Jaco-based realtor David Karr outlines the top five mistakes he sees people making every day when buying property in Costa Rica and how to overcome them.
Look I get it. You’re smart, you’ve bought plenty of property in your life, made tons of investments. You know how to research and you can figure things out, so when buying property in Costa Rica this should be no different.
Sure, maybe you’ll need to read up more, be a little more careful, but you’ll figure it out.
Riiiiiiight, good luck with that.
I’ve been living in Costa Rica for over twelve years, helping people with real estate transactions. In that time I’ve seen countless mistakes people have made in both their decision-making and sales process.
Many inquiries I receive come from people who need help to fix their bad decisions.
Here are the most common mistakes I’ve seen people make when buying property in Costa Rica, along with some tips to avoid them.
1. Searching for property on your own
The most important thing to understand about Costa Rica real estate is that there is no MLS (multiple listing services).
That means if you’re searching for sales info, comps, listings, etc, you must sort through thousands of listings spread throughout the internet, most of them outdated and/or inaccurate.
Don’t be mislead with some offices or brokers advertising their sites as MLS sites. There is no such thing, and it’s all marketing ploy.
Many brokers fail to update their listings or have inaccurate information about the listing. I’ve had countless clients send me listings they saw online which sometimes were listings that sold years ago!
Listings with incorrect pricing, incorrect size and sometimes not even the correct photos of the actual property!
Searching on your own will drive you mad and leave you with an inaccurate assessment of the market.
Nothing wrong with searching for properties online, but find someone you can consult with.
A solid real estate broker can guide you with all listings, helping you to confirm accurate information and better educate you along the way.
I tell my clients to send me any listings they see online and I can confirm if it’s still available and/or line it up for them to see. Get the help of a professional and don’t do it on your own.
2. Going too fast
Sometimes a great buying opportunity pops up. But if you haven’t done your homework, put yourself in the right position, tested the market, and learned the country more, then how do you know what a great opportunity even is? Let alone be ready for it? Take your time. I’ve seen many people rush their purchase for no reason.
Come up with a game plan and a timeframe to buy. Spend time in the area you want to buy property in. Many properties in Costa Rica are available as a vacation rental and I often encourage clients to stay in a property on their wish list, if possible, to get a better feel of it and the area. Don’t be in a rush and take your time in finding the right fit for you.
3. Not learning the market
It amazes me how many people buy property without understanding the market.
This is a big investment, and before purchasing you should have a better idea of the real estate market in the area you are purchasing. You should have a better idea of priced listings, sold comps, and accurate rental numbers.
Many people rely on what a sales agent might tell them versus getting the information they need to understand the market for themselves.
I always tell my clients that my first job is to educate them on the market. To give them the info they need to better understand options and values.
I want them to understand where the value is, not because I’m telling them, but because they understand and realize where those values are. Take the time to learn the market for yourself so you can make a smart decision.
4. Ignoring the follow-up
Have you ever owned a second home or vacation property?
If it is your first, then you need to understand that you need to put in a little effort in yourself. While you might elect to have a property manager assist you, there are items you need to make sure you are following up on. Property taxes, corporate taxes, HOA meetings and so on.
Yes, you can have someone help you with all that, but it’s important to stay on top of it. If you’re part of a homeowners association, stay involved so you know about any changes that affect your property.
Stay on top of things. Reach out to your property manager, attorney, broker, whoever you need to ensure bills are being paid. Don’t assume everything is being done. There’s no need to micro-manage but quarterly or bi-annual checkups should suffice.
5. Choosing the wrong real estate agent or using multiple agents
Oh boy. Sadly, this is the culprit of many bad decisions.
It’s important to understand that Costa Rica has no regulations or licensing for real estate agents. This means anyone with a pulse can sell you a property here.
Many purchasers don’t properly vet the person they have to represent them, which can be a pivotal mistake. And don’t think choosing an office with a brand name will be any better. Just because an office might have a big franchise name it doesn’t mean they have any additional requirements to protect you.
In fact, some big name offices have some of the most inexperienced and unethical agents I have ever dealt with, so don’t let your guard down.
It’s also important you choose one person to work with. A broker can collaborate with other brokers, so you only need to choose one person. Having multiple agents involved encourages a feeding frenzy where brokers focus on selling *their* property to you rather than working and representing you.
This is a paramount decision and you shouldn’t take it lightly.
Don’t be afraid to ask tough questions to find the person you’re comfortable with and you have confidence in to represent you. Talk to a few different people, BUT once you decide, choose ONE PERSON to work with.
Ask to talk to some of their past clients, make sure they are a legal Costa Rica resident, talk to them over the phone, and get to know them. The right person can help to make sure you have a great experience.
Costa Rica is a beautiful country, and it’s easy to see why so many foreigners seek to own a piece of this paradise.
If you’re aware of the mistakes others have made when purchasing, you can avoid them yourself whenever you’re ready to start to your search.
David Karr has lived in Jaco, Costa Rica with his wife Melissa since 2006 where he runs CP Properties, a real estate and rental consultancy focused on the Central Pacific region. You can also follow him on Facebook.