Real Estate Guy’s Super Powers

A typical conversation in a-day-in-the-life of a Costa Rica real estate agent.
Visitor – Hey Ben, howzit going?
Ben – Good man. How’r you?
Visitor – Good. How are things in The Zone?
Ben thinking to himself – (Translation: Are properties selling? Are prices going up? What is this season like? What is the coming season going to be like? How much is my property worth? What is the effect of the global economic crisis on Costa Rica? I’m thinking of selling my property, is now a good time to sell? I’m thinking about buying a property, is now a good time to buy? Etc etc…)
Ben talking – Going fine. We’re not in a boom by any means, but by contrast with the last couple years, we feel encouraged.
Visitor – Sounds good. What’s selling?
Ben thinking – (or – Are prices going up? What is this season like? What is the coming season going to be like? How much is my property worth? What is…)

It is like having a super-power. Perhaps a bit overstated, but essentially true. The nature of the business of real estate does give one an ear to the ground on how things are going with the economy, social trends and by extension, the quality of life In The Zone. We all are curious to some degree about “what’s going to happen” and so we are on the watch for data, for information that’ll give us a clue as to what the future will be like.

To illustrate: Pre-Super Bowl talk shows. These popular shows are really about nothing more than guessing what is about to happen in the next few minutes. Player’s strengths and weaknesses are analyzed, their past injuries are discussed, and notable personal traumas might even play a bit into the picture. And this is all around what is about to happen with something that really isn’t going to impact the quality of anyone’s life to any appreciable degree! We humans love to speculate on what is going to happen in the future.

So, I’ll give you my read. I’ll tell you what my crystal ball says regarding what the future might look like here in The Zone. To do so however,

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Costa Rica Real Estate Closing Costs

“Four percent of the sale price on top of your commission?!” exclaimed our client, a long time resident in The Zone. (In keeping with an old Guys’ tradition, I’ll refer to him as Mr. Zellbren throughout this article.) Ben and I first explained that we are currently dealing with a severely down market (approximately 50% off the peak value of three years ago) and an excellent time to wait for the market to rebound. Mr. Zellbren wasn’t interested in waiting, so we continued to explain the standard closing costs of a Costa Rica real estate deal. Some of the data he was familiar with; some of the finer points had to be clarified.

Traditional Closing Costs

Closing costs, when you add up the transfer tax, stamps, and legal fees, usually equate to approximately 4% of the sale price. Mr. Zellbren told us he would accept a $550,000 offer for his house equaling $22,000 in closing costs. In 99% of the deals we are part of, Buyers and Sellers split closing costs 50-50. It’s what we do here in Costa Rica. Additional costs—re-surveys, title insurance, new corporations—are typically paid by the Buyer.

Interestingly, there are a variety of stamps required to transfer a property in Costa Rica. They are– the Legal Bar Association Stamp (Timbre del Colegio de Abogados), the Municipal Stamp (Timbre Municipal), the Fiscal Stamp (Especie Fiscal), the National Archives Stamp (Timbe del Archivo Nacional) and the Agriculture Stamp (Timbre Agrario). Like everything else, your lawyer will take care of the licking and sticking of these stamps, which equate to roughly .05% of the sale price.

Legal fees, also known as notary fees here in Costa Rica, are calculated at 1.5% of the sale price. This is what is paid to the lawyer/notary for setting up the Sales and Purchase Agreement, as well as, researching and filing all of the necessary documents in the sale. These standard legal fees do not include any additional legal work (e.g., a new corporations, establishing an easement, etc.). One last point regarding lawyers that I would like to add is… you often get what you pay for.

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