We’ve had a week full of working with buyer-type clients, but they definitely fit into what the “Man Says There’s No
Market here” article says below. I’ll call them the Schmuggerdoos. They are intent on buying some land, they came here to buy land, they found land that will suit their needs and budget, but that extra spark of “I think I’ll buy this property now” is lacking. They are going back home so that they can return in a few months, maybe, and buy something then. It’s been a great week though. Rod & I enjoyed getting to know the Schmuggerdoos quite a bit and hope they realize their dream of moving to Costa Rica. We also are enjoying the ever expanding cooperation between the real estate agencies here. It is proving to be a real value-add for both buyers & sellers, and it’s improving the quality of life among us real estate professionals. Prior to the Schmuggerdoo’s arrival I had sent their criteria to the other agencies in the area, who responded by sending links to listings on their websites that fit the criteria. Here is their criteria: (more…)
October 2, 2009
Kicking Tires in Paradise
April 22, 2009
Seller Options: Exclusive Listings
In my previous article I considered the workings of the standard Costa Rica real estate model – the Open Listing.. If you haven’t read it (and would like to) you can by clicking here.
I have been a bit negative about exclusive listings in the past. My attitude towards these is now changing and, if anything, I’d say I’m a bit positive towards them now – with caveats.
The Exclusive Listing is a hybrid business model between the existing Costa Rica non-MLS model, and the Multiple Listing Service model that so many are accustomed to in the U.S., Canada, and elsewhere. I have recently learned that England does not have an MLS and, get this, that Mississippi doesn’t have an MLS. The point about England came from a reliable source. The one about Mississippi was chit-chat. I did a cursory study of the Mississippi matter on the internet and found a little bit of information but it’s still unconfirmed.
Realtors in England are called “Estate Agents” and the term “Real Estate Agent” is looked down upon. The non-MLS model has been used forever in the UK and they are quite settled with it, thank you very much. In a single yard of a house for sale you can see numerous signs to the various agencies that have the property listed. The typical commission paid to an Estate Agent in the UK is 1.5%
The exclusive listing attempts to provide buyer/seller representation in the Costa Rica market place.
The Way it Works
You approach your favorite real estate agent. You give that agent the listing for your property. That agent then takes the full responsibility of marketing your property so that it receives the broadest possible exposure. Sounds good right? Well, it is, but…
(more…)
April 13, 2009
Costa Rica Property Seller Options
I have written about the nature of our marketplace and the listing options open to sellers. Its not a pretty site in this non-MLS (Multiple Listing Service) marketplace. The seller is confronted by the decision to personally market the property to each of the real estate agencies in the area (Open Listing), entrust one agency to the task (Exclusive Listing), or go it alone with a For Sale By Owner. Here are the pro’s and cons of the options.
Open Listing: this is the type of listing that is considered the norm here in the non MLS model. The seller walks into my office with a packet of information on their property. I ask a number of clarifying questions: access, water, electric, phone, Internet, view, privacy and of course, price. Provided the answers to these questions indicates that the property is sellable for what the seller has in mind price wise, we set up a time to go and view the property. We visit the property, take photos/videos and then the listing goes onto my website.
This generally pays 8% commission to my agency.
The seller then goes down the road to the next agency and does it again.
Pros of the Open Listing: The agencies are motivated by the full commission. Right now the inventories of the various agencies are ripe with great listings. When a prospective buyer comes into the office, or starts up a dialogue via e-mail about their search for property, the well-intentioned, but commission motivated agent is going to gravitate towards the full commission listings first. This is a weighty point that will not be fully dealt with until we have a fully functioning Multiple Listing Service here in Costa Rica.
If you think it through, the seller has no actual representation in the marketplace. For that matter, neither do the buyers. You’ve got seller, buyer, and a commissioned sales person in the middle trying to make a deal happen so that he/she gets paid. Not the best of business models, but it’s ours and somehow it works.
