He has decided that he will definitely move to Costa Rica… he is sitting in a cafeteria and a young Costa Rican man approaches him and, in broken English, informs him that his uncle is selling a property “with a beautiful view” and “a really low price.” He then explains that you will be able to save “a lot of dollars” because you are buying directly 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’ll get knowing smiles and nods.

This scenario and countless similar variations play out every day in Costa Rica…and the saddest part of the story is that most buyers don’t know until a few years later how much they have overpaid for their property.

The example above can almost be laughable because who among us wouldn’t try to get as much as they could for their property if a group of wealthy foreigners descended on their neighborhood? Almost everyone reading this will know that there are no government or local regulations regarding buying or selling real estate in Costa Rica. In other words, it’s CAVEAT EMPTOR (buyer beware) and “anything goes”. You are truly alone.

This is not to say that there aren’t honest real estate people in Costa Rica…there are…but how can you find an honest real estate person AND get the best value for your purchase? Although Costa Rican real estate may be among the most beautiful in the world, none of us like to feel taken advantage of.

Most “gringos”, when buying real estate in Costa Rica, assume:

1. The real estate system in Costa Rica is VERY similar to that of the United States or Canada.

2. Homes are readily available to buy in Costa Rica and while they may be a bit different, they can be easily remodeled.

3. How different can the real estate system of the United States and Canada be if there are real estate firms like ReMax and Century21 in Costa Rica?

4. The Internet is a true and valid representation of real estate and prices in Costa Rica.

5. The full range of services, such as electricity, telephone, internet, and water, are available almost everywhere in Costa Rica.

6. Title insurance and fraud protection are easily obtained. The SAD truth of all of the above is that they are all fake!

Reality:

1. The real estate system in Costa Rica is “wide open”

2. There are no “comparables” of any kind here, so you never know if you’re paying a fair price.

3. There is virtually no protection against fraud and misrepresentation in Costa Rica.

4. It’s more expensive to remodel an existing home than it is to build…and there really isn’t much protection against builder fraud…unless you take certain steps.

5. Real estate franchises here mean nothing, as they are not subject to strict rules and regulations like in the United States or Canada. Here they are used purely as a marketing tool.

6. Public services and all ancillary services and common infrastructure services are not readily available in all areas of the country. Even in some of the more prosperous areas of Costa Rica, it is common for power and water to be “out” for several hours, three or four times a week. Phones in some areas can literally take years to become available. Building permits are denied in some areas because the local infrastructure cannot support the increase in population. In some beach areas, the issuance of building permits may NEVER resume, as the infrastructure simply cannot support the number of incoming “gringos”. DON’T ASSUME IT’S ALL THE SAME…. DON’T MAKE SENSE OF ANYTHING!

7. Approximately 40% of all gringos who settle in Costa Rica return “home” within five years…and over 55% of all gringos who settle in beach areas year-round return in the same time period.

8. Real estate fraud is common, even with title insurance. Suppose you will need a lawyer to control your first lawyer! (Really…)

“Okay, you have my attention. How do I know if I’m not overpaying for real estate?”

Unfortunately, it’s impossible to know if you’re getting a good price or not. The vast majority of real estate agents show their ads at the price that the owner asks. But the most important thing to know about Costa Rica real estate is: Costa Rica real estate is a two-tier market: one price for ticos (locals) and one price for gringos (foreigners).

So…the question then is “how can I, a gringo, get Tico prices?” …. Or… “Why should I believe you? Are you trying to get more business for yourself?”

Let’s address the last question first. My company operates in a very, very small geographic area of ​​Costa Rica…probably less than 5% of the country. We have more business than we can handle.

Our firm has several Costa Rican “scouts” who speak daily with potential sellers of properties in our area. We do not list every property we find for sale because 90% of the properties or houses we list are overpriced. Remember, the old cliché of “almost everything in Costa Rica is for sale at the right price” does have some validity. (Look at it this way: If someone offered you twice what your house is worth, you’d probably consider selling and buying another one and keeping the difference, right?) Because we see so many properties, we are aware of what is a fair value and price. Most people, including the locals, are not.

If you take a look at the many advertised websites selling real estate in Costa Rica, you will often find literally hundreds of houses and properties for sale AND refer to an MLS that exists in Costa Rica. TRANSLATION: This means that these listings are collected from other websites and claimed as their own. There are virtually no exclusive listings in Costa Rica. These firms have categorically not talked about all of these listings and claim them as their own. In fact, 99% of all real estate transactions in Costa Rica take place exactly as they have for decades…mainly through word of mouth.

mouth.

