Buying Real Estate in Costa Rica
If you can’t afford to buy a house in the United States or Canada, you
might be able to here. Prices for homes in many neighborhoods in Costa
Rica begin at about $60,000 with financing available for new homes if you
become a resident. In 2003 I purchased a new $85,000 home in Heredia
with financing. Our payments are about $560 monthly on a 15-year, 7.0
percent loan—$150 less than I used to pay for rent in Rohrmoser. The
monthly payment includes a life insurance policy that pays off the loan in
full in the event of death of the owner.
Just like in the U.S., Property ownership is fee simple title. You do not
have to be a resident of Costa Rica to own property and you are entitled to
the same ownership rights as citizens of Costa Rica. Ownership of real estate
in Costa Rica is fully guaranteed by the constitution to all foreigners. This
means your purchase here can be fully secured and safe. Title can be held
several ways in Costa Rica: by a single person, jointly by several persons, by
a corporation, a limited liability company or a trust.
Though the buying process isn’t as neatly predictable as one might want
it to be, here are the basic steps in more or less chronological order:
- Find a property
- Check it out by doing some preliminary due diligence
- Meet the owner and start the negotiation
- Offer and counter-offer
- Sign the sales agreement and put down a deposit or purchase an option
- Line up financing
- Complete the due diligence process
- Make any contract adjustments according to what you turned up
- Have notary draw up the document that will be the deed
- Sign (along with the seller) the deed at closing, along with the seller
- Send the notary to the National Registry to register the deed
- Pay transfer taxes, notary fees, broker fees, and administrative fees
- Within two weeks of submitting the deed to the National Registry, the
property should be registered under your name or corporation.
Some of these steps can take place simultaneously, especially on the financing
end, which is something to keep in mind even before you find the
property you want to buy, as lining up the actual payment can take some
How to locate a property
Though Costa Rica has drawn the developed world’s attention as a great
place to buy real estate, it’s still very much a developing market, which is
something to keep in mind as you begin your search for a house, a condo,
or a piece of property. The market is still not very efficient at finding buyers
what they want. And the lack of a multiple listing service makes it hard for
buyers to quickly find fair prices. That’s not to say that there aren’t lots of
nice properties out there at good prices – just that they’re harder to find
in Costa Rica than in developed markets like Canada and the U.S., and
finding the good deals requires more than picking the low-hanging fruit in
newspapers and on the Internet.
Fortunately, though there’s work to be done, the Costa Rican market
is indeed becoming more sophisticated, and there are a lot more places to
shop for real estate and compare prices than there used to be.
Classified ads in local newspapers will probably give you a closer idea of
fair prices. You may also want to check out the listings in the back of the The
Tico Times. If you want to save money, look in the daily Spanish-language
newspapers La Nación or La República, because prices are more realistic.
Also, look around; go door-to-door in areas you like, and talk to other
expats. If you drive around an area you like, you are bound to see a number
of for-sale signs for properties not listed in the newspaper.
Like most other things in today’s information marketplace, the best
place to start looking for a Costa Rican property is the Internet. A few
hours on -line will give you at least a basic idea of what’s out there. The
sites addressing Costa Rican real estate split into three rough categories:
Those offering services (brokers, lawyers, fixers, property tours), those
selling their own properties (developers), and those offering third-party
listings (newspapers, Internet classified ads). The first two kinds of sites can
have good information, but should be taken with the proverbial grain of
salt. For one thing, anyone with a few hundred dollars can set up a decent
Web site these days, and it’s not proof of competence. For another thing,
most of them directly profit from high real estate prices, so there is quite
a bit of hype and their price quotes (if they offer them) will be a bit high.
Still, those kinds of sites can give you an idea where price negotiations will
start, especially if you’re in the market for a condo or a house in a gated
These sites are also a good place to start researching the service people
you will need to hire to complete your transaction. The best way to find
them is through Internet search engines like Google.com and Yahoo.com,
preferably searching with the name of the region you’re interested in (Jacó,
Escazú) and the product you’re looking for (condominium, broker, etc.).
Keep in mind that housing costs are much higher in gringo enclaves such
as Escazú , Rohrmoser and touristy beach areas. Be sure to remember that
the farther away you live from San José and the upper-end areas the more
you get for your money.
To find a house or land to purchase, look for a well-recommended
realtor who can identify true market value. If you’re on a tight schedule
and you know where you want to buy, you can hook up with a broker, fly
in, and pound the pavement hard for a few weeks.
If you don’t know the country or you want to check out places you
haven’t been (but are still on a tight schedule) you could take a retirement/
lifestyle tour like the kind offered by Christopher Howard (Live in Costa
Rica Tours, www.liveincostarica.com), which will show you the best areas
to live and their amenities, infrastructure like malls, hospitals, supermarkets,
appliance stores, etc. You will also see a sample of different living situations
including actual properties in order to gain a broad perspective of the local
market. You will also be introduce to trustworthy brokers, developers, and
real estate lawyers.
Another alternative is the lifestyle real estate tours offered by Costa
Rica Retirement Vacation Properties (www.costaricaretirementvacationproperties.
com). They interview you to determine your needs, then create
a streamlined process to find properties that you will like.
In the best case scenario, however, if you have a few months to poke
around, you may want to rent an apartment or house somewhere central,
rent a car, and take short trips to the different markets. Talk with brokers,
drop by different developments – it’s sometimes even a good idea to hire a
tico fixer who can go with you as a translator so you can stop at all the little
farms with the se vende signs out front, if it’s raw property you’re after.