Cons of the Open Listing: (more…)
December 21, 2008
Help for Buyers and Sellers Takes a Big Step Forward
Imagine this: you are interested in buying a piece of property in Costa Rica’s southern zone, so you walk in to one of the real estate offices in say – Uvita. You consult for awhile with an agent there. (For the sake of this article, lets call him “Ben” 
) and off you go looking at properties that fit your interest. After looking at all that Ben has to show you, nothing strikes you as the right piece (hard to imagine, but it has happened a time or two).
So far not a lot of imagination has been required. Here’s where it gets a little more difficult.
Ben says: “how ‘bout we pop on down to this other agency, some competitors of mine down by Ojochal, and see what they’ve got” or “Let’s go on up to an office of my peers in Dominical that’s been around for years. They’ve probably got a few listings that I don’t that may be a perfect fit”.
I know – hard to imagine, but stay with me here.
Last Saturday marked the 2nd meeting of… well frankly I’m not sure what. I’m not being evasive – we actually don’t know what to call it: Costa Ballena Realty Board? Association of Real Estate Professionals? There were a few other names tossed about: Think Tank, Master Mind Group, Coffee Talk… whatever it ends up being, it holds the key to making the real estate buying and selling experience in our zone 10 times better than what it currently is. (I like “Unified Realty Professionals”. This could have the distinguished acronym URP which would be said something like – well, like ‘urp’ which would bring to mind the satisfied feeling one has having just enjoyed a good meal.)
Ojochal, Uvita, Dominical, Hatillo Platanillo and San Isidro are the towns that make up “The Zone”. There are numerous real estate agencies in these towns. Some with recognizable names from other parts of the globe such as Coldwell Banker, Century 21 etc… Then there are the “no namers” such as yours truly with Dominical Dot Biz Select Properties, and there are many such private label real estate companies.
The objective of the meeting was to improve our ability, as a unified and cooperative group, to serve people who want to either buy, or to sell property in our zone. This is a beautiful, and much needed thing.
The meeting was attended by the owners of Osa Tropical Estates (Ojochal), two of the Coldwell Banker partners in the Dominical office, The Land Company (Dominical) principal and myself (Uvita). We all have knowledge of all areas of The Zone, but have greater expertise in some areas over others.
Problems Identified:
It was agreed that the non-MLS (Multiple Listing Service) business model in Costa Rica makes it difficult for sellers and buyers. The core problem is the lack of REPRESENTATION available to our buyers and sellers.
Buyer’s Problems:
When a buyer spends a day or two with a single realtor looking at property, they are only seeing what that particular real estate agency has for listings. To really know that they have seen everything, a buyer would have to (more…)
May 26, 2008
A Day in the Life of a Costa Rica Real Estate Guy
A great example of how to go about buying a piece of land in Costa Rica
I thought that it might be interesting to catalogue the recent visit, well actually the current visit, of The Smiths. Their visit is very representative of what are perhaps the bulk of my presentations. From their upper budget limit of $200,000 for raw land, to their purpose for the purchase: they hope to relocate to Costa Rica in the coming years, a consideration of their experience will likely be a help to other who are looking to buy land in Costa Rica.
Using the Internet, Mr. Smith did the research on the Dominical and Uvita area real estate agencies and their listings. Mrs. Smith studied the geography of the area and what the various zones are called. They wrote to me asking for 3 references, which in fact isn’t so representative of what most prospective buyers do, but I think is a very smart idea.
To digress for a minute, all us real estate folks down here in Costa Rica are not licensed. There is no policed nor enforced procedure for buying land in Costa Rica. Consequently, (more…)
May 15, 2008
The Problems In Costa Rica Real Estate Caused By Not Having an MLS
I was out with a client the other day. We had set up the appointment via e-mail. I had helped with getting him set up with a car rental, and we had spoken extensively via phone regarding what he was looking for so that I could have a presentation ready for his arrival.
We met, and off we went to view property. On the way to the property, we realized that another real estate agency had already shown him the property. The client was distressed. “How does this work”? “What if I want to work with you”? “Whose listing is it anyway”?
Ah, the problems caused by not having a Multiple Listing Service in Costa Rica. I feel like I bump into them every time I turn around in this business here in this country.