“So… what’s next? How do I find my ideal property… and at a fair price?”

In my opinion, your initial assumption should be: “all real estate in Costa Rica is overpriced.”

Then step two: Spend time finding an area or city that you absolutely love and that “feels right.” Spend time there. Talk to the local gringos about prices, public services, infrastructure… all the items on your “checklist”. These people live there. They should be able to tell you the pros and cons of life there.

Now comes the difficult part… WHAT and WHERE and AT WHAT PRICE?

Chances are there are areas within your personal “chosen area” that will be more expensive than others…Greece, for example, has a specific area (San Isidro de Grecia) that has a preponderance of gringos and has a minimum price 50% higher than surrounding properties? Why?…

who can say In my opinion, it’s not worth it. But the point here is:

make sure you see ALL the surrounding areas, not just one, or your decision making will suffer. In many areas there are simply no “well known” real estate firms or firms that advertise on the Internet OR even speak English. (Keep in mind that “everyone” is a real estate agent in Costa Rica, or at least, they know someone who sells properties.) But it is imperative that to find the best price you need SOMEONE who knows the area and can at least find good prices.

Several important points:

1. Ticos prefer to live on a main road. Not everyone has a car and usually prefers to buy something smaller and on a bus line. (Smaller properties, meaning those less than 5,000 square feet, can only be legally purchased if they are on a main or main street.)

2. The average Costa Rican family earns between $500 and $700 per month. Most ticos cannot afford the same properties as gringos. This should be self-explanatory, except most gringos don’t even consider it when they think about buying.

3. 95% of gringos prefer properties that offer privacy and, at the same time, comfort and security… and of course, we all want a view AND a river! And certainly at least an acre or two. Be specific with your wish list. Make sure you know exactly how much a new road or new power lines will cost for your dream property. It has to be taken into account. When my wife and I were looking for a property and discovered that it would be almost impossible to find an existing home to buy…we used the services of a local tour guide to help find a property. We didn’t find out until later that we overpaid for our property almost double. We are still not sure who got the difference between the sale price and which SHOULD have the actual price.

been… and at this point it doesn’t matter except to serve as an illustration and warning to others in the same position.

4. Don’t be in a rush to buy. Rent if possible and get to know the area.

5. Ultimately, you will need to hire someone to help you find a property. But… (and this is crucial) be sure to let this person know that you know the seller will likely give “his employee of his” a commission and that you hope to be able to verify the exact sales price. You can even tell this person that your attorney will need to verify the price. It is imperative that your employee knows that you know exactly how the system works. It won’t guarantee games won’t play, but it will help.

6. Talk to local gringos and ask for help. Find a local attorney or two and do the same. Talk to the president of the local bank. You will slowly get a feel for the local pricing structure. Unless you are lucky enough to find a real estate company that you have complete confidence in…you will definitely need to use the locals to be your “scouts”. And it is crucial that you tell them that the sellers do NOT know that a gringo is interested in buying. (If you use more than one “scout”, you’ll quickly see the gap between gringo and tico prices and the disparity that’s always here. And if you don’t see it… then something is wrong with your scouts’ findings.)

A few more comments…..

-if you plan to live in an efficient gringo community or in a popular beach area… it will be even more difficult to find a good price and value. Demand and prices have become almost stratospheric. It will take luck or perseverance to get a true “value” near the ocean or in a more expensive gated community. The above is mainly for the purchase of raw land. The following should be used as a rough guide when purchasing land with an existing home:

Construction costs (including architect fees, utilities, landscaping and all extras):

Central Valley: between $38 and 42 per m2. football.

Sea or beach: between $48 and 60 per square meter. football

Gated or development areas: the sky is the limit

You will be the only one to determine how much of the premium you are willing to pay. And remember that when calculating replacement value, Ticos include ALL tiled areas in their size estimates. You must not. (For example, a tiled exterior porch doesn’t cost as much as an interior part of the house… estimate about a third). If at the end of your search you find your “perfect” property… DON’T FORGET YOUR CHECKLIST! And lastly… make sure you get the services of a good lawyer (and make sure he or she is bilingual and has all documents translated). Ask for references from local gringos or other ethical professionals. And, if you’re still concerned about fraud or accuracy… get another lawyer to check the first one’s work. It may be worth the extra $50 it will cost.

Good luck!