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What to Expect with Costa Rica Real Estate

What to expect with Costa Rican real estate...

 

When speaking of Costa Rican real estate as with most things in life there are generalities and common questions that always seem to surface from our clients when looking for a property.  I have outlined and addressed the most commonly asked questions and “surprises” that buyers have expressed to us over the years.  Hopefully this information will provide you with a better insight into what to expect when you begin looking for your own piece of paradise.

 

 

 

 

Location-  In real estate the age old adage of location, location, location will always hold true no matter where you are buying real estate.  However, in a country like Costa Rica sometimes being 10, 15 or even 20 minutes outside of town is not only acceptable but can be very desirable. Costa Rica is not as developed as most of us are accustomed to north of the boarder.  When you leave a small town and drive 10-15 minutes into the countryside to view a property it may seem too far and inconvenient. Chances are that back home no matter how close you live to town in distance you will spend the same amount of time getting to all your basic needs due to traffic and congestion caused by “development”.  One major advantage of living a few minutes outside of town is the peace and tranquility that surrounds you which will more than compensate for the distance you must drive.  Also keep in mind that “pulparias” are the Costa Rican equivalent to  7-11’s and almost every neighborhood has at least one, making all the basic necessities like bread, milk, sugar and coffee within walking distance of home!

 

MLS-  In North America when we buy or sale a property we are accustomed to an organized system of information called the Multiple Listing Service or MLS for short.  The MLS is a great tool available to real estate agents to provide valuable information about property availability, gathering data and generating useful reports.  One such invaluable report is the CMA (comparable market analysis), which helps to determine fair market  value by showing what recent homes in the neighborhood have sold for, what are the current pricing trends in the area and the average days a property has been on the market.  With this information in hand a buyer can see in black and white, hard numbers and make an informed decision when making an offer.  In turn, sellers can also see the reality of the market and know exactly how to price their homes and how long they can expect for it to sale.  Having said that, when in Costa Rica throw all that you know about CMA’s and the MLS out the window and forget about it.  In Costa Rica you will have to rely on your professionals experience and expertise to determine value.  When you are really serious about making an offer on a property, ask your agent what similar properties have sold for.  Use your own instincts too.  If you see 5 houses that all are similar in size, location and amenities and 4 homes are price at $350,000 and the 5th home is $425,000, then you know that the 5th home is over priced.  

 

Pricing-  For many North Americans who have been use to relying on an organized system like the MLS to determine value for a property, they will often times find themselves confused when it comes to determining value for Costa Rican real estate.  The truth is, the market is what it is, no matter where you are in the world, and buyers will only pay what they perceive to be the market value of any given property.  In Costa Rica the value of a property is easy to determine:  It is the maximum price a buyer is willing to pay and the lowest amount a seller is willing to accept.  A reality that buyers and sellers must keep in mind is that the Costa Rican real estate market is unique in that 95% of all real estate transactions are cash deals, property taxes are low and holding costs are a minimum when compared to properties in the United States, Canada and Europe.  What does that mean, especially to the buyer?  Generally speaking there is no sense of urgency for a seller to sell, giving the seller the luxury of holding out for the price they are asking.  That does not mean you can’t negotiate.  Quite the contrary.  Typically we see prices negotiated between 5%-10%.

 

Architecture-  Architecturally speaking, you can find almost any style of home you desire in Costa Rica ranging from traditional ranch, open contemporary, Spanish colonial or even exotic Bali style homes.  Homes are most commonly built using concrete block with impressive foundation because we are a seismically active country.  Due to the climate, most homes will have large open living areas with high ceilings that are often vaulted with beautiful hardwoods. For the same reason, large porches, balconies and verandas are common place creating outdoor living areas that most homeowners use more often than their indoor counter parts. Most homes will be designed around stunning views making large doors and windows a must.  In terms of bedrooms/bathrooms, 2/2‘s are more common than 3/2‘s.  Another nice amenity you typically find in a Costa Rican home are ranchos, which are large outdoor covered pavilions, usually near a pool perfect for a grill, outdoor kitchen and dinning area.  Of course swimming pools and guest houses are often common place.  

