Costa Rica Real Estate Jungle Part 2

Another good thing to know is that there is NO regulation of who can call himself a realtor or broker. There is no multiple listing service. There is no oversight of real estate brokers or agents and there is no disclosure of any sort required. House built on an old toxic waste site? YOUR problem even if the broker knew about it. This even applies to price disclosure. The seller may agree, through an agent, to sell for $100,000 but the agent can sell it to you for $200,000 and pocket the difference. There are no set commissions or fees. All the business is handled through lawyers and unless you are really paying attention you can get screwed royally. The rule of the thumb here, and this is no joke, is to hire a good lawyer, then hire another good lawyer to make sure the first one isn’t screwing you. And make sure two lawyers don’t know each other.

One of the riskiest things you can do is to buy from a developer who is ‘pre-selling’ lots in a new development, or condos in an unbuilt project. Assuming the project isn’t a total scam, you may find that the developers are counting on revenue from sales to build the roads, put in the water lines, bring in the electricity and whatnot. If sales don’t live up to their hopes, the roads don’t get built, there is no water or electricity or telephone or internet that was promised. I know of a development where buyers were promised all of the above, and still don’t have the paved roads, clean water and internet. And this is a relatively honest development. Some sell with no intention of ever doing the improvements. And so you want to sue them? Lots of luck, amigo.

Beyond the hazards of buying property, there are the hazards of owning property. If you buy a condo that’s already there, you have avoided (probably) the buying land mines. But what about condo association fees? I have heard of people who bought a condo and the vacancy rate was so low all the maintenance had to be paid for by 2 or 3 owners. Can get pretty expensive.

Stand alone properties carry their own headaches too. Anybody that wanders around Costa Rica with their eyes open will notice all the barbed wire and bars on the windows. The real estate boosters will tell you the bars on the windows are just traditional. They can’t exactly explain the razor wire that is everywhere, but most will just change the subject. The reason that stuff is everywhere is simply because theft is the real national pastime in Costa Rica. You simply can not leave property unattended with anything of value inside and expect it to be there when you return. It may be there, or it may not. Many people hire caretakers but don’t think that someone on your payroll will be grateful for employment and not steal or set you up for friends or relatives who do. If you plan to never leave your property, and you raise rottweilers, maybe this warning is unnecessary.

One last thing. You may have gotten what you feel is a good deal buying your dream place. But if something happens and you want to sell it, you may have a very difficult time finding a buyer. The biggest problem right now is financing. If you are willing to carry 100% you’ll be okay, but if you are depending on the buyer getting financing, you won’t find lenders lining up to loan money on Costa Rican property.

Here are a few links that tell some related stories if you care to read more:

Costa Rica Real Estate Jungle Part 1

Bought the Farm

Sold the Farm

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Comments

  1. I don't get that feeling from these articles at all (that he doesn't like it here). I read these as what he said they are: a warning, nothing more. As for your claim that there is an MLS, I'd say that tells me that you are somehow involved in "real estate." In what capacity, may I ask? Do you have any sort of license? Is there any sort of licensing Board or agency overseeing your work as a realtor? Why haven't you posted your real name here, so folks could know who you are?

  2. There is definitely not an MLS, at least not in the sense of the kind in the U.S. That is good and bad. The MLS is mis-used in the States to make it look as if the real estate agent actually has some value-add. Mostly they don't. There is property all over this country that is not in any kind of database. It is nearly impossible to do any "comps" (comparative pricing) except by spending a LOT of time shopping around and realizing that prices are set more or less arbitrarily. A particular lot's price might, not coincidentally, be set at the dealer price of a new car the owner wants to buy. I am not kidding!

    Also, yes, the RE agents are pretty much unregulated and you have to be careful. I would not trust ANY RE agent to handle a deal without in-depth supervision of what is going on at every step of the deal. It requires hands-on management. One technique I used, successfully, when I made offers was to make an all-inclusive offer. That is, I set a price and the owner understood that they are responsible for all agent commissions and legal fees, period, end of story. That puts the negotiations with all the parties on to them and I pay only what I think is a fair price. No surprises that way.

    I'm with John, I don't think the author dislikes CR at all. Dominical sounds like the curmudgeon in all this.

  3. You sound like you really love it here in Costa Rica? Many of your statements are completely offbase but then again it doesn't sound like you are overly educated on what is happening. There is an MLS system and your comments on the past time being theft…well I mean really though…I think if it were that bad you'd have left along time ago? Speaking of which. If you dislike it here so much what are you still doing here?

    • "Completely Offbase" is a nice vague piece of jargon. Yes there is an MLS in Costa Rica for at least five years, however no one really uses it. There is also an association of "realators", but membership requirements are not strict while membership is strictly optional.

      I don’t think anywhere here is against Costa Rica, but as pointed out you are sellingcr.com, and we are “Living in Costa Rica”. Your business model depends on the new flesh coming out of the airport not to ask difficult questions.

    • Meanwhile, what has happened to this 'realtor?' Why hasn't he responded in kind to any of us?

  4. Dominical,

    I hope you will post again inform us just where to find the MLS you say exists. I have several friends who work in real estate here and would love to know about it. I am guessing you are somehow involved in real estate and don't like it when anybody says anything that might lose you a sales prospect. If you have facts that refute items in my post, please feel free to post a detailed comment. I will be happy to turn it into an article and give you credit if it has merit, even if it strongly disagrees with my views.

    I did click on your name, and the site it took me to was called 'Selling Costa Rica,' I can see why you might not like my point of view.

    I live in downtown San Jose. I live in an apartment with full time guards and good security overall. It may be different in other places. I do know that a friend who bought a country place way out in the sticks had continual problems with people stealing his tilapia, and even the electric cable that ran to his house. I have another friend who lived very far from a city who had his entire house emptied out while he was away. These are anecdotes but just try getting statistics here about theft. Take a walk down pawn shop row and tell me the mountains of cameras and cell phones there were bought by Ticos who came on a little rough time and needed a few Colones then decided not to get their stuff back out.

    I have lived here over 5 years and I am happy living here. If I were writing about the USA, you can rest assured I would have plenty to say that would irritate people even more than I do here. I am not a Pollyanna though, and I don't make money trying to convince Costa Rica is paradise. It isn't. Real estate boosters are all over the web, making fantastic claims that have little to do with reality other than mentioning the nice weather.

  5. Here are a few points to consider on Costa Rica Real Estate.

    No Transparency: You can sell a house with a crack in the foundation or a bad roof for example and there is no law that would require a seller to disclose that fact. The house can literally fall down the day after you sell it and there is no resource for the buyer.

    No License Required: You can sell property or even put up a sign in your office that says you are a realtor and no license is required. In fact I was thinking of making my dog is a realtor, but determined it would be an insult to the breed.

    No Disclosure: A “realtor” is not legally required to disclose their fees or interest in the deal. A seller can legally represent himself as the owner while negotiating with the owner as a buyer.

  6. I commend you on your honesty. Most people can't handle the truth. They prefer to keep on the rose colored glasses and tell everyone, come to CR and buy, buy, buy. If people knew the real truth, I think less would come and the ones that did would guard their purse more. I'm not here to make a buck off anyone and I accept CR as it is. I've been here eight years now.
    I did learn not to put negative stuff on my blog though….. people don't believe it anyway until they learn for themselves. Bless you for telling it like it is. I love your blog.