

4. Ejido Land Marketed as Private

This is covered in depth in our ejido land guide, but the summary: ejido (communal agricultural land) cannot legally be sold to foreigners. Any such sale is void. In the established Los Cabos resort communities, this is not a risk — that land was converted decades ago. But on the Pacific side, parts of the East Cape, and informal subdivisions outside master-planned communities, ejido parcels still exist.

Always verify title status through the Public Registry of Property in La Paz and cross-reference with the Registro Agrario Nacional before any purchase.

5. Phantom Amenities

Renderings are promises. Concrete is delivery. I have seen developments market world-class amenity packages — beach clubs, golf courses, restaurants, fitness centers, spa facilities — that were never built, built years late, or built at a fraction of the marketed quality.

Protection:

• Research the developer's track record on prior projects. Did they deliver the amenities they promised, on time and to specification?
• Review the purchase agreement for amenity delivery guarantees, timelines, and remedies if they are not met
• For pre-construction, ensure the escrow release schedule ties payment milestones to construction milestones — not calendar dates
• Visit the site in person. If Phase 1 is occupied and the "coming soon" amenities from the original marketing are still dirt, that tells you something

6. The Pre-Construction Price Is Too Good

Pre-construction pricing in Los Cabos typically offers 10-20% below comparable resale properties in the same community. That is a legitimate early-buyer discount that compensates for construction risk and time value of money. If a pre-construction project is priced 30-50% below comparable properties, ask why.

Possibilities:

• The developer is undercapitalized and using buyer deposits to fund construction (pyramid financing)
• The permits are incomplete or the land title is unclear
• The project specifications will be downgraded during construction
• The developer has no intention of completing the project

None of these possibilities end well for the buyer. See our pre-construction guide for the full analysis.

7. No Home Inspection

In the US, home inspections are standard. In Mexico, many buyers skip them — either because the agent does not suggest it, because the buyer assumes new construction does not need inspection, or because the buyer does not know inspectors are available in Los Cabos.

They are available. And they are essential. Mexican construction standards differ from US standards, and common issues include:

• Waterproofing deficiencies (critical in a tropical coastal environment)
• Electrical wiring that does not meet current codes
• Plumbing issues — particularly drainage and water pressure
• Structural cracks from settling or insufficient reinforcement
• Termite or pest damage (see our pest guide)

A qualified home inspector in Los Cabos charges $400-$800 for a standard inspection. See our home inspection guide for specifics.

8. HOA Financials Are Hidden

Before buying in any Los Cabos community with an HOA, request and review the HOA financial statements — balance sheet, income statement, and reserve fund balance. A well-managed HOA will provide these without hesitation. An HOA that refuses or delays is hiding something.

What to look for:

• Reserve fund balance: Should be 25-40% of annual operating costs. A reserve fund near zero means special assessments are coming.
• Delinquency rate: What percentage of owners are behind on HOA payments? High delinquency signals financial stress and deferred maintenance.
• Insurance coverage: Does the HOA maintain adequate master policy coverage for common areas and shared infrastructure?
• Pending litigation: Is the HOA involved in any lawsuits — with developers, contractors, or owners?

See our HOA guide for the full analysis framework.

9. Dual Pricing

Some sellers maintain two prices — a lower "official" price registered with the notario (to reduce the buyer's acquisition tax and the seller's capital gains tax) and a higher actual price, with the difference paid under the table in cash.

This is tax fraud. It is illegal under Mexican law. And it creates real problems for the buyer:

• Your registered purchase price is artificially low, which increases your capital gains tax liability when you eventually sell
• Your insurance coverage may be based on the registered value, leaving you underinsured
• If a dispute arises, the legally enforceable purchase price is the registered amount — not what you actually paid
• You are a participant in tax evasion, with potential legal consequences under both Mexican and US/Canadian law (FBAR and FATCA reporting)

If a seller proposes dual pricing, decline and insist on full value registration. If they refuse, walk away.

10. Pressure to Close Immediately

Legitimate real estate opportunities do not evaporate overnight. If a seller, developer, or agent pressures you to sign, deposit, or close within hours or days — "another buyer is interested," "the price goes up tomorrow," "this is the last unit at this price" — that pressure is a tactic, not a fact.

A reasonable timeline for a Los Cabos purchase:

• Due diligence period: 30-60 days
• Title search and verification: 10-15 business days
• Fideicomiso establishment: 30-60 days
• Total closing timeline: 45-90 days from signed purchase agreement

If anyone tries to compress this timeline to "sign today and wire tomorrow," they are not protecting your interests. They are protecting their commission.

The Bottom Line

The Los Cabos real estate market is legitimate, well-established, and safe for foreign buyers who exercise standard due diligence. The vast majority of transactions close smoothly, and the professional community — notarios, attorneys, escrow companies, established brokerages — is experienced in serving international clients.

Problems arise when buyers abandon due diligence because they are excited, trust an agent they just met, or assume that "this is Mexico, things work differently." Things do work differently in some ways — but the fundamentals of protecting a major purchase apply everywhere: verify independently, use escrow, hire your own professionals, and never let urgency override judgment.

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