How to Purchase Real Estate in Costa RicaBy Mike Krieg, real estate broker
August 09, 2021
Buying real estate in Costa Rica is pretty parallel to how you would do it in the United States, but with a few differences.
Buying real estate in Costa Rica is pretty parallel to how you would do it in the United States, but with a few differences. Michael Krieg with United Country | International Properties shares some details and tips on how you can find your dream property in the beautiful country of Costa Rica.
1.) Find a property you love in an area that suits your lifestyle. To do so, look on local websites rather than just doing a scattershot online search. There is no MLS in Costa Rica, so listings get shared around and some agencies are better at keeping their websites up-to-date. You will always have better results by selecting one agent in the area of interest and sending any listings you are interested in to that agent.
2.) A qualified agent, like Krieg, will prepare an offer that works for you. It is very hard to find “comparables” in our markets, so pricing could be a plus or a minus. Assume there will be some negotiating with the seller in order to arrive at a price acceptable to both of you.
3.) When you reach an agreement, your offer will be formally turned into a Sales and Purchase Agreement. If you are from North America, you might think of this as the “Earnest Money Contract” that your agent would do for you as part of their service, but here, your agent will have an in-house attorney do it and is included in the fees charged as a buyers representative.
4.) While these things are happening, we will assist you to open an escrow account. This is probably the hardest part of the process for new buyers to understand. In order to comply with money laundering laws, the escrow company is obligated to gather a huge amount of information about your finances. The whole point is to be very sure that you are who you say you are and the source of your funds is legit. It’s just something that you have to do, so meditate for 30 minutes, take a deep breath, and our team will walk through it step-by-step.
5.) You may also want to have an attorney create a Costa Rican corporation to “own” the property for you. This has advantages in terms of liability, so it’s something you should at least consider. It only takes a week to ten days to do this, so it is easily finished by the time you go to closing.
6.) Once your SPA has been signed by both parties, you will typically send a 10 percent deposit to your escrow company. That triggers the due diligence period (the time period where you’ll investigate all of the ins and outs of the property).
7.) Due diligence will be coordinated by your agent (Krieg) and an attorney and include several people, like a surveyor, home inspector, agent, municipality and others. It needs to be done well, and if you decide not to do parts of it, you should do so with your eyes wide open. At the end of the due diligence, you will be given a report that allows you the opportunity to accept the results or reject any part of them. If there is a “fatal flaw,” you can simply withdraw from the deal and get your deposit back.
8.) If you accept the due diligence, your deposit will go hard (nonrefundable) and you will send the balance of your payment to your escrow company. Then, you will close within a few days and your property will be recorded in your name in the National Registry.
9.) Once you own the property, it would be wise to make sure you understand what your obligations are and how to fulfill them. Write down how to pay your utilities and taxes and make sure you understand how much, when and how to pay them. You may need to set up a bank account to make this simpler, especially if you will not be living at your property full time.
10.) Know your fees. The average fee for a real estate transaction is around 4.5 percent. This includes your due diligence in inspections, your required taxes and closing costs. Of course, all things are negotiable as to who pays. Much like in the U.S., a 50/50 split is common. Although the details may look familiar to you, there are challenges, especially time. Time moves very slowly in Costa Rica.
If you’re looking to buy your next dream property in Costa Rica, our experts like Michael Krieg, are ready to help make the process as seamless and enjoyable as possible. Visit www.UnitedCountry.com to find available properties in Costa Rica, Panama, Mexico and the United States.
About the author
Michael Krieg is a real estate broker with United Country Real Estate who specializes in international sales of resorts, ranches and farms, luxury homes and commercial properties, specifically in Costa Rica. He also helps clients in the United States with their real estate goals. Learn more about Michael at www.MikeKrieg.com.