Costa Rica Real Estate, from Coast to Coast, the Right Way!!!

To FSBO or not FSBO

By Patrick Mulheren, our "cool side" specialist, for the Easy Times

To FSBO or not FSBO:  that is the question. Well, we'll get to that.  First, what is FSBO?  FSBO stands for For Sale By Owner, which is exactly what it sounds like: a property owner trying to sell their property in Costa Rica by themselves, without the assistance of a real estate agent. Why on Earth would a property owner want to do that? And why on Earth would a buyer want to buy directly from a seller? Let's discuss:  

FSBO from a buyer's perspective: There's really no benefit for a buyer to seek out FSBOs on their own. Consider:  

•  It's not saving you money. The real estate commission is paid by the seller, not you, the buyer. Also, a real estate professional will likely be able to negotiate a better deal than you can. Even if you see an FSBO ad, it makes sense to ask your real estate agent to contact the FSBO seller (who will likely then agree to pay a real estate commission and allow the agent to show the property). 

• Looking at property in Costa Rica is more than just determining if you like a specific home for sale or not. A real estate professional will work with you to find not just the right property but, first, the right area for you. You must consider your needs for schooling, medical attention, entertainment, shopping, transportation, etc. A good real estate agent in Costa Rica will want to find the right properties in Costa Rica for you that will suit ALL your needs (showing you both the good and the bad of an area and property), whereas an FSBO seller wants one thing only: to sell his home at any cost. 

• Many FSBO properties in Costa Rica have problems. A property owner will sometimes choose to use a For Sale By Owner Costa Rica website in order to try and hide a problem. A good real estate professional will thoroughly check out a property in Costa Rica before they even list it (making sure it has clear title, no liens or claims, etc.). Also, they will likely be able to spot physical problems (easy to spot by a real estate professional in Costa Rica but not an out-of-town buyer) with a house upfront and make sure the seller fixes them (at least before a closing). For example, see here our last month's newsletter about this issue.

• A real estate professional saves you headaches. If you're not familiar with an area, it may be difficult to find the property in Costa Rica on your own. Plus, if you want to see multiple properties in Costa Rica, it's difficult trying to arrange multiple appointments with For Sale By Owner sellers. A real estate agent in Costa Rica is used to these kinds of scheduling difficulties. 

• A real estate agent in Costa Rica will help you get in and get out quickly (if desired). For a first visit to a home for sale, a buyer typically just wants to take a very brief look at the home for sale to see if it's even worth further consideration. An FSBO seller will want to hold you there as long as he can. But a real estate agent can help you look at multiple properties for sale very quickly, and then choose one or two (or three) that you really want to pursue, and then arrange follow-up visits to spend as much time as you want at the specific properties of interest. 

• Using a real estate agent in Costa Rica provides an emotional buffer between the buyer and seller both in viewing/discussing the property for sale and in the negotiation process (so you're not directly intimidated by the seller). 

• As mentioned above, there are MANY more details to work out than just finding a property for sale and establishing a price. A real estate agent performs tasks such as (but not limited to): 
  • Review the title search (before the property is even listed)
  • Review survey map
  • Confirm zoning criteria
  • Ensure available of utilities (phone, electricity, water, TV, Internet), and help get those set up if not already available
  • Submit the offer
  • Prepare an Offer to Purchase - Sale Agreement, which includes:
    • Legal ID of all the parties
    • Legal description of the property for sale
    • Terms and conditions of the sale
    • Payment and escrow provisions
    • Due diligence period
    • Specific closing date
    • Default provisions
    • Disbursement and closing cost details
• Coordinate with the lawyer the option to purchase – sale agreement
• Assist with the bank financing and all the documents the bank needs (if applicable)
• Assist the lawyer with final closing documents
• Ensure payment of property taxes, luxury tax, municipal services, utilities and condo fees (if applicable)
• Coordinate the home inspector (if applicable)
• Perform a pre-closing walk-through (if desired)
• Schedule and coordinate the closing

In short, a good real estate agent makes sure everything is done correctly and that the whole process goes smoothly (we have been told numerous times by clients that, without our assistance, the transaction never would be completed).  

• A good real estate professional (especially those within the American-European network) will "hold your hand" BEFORE showing properties for sale (helping you decide which area is best for you), DURING the showing of properties for sale (helping you make the right decision on a specific property), and, more importantly, AFTER the purchase (providing whatever assistance you need to get started on your new life, from helping you set up utilities, showing you where to shop, helping you with banking, etc., which an FSBO seller is not going to do for you). This is one of the reasons why those who DO go directly to an FSBO seller are a high percentage of those who return home within two years after moving here, because they didn't have the help of a real estate professional in Costa Rica to "hold their hand". 

For Sale By Owner from a seller's perspective:  The primary motivation for a property owner to try and sell a property on their own is likely to try and save money by not having to pay a real estate commission.  That's somewhat understandable, BUT:

• It's debatable whether or not the seller actually saves money (since good real estate professionals are usually better negotiators than a seller).  Also, real estate professionals spend their own money on a wide variety of marketing avenues (not just relying on the one For Sale By Owner Costa Rica website, etc.), as well as having the capability to include the property in the Tierra Max® Multiple Listing Service (available only to real estate professionals).  

•  The seller is greatly limiting their potential market.  Real estate professionals will always have clients who won't see the FSBO ads.  Also, a real estate professional can help a seller set a reasonable asking price (most FSBO sellers tend to overprice their home for sale, which may drive away potential buyers). 

• Using a real estate agent saves a seller headaches by fielding all of the inquiries (most of whom are just "tire kickers" who don't end up looking at the property), as well as handling the scheduling. Also, the real estate agent is the one who has to answer calls from clients at midnight (yes, it happens!). 

• Using a real estate agent in Costa Rica instead of For Sale By Owner Costa Rica provides a level of security for a seller. Its risky allowing strangers into your home on your own (some thieves target FSBOs). A real estate agent properly screens a client before even making an appointment, and then accompanies the client throughout the house. Also, when you use a real estate agent, it won't be your contact information that's available to the public. 

• Selling a property in Costa Rica is not as simple as just accepting a check. A real estate professional has all the right contacts and knowledge to ensure a smooth process, from dealing with a home inspector, to assisting in bank financing, to preparing contracts (there are MANY more details to work out than just the price), to working with a lawyer to make sure the final transfer goes smoothly, etc. 

It's said that you would never want to represent yourself in a court of law. It may sound silly and exaggerated that you also shouldn't represent yourself in a real estate transaction. But it's true. Can it be done without a real estate agent? Sure. But a good real estate professional in Costa Rica can prove invaluable in making sure everything goes smoothly and to keep both sides out of trouble. You'll be glad you contacted one of the American-European real estate professionals!  

Patrick Mulheren is our affiliate properties specialist in the east side of the Central Valley (San Pedro, Curridabat, Lomas de Ayarco, Pinares, etc.), Cartago and the Orosi Valley and general surrounding areas, with houses, condos, farms and any properties for sale. Patrick has been serving Costa Rica real estate for the past 15 years. We feel that his strength is the customer service he provides. Rather than just push a few select properties to any and all customers, he instead asks the customer to paint him a picture of their ideal property.

Patrick Mulheren does not see a client as an opportunity to "make a sale". Instead, he strives to develop lasting relationships of trust. He measures his success by the number of customers who come back time and time again seeking his assistance with their assorted real estate-related needs.

• Check out Patrick's Hot Properties of this month:
  • A charming well designed home in a gated community
  • Beautiful cozy home in nice Guadalupe area