Tico homes in Tico neighborhoods
Some gringos want to live in predominantly Costa Rican neighborhoods.
However, most Americans don’t want to downgrade but rather upgrade or
preserve their present lifestyle. Unless you have the money to live in a gated
community or high-end area like Escazú, Santa Ana most tico housing
and neighborhoods are substandard for a lot of foreigners. Older areas
like Guadalupe, Desamparados or isolated neighborhoods, for example,
have a scarcity of adecuate housing. The tico-style homes in these types of
places usually have poor plumbing with no hot water, are noisy, can have
boisterous neighbors and small dark bedrooms without closets. Although
living among the locals is a good way to meet people, Costa Ricans tend to
keep to themselves. If you don’t speak Spanish you may often feel isolated
in a tico neighborhood. Also crime may be a factor. Criminals often prey on
foreigners in these types of living situations. You may find cheaper property
in one of these neighborhoods but most likely won’t be happy with it.
Value of land
Pricing of land in Costa Rica can be relative. One way to find out is to hang
out with the locals and see what land is really going for in an area. By cross referencing
one can usually arrive at the real value of property in a specific
area. Another method of pricing is to put a value on it according to what
person needs. A property may be worth only $10,000, but the owner needs
$15,000. So he puts an arbitrary asking price of $15,000 on the property. The
best way to find the true value is to compare the price of similar properties
in the area, look for a motivated seller and work with a competent broker
who knows the area. Many established brokers have sold properties in the
area and keep a list of their previous sales. Some foreigners, including North
Americans, charge outrageous prices to make a quick buck. So, be careful
with whom you deal.
To find a good buy, you should study the market. Remember it takes
time to understand the market so you learn what a good value is. It is also
a good idea to negotiate in colones since you will come out ahead in the
long run as the colón continues to devaluate. This will make your home
appreciate over time. Don’t depend too much on the newspaper. Talk to
as many people as you can. Nothing works better than word of mouth for
finding good deals. Practice your negotiating skills. Ticos love to haggle.
You may be better off having a trustworthy, bilingual Costa Rican search
for you and do your negotiating. Your realtor or lawyer should also be
able to assist you.
How value is assigned to a property depends, of course, on the
property. Generally, however, turnkey properties like condominiums are
priced according to their constructed square meters (i.e. – any space that’s
under a roof) plus any additional property (outdoor parking, garden, etc).
A square meter equals 10.76 square feet. The price you pay per square
meter of the building will vary according to concrete factors like the quality
of the furnishings and the building materials, as well as intangibles like
location and market conditions.
Generally speaking, anything costing over $1,000 per square meter –
especially large houses – should have top-of-the-line furnishings and be in
excellent condition. That per-meter price tends to be higher the smaller
the house or apartment, and will vary wildly according to location. A small
condo in a prime Guanacaste beach location can cost upwards of $2,000/
m2, while large country homes around Cartago or on the Caribbean slope
can be down in the hundreds of dollars per square meter – once again,
depending a lot on the furnishings.
Pricing large tracts of raw property is traditionally done differently.
Pasture and farmland is sold by the hectare, a unit equivalent to 10,000
square meters, or 2.47 acres (occasionally in rural areas you may also run
into manzanas, a unit of area measurement equivalent to 1.72 acres). In
rural areas, these prices can often break down into a few dollars per square
meter, which is certainly a deal. You can tell an area is becoming more
valuable (or anyway, more residential) once the tracts of land get smaller
and the prices are posted by the square meter, as is the case now in beach
towns and has always been the case in urban areas. In really hot markets the
price for raw land can go above $1,000 per square meter, though this isn’t
common, and expensive land should certainly come with added value, like
sewer and electric hook-ups and road infrastructure.
As mentioned elsewhere in this book, finding a nice property is one thing,
and finding a property at a realistic price is an entirely different matter.
Property is regularly overpriced to see if the gringo will bite, although that
overpricing isn’t entirely the fault of the owners: Lots of property bought
in rural areas is farmland, with no residential pricing precedents in living
memory. A few other market factors make it difficult to put a clear price
on many properties and homes. The biggest issue is the market’s lack of
a multiple listing service, especially one that keeps a record of past sales.
This makes it difficult to find out how much other properties are selling for
(“comparables,” in real estate jargon).
One solution is to hook up with a well-established broker with lots of
listings and years of experience. Name-brand brokers like Century 21 and
ReMAX have offices all over the country whose databases are connected,
but beware: Some of those brands are just carpetbagging operations. In
many areas of the country, the best brokers don’t have a branded franchise.
An experienced broker with many years in the market will be able to give
you price comparisons, as well as an idea of the market’s past performance.
If you’re looking for a somewhat liquid product (residential condominium)
in an active market (Jacó or Tamarindo) there should be plenty of product
on the move that will allow you to take an educated guess as to the value.
Be careful, however, to get some sort of documentation or proof of sales
values, as rumors run fast and wide.
What is a perito?
Another option – actually, a recommendation – is to get a quote from a
professional property appraiser, the famous so-called perito, or expert. A
perito will visit a property, measure it, note the materials used, examine the
construction, and take the local market into account to place a value on the
property. Keep in mind that the final quote is just an estimate, and should
be taken only as a starting point for negotiations. But the perito is there to
serve you, the buyer, not the seller or the broker, so the evaluation plus a
short sit-down interview should give you a clear picture of what’s going
on. Peritos usually have a university degree in architecture or some sort
of engineering. There are a handful of reputable companies that offer this
service, for whom contact information is available in the resources section
of this book. You can also use local companies or individuals that are based
in the area where you’re looking to buy.