10 Tips for Buying Real Estate
Purchasing your property in Costa Rica can be as overwhelming as it is exciting. Read up on our top home buying tips to avoid common pitfalls and ensure that your home search and purchase go smoothly. For more info, see our guide to buying real estate in Costa Rica.
- Rent before you buy: Purchasing a home represents a serious financial investment. It's important to "test drive" an area before you purchase, preferably for at least a year. Renting affords you the luxury of time to discover what a neighborhood is like during both the dry and wet seasons, what your neighbors are like, and whether you have access to conveniences and amenities.
- Secure financing: If you're not making a cash purchase, secure financing before you begin your real estate search. It can be difficult to get a U.S. loan for real estate purchases abroad, and Costa Rican mortgages have requirements you may not expect. Look into your options and get pre-approved to determine what you can afford.
- Save up: As a home-buyer, your closing costs will add up to 5-6% of the property's purchase price – that's $15,000-$18,000 on a $300,000 home. Mortgage registration fees (1.28%-2.03% of the sales price) and realtor commissions (3%-10% of the sales price) are extra. Additionally, if you're taking out a local mortgage, you'll be required to make a minimum 15-20% cash down payment.
- Trust your real estate team: A seasoned real estate agent and knowledgeable attorney will make the home-buying process run smoothly. Ask for recommendations from friends, and don't hesitate to ask questions. Even if you speak Spanish, having a bilingual team is very helpful, as real estate and legal jargon is difficult to understand (even in your native language).
- Accent matters: Have a Costa Rican friend make first contact with sellers. Unfortunately, some people may equate a foreign accent with the ability to pay more, and will quote you the "gringo price" as a result.
- Don't settle: Costa Rica's real estate market is slow and inventory is low, so the same properties may remain on the market for a long time. Have patience, and bide your time. Make two lists – one for your must-haves and another for your would-like-to-haves. Don't deviate from the first, even if that means waiting months for the right property to come along.
- Research: If you've found your dream property, make sure to explore the neighborhood, research local weather patterns, meet the neighbors, and inspect every aspect of the property.
- Don't assume: You know what they say: don't assume that amenities – telephone, high-speed Internet, cable television and even water – are available. Instead of asking the homeowner, always inquire directly with service providers: ICE (home phone, DSL), Amnet or CableTica (cable Internet, television), and AyA or the local municipality (water).
- Get a home inspection: This isn't common practice in Costa Rica, but a home inspection is always a good idea. Local construction standards don't always meet U.S. or European expectations, so a $500 inspection can easily save you thousands in future repairs.
- Do a title search: Title insurance is not common in Costa Rica, but your lawyer can research any property in the Public Registry. This is an important step to determining whether there are any liens or other debts against the property, and to ensure there are no legal issues to impede or threaten your investment.