 

Home finishes- Finishes and details that most people take for granted back home, are often not common in Costa Rica.  For example, bath tubs are traditionally not common in Costa Rican homes but in recent years have become more common.  It will be standard to find nice built-in or walk-in closets in the master bedroom but more often than not, guest bedrooms do not have a closet.  Interestingly enough, you often find windows and doors without screens, however this is changing too.  Garages are almost nonexistent but carports are standard.  If you are looking to purchase a new construction or spec home, don’t expect appliances to be included.  In addition, often times lighting packages are an option but not standard.  Carpeting is unheard of and hardwood floors are rare but beautiful ceramic tile can be found in every color, style and texture under the sun.  Because of the amazing climate of the Central Valley, air-conditioning is virtually unheard of and NO HEATING, unless you live high in the mountains, then a fireplace may be in order. 

 

Land -  In Costa Rica most standard building lots are large in size, on average 1-2 acres, especially in the countryside.  However, more times than not only about 1/4 of that land may be flat and usable.  Having said that, don’t be fooled because a creative gardener can work miracles turning perceivably unusable slopes into amazing fruit orchards and beautiful garden paths.  Another aspect to the land you must take into consideration are the views.  If you want the big, impressive views, and who doesn't , then 9 times out of 10 you have to be up in the mountains which means driving long, steep, winding roads.  If you are a flatlander as I am, then this will take a bit of getting used to, but trust me in a month or so, you will be traversing these hills like a local.  In turn, if you want flat, usable land then most likely you will have to sacrifice those wonderful views.  

 

Neighborhoods-  It is very common in Costa Rica to see a mansion next to a small, humble, country home.  It most countries, especially the United States this would have a direct impact on the value of the large home.  This is not necessarily the case in Costa Rica. You will often pass through very humble neighborhoods to reach the more exclusive gated communities.  One point that buyers bring up almost on a daily basis is the use of burglar bars in Costa Rica.  For most of us, this a sign of a bad neighborhood.  Again, that is not always the case in Costa Rica.  Are burglar bars used for security and safety?  Of course, but they are also used for decoration, especially in the countryside where crime is extremely low.

 

Subdivisions-  In the United States and Canada, many of the newer subdivisions and communities are loaded with amenities such as playgrounds, community centers, club houses, common areas, dog parks, gyms and swimming pools.  Here in the Atenas/Grecia area you will find a great many beautiful gated communities that offer 24 hour security, but that is about it.  Most of the other luxuries do not exist here as they do back home.  In turn, your monthly community fees are much lower, ranging from $40-$65 per month.

 

Countryside Condo’s-  As in most countries, Costa Rica has its fair share of condo’s, especially in the capital of San Jose and at most of the beach communities.  However, here in the countryside condo’s are nonexistent.  For me it seems quite logical why condo’s have not caught on or become popular in the countryside.  Most people have a specific idea of what country living is, and an urban dwelling in a rural setting, close neighbors with only a wall or floor separating them does not fit that “idea”.

 

Profit and Loss Statements- In most areas of the world, P&L’s or profit and loss statements are common place for someone who is looking to buy or sell a business.  In my 20 years of doing real estate, 9 out of 10 a business are sold SOLEY on the bottom line and the ROI (return on investment), which can be determined by using a profit and loss statement.  Here in Costa Rica we have sold several business, especially hotels and bed and breakfasts‘  and  have never received what we consider to be a P&L statement or quality records.  DON’T EXPECT THEM.  Why?  There are many reasons for the lack of good records but we have found that most people who have opened business here in Costa Rica are doing so for the first time in their lives and have a lack of business experience.  That is not to say that they don’t run successful businesses.  Another major reason for the lack of P&L’s is for tax purposes. 

 

When considering purchasing a property in a foreign country it is important to be as informed as possible before visiting the country.  Once you are on the ground, you can start your search in earnest armed with all the basic information in hand.  We hope that through our years of experience and expertise as well as the experience of our valued clients that this information will help you in your journey of purchasing your dream home in paradise.

 

 

 

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