Very interesting thread ! The person selling land says not to trust ANY realtor .... hmmmm.
As a person who has been involved with real estate here for over 11 years, I would like to clear up some of the misinformation in the thread.
Realtors vs. real estate agents vs. licensing
There are two associations here that foment professionalism in real estate. The CCCBR and the GAR. Both are affiliated with NAR and members of either may use the term Realtor. It is true that there is no formal licensing here. So I tend to prefer the term real estate broker or real estate agent in order to avoid confusion. Now given the mortgage meltdown and the way many agents, mortgage companies and banks operated in the US, I am not convinced that licensing is such an important factor. Licensed means that an individual has gone through all the process, but it doesn't tell you anything about their ethics or interests. In any case a person making a big investment, such as purchasing property, has to make judgements about all of those involved in the sale: the owner of the property, all lawyers involved, and any other parties like mortgage brokers, real estate agents and mortgage insurance companies. If any of the parties are not transparent you will run into trouble.
Horror Stories vs. reputable brokers
A vast majority of the horror stories I have heard come down to 3 principal factors, and none of these involve people who have held themselves out as established brokers or professional real estate agents.
- Buying property sight unseen (like from a telemarketer or on eBay or any other web site)
- Buying property direct from the owner or developer and without adequate knowledge of the local procedures.
- Buying property inadequate for the intended purpose.
I couldn't quite follow the A vs. D vs. C example, that was a little complex for me. However any reputable broker is earning a specified percentage from the seller. It will run from 5 to 10% of the market value of the property. In general homeowners pay 5 or 6% commission, while farmland pays 10% to the broker, because of the lower value additional efforts required. Professional brokers and agents do not engage in the practice of selling a property that is price over the market value as described in this example. It is not good business. The fact is that the old Tico saying is true: "there is nothing hidden between heaven and earth". There is always a very strong possibility that the owner who buys a property on a "sobreprecio" will find out that they paid too much. It may be as simple as their circumstances changing and they suddenly have to sell the property and they learn what the true market value is when they try to list it.
FSBO vs. Brokers
If you are ready to invest the time and energy to get the connections you need to learn about the area you want to buy in, then you may consider going through a for sale by owner web site or look at properties from La Nacion or The Tico Times and contacting the owner yourself. After all, you can pocket the money the broker will earn right? Except that the seller is probably trying to pocket that money too! So who will get it? Plus, how did the seller price the property? In our experience, owners tend to have an inflated idea of what their property is worth. After all, if they have owned it for any length of time they have probably made improvements and have fond memories of good experiences they have had there. One of the first jobs of the listing agent is to discuss with the owner the question of setting a realistic price for the property.
On the other hand, working with a reputable broker will save you time and money from the beginning. You get instant access to their experience and knowledge, not just of real estate in general but all the ins and outs of relocating to Costa Rica, plus invaluable advice on the area you are moving to. They are listing properties that they know will meet the expectations of an expat buying property. A big problem with classified ads is that you have very little information to go on, and you have to believe what the owner tells you on the phone. You will waste a lot of time seeing properties that don't have enough closet space, bathrooms or bedroom area when you look at classified ads. By comparison a good agent will pre-screen properties and won't list those that don't meet certain standards.
Finding a reputable broker
There are a lot of questions that you can ask of and about any broker to find out what their experience is and how they run their business. Here are a few to get you started:
- How long have they lived in Costa Rica? In the area they specialize in?
- How long have they been an agent? Have they owned other businesses in Costa Rica?
- Do they own property themselves?
- Do they have a web site? An office? A land line?
- Can they give you references?
- Do they work real estate full time?
Also trust your instincts. Does the person have more than one property they can show you? Do they seem more interested in making the sale, or more interested that your needs are met? Do they work with other agents and brokers?
In summary, an experienced real estate agent can be an invaluable resource for you when you buy property in Costa Rica. While you cannot trust ALL brokers, it is totally unfair to say you cannot trust ANY agents. Good brokers aren't so hard to find and you will be amazed the resources they can bring to bear to help you make a smooth transition.