Negotiating Real Estate Deals

Negotiating to Buy from a Tico or Developer

The seller’s lawyer will present the asking price and your broker responds
with a counteroffer that will contain all the conditions you might have for
the purchase – for example, any work you want done on the property or
house, the time frame for payment or financing, the deposit and length
of time necessary to allow your lawyer to carry out due diligence, etc.

Here are a few important features of the property to keep in mind when
negotiating:

- Grade: How steep is the property? Will it be hard to build on it?
- Bodies of water: While a river running through a property is a nice feature,
bodies of water can be either a plus or a minus. Its presence will
limit the use of the property, as there are building restrictions within 15
meters of bodies of water.
- Water source: If you need to drill a well, remember that getting water
rights where there are none is a separate process. If those rights are
already locked in, it will save you a potentially major headache.
- Utilities: Water and power connections to the property (or, more to the
point, lack thereof) could have an important affect on the price, as they
can be fairly difficult to arrange.
- Access: Is there a way to get to your property? What’s the road like? As
a helpful exercise, try to imagine it with five inches of rain falling in the
space of a few hours.
- Encumbrances: Does a neighbor have a right-of-way that passes through
the property? Are there power lines or pipes that will restrict how you
can use the land?
- View: Is it up or down? Does it look out over the Pacific Ocean or a sea
of tin roofs?
- Landscape: Cow pasture and other farm land is relatively easy to build
on; forest is not, as you have to get special permits from the Ministry of
the Environment to cut down trees.
- Security: Does the development include the infrastructure for 24-hour
security, such as a guard shack?
- Financing: Is the seller financing the deal? Is he or she willing to accept
balloon payments or some other kind of option that will better meet
your needs? Does the seller need quick cash? Will you be forced to wait
for any legal issues to be resolved before you close on the deal?

As far as the human side of the negotiations, negotiating with a tico

landowner versus negotiating with a professional developer are two distinctly
different experiences. Business negotiations in Costa Rica are quite circuitous,
and if you decide to take part, you will be expected to drink a lot of coffee
and begin meetings with long, winding discussions on the weather, family,
and other such niceties. It can be pleasant once you get used to it, which
you might as well do, because though language barriers may cut down the
chitchat somewhat, American-style aggressiveness and brusqueness will get
you nowhere.

This is perhaps the most important thing to keep in mind when going
into a business negotiation with a tico, especially in rural areas. If you are
an impatient or pushy person and have a difficult time containing yourself,
it might be a good idea to find a bicultural broker who can handle the negotiations
on your behalf.

Negotiations will, of course, have a different quality if the seller is a
developer – local or foreign – with product to move. Developers have a set
range in which they will negotiate, and it’s a range that varies depending
on the newness of the development. Make an offer and see what happens.
Newer developments will be anxious to get some sales on the board and their
sales staff is probably more likely to come down in price. One advantage of
buying a place still under construction is that you can negotiate the interior,
including the fixtures, cabinetry, floor, lighting, and even appliances. If the
developer doesn’t want to do things the way you like them, you can negotiate
the furnishings right out of the contract and do them yourself once you
take possession.

One final caveat to negotiating with tico landowners is that though you
can usually talk the “gringo price” down, it depends on the landowner’s motivation.
Some property owners simply slap a se vende sign on the front gate
after seeing their neighbor rake in a million bucks. They’re not motivated
to sell the property, but they will if the price is right. Oftentimes, however,
their expectations are unrealistic and you won’t be able to negotiate that
seller’s price down much at all. In that case, it’s best to move on.

Related Resources:

Business Investment Opportunity in Manuel Antonio Turnkey Vacation Rental

Cayman Real Estate & Vacation Rental Properties

Mexico real estate – Cancun, Playa del Carmen, Riviera Maya, Cancun

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