Real Estate in Costa Rica

Real estate in Costa Rica can be pretty difficult for the outsider. I have spent two years in Costa Rica with a strong interest in learning about real estate and I still find myself confused by some of the nuances that seem very normal to the locals. Although many differences exist between real estate in the United States and Costa Rica, the most notable difference is the informal way of setting a price for real estate in Costa Rica.

Costa Rica Real Estate: The Art of Bargaining

Sure, real estate involves bargaining in any country, but in Costa Rica it can be all that matters. Although you can have properties appraised in Costa Rica, most people in Northern Costa Rica buy and sell property based on local consensus of property values. Rural folk have a good idea of what land is worth to them because they have worked the land for decades and understand the value of the land as a result of its income-generating potential. These calculations are not exact and you probably won't get anybody to verbalize them, but they still take place in the as a rough estimate.

You might think, "perfect—real estate valuation sounds really easy." Well, not really. Although a farmer knows the value of his own property, the asking price will often be more than what it's worth, even when the buyer is another local. This may not sound like a profound concept, but foreigners are considered very rich by local standards—and often they are—the asking price may be several times the price you could get with good bargaining. A Costa Rican will take a chance in asking a ridiculous price for a property because foreigners often do pay exorbitant prices.

What's the big deal? If foreigners can pay...

Yes, many foreigners can overpay for properties, but not everybody has that luxury. Many foreigners come to Costa Rica to find a pleasant, affordable place to retire on modest savings or a modest pension. These people often have more trouble than expected in finding quality real estate for good prices because nobody wants to sell a property for market value when the buyer suffers the stereotype of a rich North American mogul who will pay anything for something he wants.

(Many locals will say that the main problem is that Costa Ricans are unable to afford land in areas that are bid up to ridiculous prices)

So, what's the solution?

I don't sell gimmicks here. The only real solution for someone looking to buy good, affordable property in Costa Rica is personal experience—often lots of it. Do you know how to bargain with Costa Ricans? Do you speak Spanish? If you rely on English-speaking real estate agents in Costa Rica, keep in mind that they deal with richer-than-usual clients. Besides charging a large commission, they may only be willing to show you high-end real estate that would break the bank of even most North Americans and Europeans.

So, if you speak Spanish and are a fairly ambitious person, you may only need some hands-on experience in Costa Rica to make that plunge into the Costa Rica real estate market. You can rent a house or apartment near a place you would like to live to test things out, meanwhile visiting other places you could potentially live.

However, if you don't speak Spanish, or simply don't have the time to make real estate hunting a full-time job, you may consider hiring someone to do your real estate dealing for you. I am not recommending hiring a real estate agent per se, and I wouldn't have to use one myself, but many people will have a hard time fending for themselves in a new country with a culture very different from their own. But as scary as the real estate market can be in Costa Rica for inexperienced foreigners, real estate agents who work on your behalf can be equally scary.

Let's face it—many people in Costa Rica (though certainly not all) see North American and European foreigners as mere sources of dollars and euros. For this reason, there are many people in the real estate business who try to make a large portion of their money catering to these higher-end clients. If you fit the profile of one of these clients, except that you don't want to waste indiscriminate amonts of money, you need to know whose advice you can trust.

Who You Can Trust

I have come across some good, honest resources in Costa Rica real estate during my time in the country. Scott Oliver, author of How to Buy Costa Rica Real Estate Without Losing Your Camisa, is one of those good, honest resources. His book it chock-full of good advice for people who want to buy a home in Costa Rica without falling victim to an unfamiliar real estate market or unforeseen tricks of sellers and agents. Although the book does not offer any information about Northern Costa Rica, the principles put forth in the book hold true all over the country. If I could sum up these principles in five words, they would be, "know what you're getting into." (Six words if you count 'you' and 'are,' but who's counting?) The book offers a good point of reference for people who are following the books advice of renting for six months before you decide to buy. During this time, you can review some of the more technical matters in the book, meanwhile investigating some of the profiles of gringo-friendly areas that the book offers. Perhaps the only thing more informative than Scott's book is his web site. I invite you to check out WeLoveCostaRica.com.

Another good resource for real estate in Costa Rica, or just about any aspect of living in Costa Rica for that matter, is Erin Van Reenan, author of Living in Costa Rica. She is an experienced ex-pat who has a great wealth of information on making Costa Rica your home. Not only is her book full of valuable information, but it is a good read. (She is a professional writer) The section on real estate is a good crash-course for interested foreigners and the broad scope of the book leaves nothing to be desired...except for the actual experience of living in Costa Rica. Check out her web site LivingAbroadInCostaRica.

Other Real Estate Resources