You’ve made up your mind that you are definitely moving to Costa Rica…you are sitting in a coffee shop and a young Costa Rican man approaches you, and, in broken English, informs you that his Uncle is selling a property “with a gorgeous view’ and at “a really low price.” He then explains that you will be able to save “much dollars” because you are buying direct from the family and will not have to pay a commission.
Too good to be true? Try telling this story to any “gringo” living in Costa Rica and you will get knowing smiles and nodding heads.
This scenario and countless similar variations are played out everyday in Costa Rica …and the saddest part of the story is that most buyers don’t know until sometimes years later how much they have overpaid for their property.
The above example can almost be laughable because who among us would not try and get as much as he or she could for their property if a group of rich aliens descended upon their neighborhood? Nearly all reading this will know that there are no governmental or local regulations regarding the sale or purchase of real estate in Costa Rica. In other words, it is CAVEAT EMPTOR (let the buyer beware) and”anything goes”. You are truly on your own.
This is not meant to imply that there are not honest real estate people in Costa Rica…there are… but how do you find an honest real estate person AND get the best value for your purchase? Despite the fact that Costa Rican real estate can be among the most beautiful in the world, none of us likes to feel as if we were taken advantage of.
Most “gringos”, when shopping for real estate in Costa Rica assume:
1. The real estate system in Costa Rica is VERY similar to that in the States or Canada.
2. Houses are readily available for purchase in Costa Rica, and, while they may be slightly different, can be easily remodelled.
3. How different from the States and Canada can the real estate system be if there are real estate firms such as ReMax and Century21 in Costa Rica?
4. The internet is a true and valid representation of real estate and pricing in Costa Rica.
5. The entire array of services, such as electric, telephone, internet and water are readily available almost everywhere in Costa Rica.
6. Title insurance and protection against fraud is easily obtained. The SAD truth to all of the above is that all are false!
1. The real estate system in Costa Rica is “wide open”
2. There are no “comparables” here of any kind so you never really know if you are paying a fair price
3. There is virtually no protection against fraud and misrepresentation in Costa Rica.
4. It is more expensive to remodel an existing home than to build…and there is really not much protection against builder fraud…unless you take certain steps.
5. Real estate franchises here mean nothing as they are not bound by strict rules and regulations as in the States or Canada. They are used purely as a marketing tool here.
6. Utilities and all auxiliary services and common infrastructure services are not readily available in all areas of the country. Even in some of the more affluent areas of Costa Rica it is common for power and water to be “out” for several hours three or four times weekly. Phones in some areas may take literally years to be available. Building permits in some areas are being denied because the local infrastructure cannot support the increased population. In some beach areas, the issuance of building permits may NEVER resume as the infrastructure simply cannot support the number of incoming “gringos”. DO NOT ASSUME ANYTHING IS THE SAME….TAKE NOTHING FOR GRANTED!
7. Approximately 40% of all gringos who settle in Costa Rica return “home” within five years… and well over 55% of gringos who settle on beach areas year round return in the same time frame.
8. Real estate fraud is common, even with title insurance. Assume that you will need an attorney to check on your first attorney! (Seriously…)
“OK, you have my attention. How can I tell if I am not overpaying for real estate?”
Sadly , it is impossible to know if you are getting a good price or not. The vast majority of real estate firms show their listings at the price that the owner asks. But the most important item to know about Costa Rican real estate is: Costa Rican real estate is a two tiered market: one price for Ticos (locals) and one price for Gringos (foreigners).
So…the question then becomes “how do I, a gringo, obtain Tico pricing?” …. OR… “Why should I believe you ? You’re just trying to get more business for yourself?”
Let’s address the last question first. My company operates in a very very small geographical area of Costa Rica… probably less than 5% of the country. We have more business than we can handle .
Our firm has several Tico “scouts” that talk to potential sellers of property in our area daily. We do not list every property we find for sale because 90% of the properties or homes we preview are overpriced. Remember, the old cliche of “almost everything in Costa Rica is for sale at the right price” really does have some validity. (look at it this way: if someone offered you twice what your home was worth you would probably consider selling and buying another and pocketing the difference, right?). Because we see so many properties we are aware of what is a value and a fair price. Most people , including locals, are not. Cairnhill 16