I have noticed that it is especially difficult for real estate buyers and investors from the States to grasp how it works here. It does work… really. It’s simply an inferior system to the MLS based system in the States.
February 3, 2007
How To Do An Exclusive Property Listing In Costa Rica
Here are some possible services that can be offered to fill that gap.
1) Market the property to other agencies, allowing them to list the property as well. They will obviously get a share of the commission if they sell it. (I’ll deal with the possibilities presented by this option below).
2) Prominent Internet exposure. The agency can put the listing on their web site and feature it so that it gets better exposure than their non-exclusive listings.
3) Real World Advertising. Depending on the property, and the agency’s normal advertising program, an exclusive lister can request that their property be mentioned on any magazine, newspaper, or other type of non-electronic advertising.
4) Pay-per-click Internet advertising. This again depends on the value of the listing. Normally this type of extraordinary marketing would be for a luxury property to justify the expense to the listing agency. This is highly effective.
5) Signage on and off the property. Directional signs leading from the main road to the property as effective as sales tool as well, but can be limited by permissions in placing the signs.
More about #1:
The listing agency should promote the property to other agencies, doing that grunt part of the listing work that would normally be done by the seller themselves. In order to appeal more to the other agencies, a creative commission structure can help to stimulate things.
For instance: The listing agency could offer to pay a 6% commission to the selling agency, and keep 2% for the listing agency. Sellers should keep in mind though that doing an exclusive listing correctly is time and labor intensive on the part of the agency. Reducing the listing agent’s share may not be the best way to go about this. The seller wants the listing agency to be motivated to share the listing.
The lack of the MLS results in the real estate agents being accustomed to the full 8% flowing into their agency. So any deviation from this can have a negative effect. The ultimate marketing formula is for all agencies to receive the full 8% while still making it worth the listing agency’s while.
Obviously the seller can simply be willing to pay a 12% commission in the case of another office selling the property. Some might feel this to be a bit steep in the commission department though.
So what can a lister do that wants to have the benefit of the exclusive listing?
The listing agency should have in mind the standard and try to reach it’s level of efficacy in getting the property marketed and sold.
I suspect that some day we will have an MLS here in Costa Rica, but until then we will see a diverse mix of policies that vary from office to office of how best to serve the people and still have good business take place.
How to sell a property in Costa Rica
The absence of an MLS or Multiple Listing Service causes an interesting challenge for those that would like to sell a property in Costa Rica (I wonder how many articles I have started with those words). In the U.S. you simply list your property with your favorite real estate agency and voila! Your property is listed in a huge database of properties for your area that all of the real estate agencies have access to, and your property gets represented in the fullest way possible. You’ve got your listing agent that represents you, the buyer has his/her representation from their agent, and everybody’s happy. Not so in Costa Rica.
In Costa Rica when you tell your real estate agent about your listing, that is usually where it stays, within that agency. I have seen cases where agents don’t tell others in that very same agency about a hot listing. The reason for this is simple; they want the sale, and consequently, the whole commission. In Costa Rica real estate there is no “listing agent” and no “selling agent”. This difference seems to be really difficult for our North American clients and sellers to understand. Understanding the difference though, can make all the difference in successfully selling your property.
Setting the Standard
The standard for selling a property in Costa Rica is to get all of the real estate agencies to list and show your property. There are a number of ways to go about this. Perhaps the most common method is this: the property owner makes up a flyer that features a photo or photos of the property, along with the details of the property ie. size, distance from the main road, electrical service, water, any distinguishing features about the property such as creeks and waterfalls. The prevalence of wildlife is helpful as well. Describe the view and if its quiet or not. Is there financing? Is there a Home Owners Association (HOA)? Are there Covenants, Codes, & Restrictions (CC & Rs)? Oh, and the price as well.
Its not a bad idea to make a number of copies of this flyer and emplasticate them. It might be good to have 2 versions, one that has the seller’s contact information on it and one that doesn’t. The one that doesn’t will be more likely used in the office to present to property to prospective buyers.
The seller then visits all of the real estate offices, or the ones of their choice, and distributes these flyers. Then a regular visit, say on a monthly basis, is a good idea. This keeps the agents mindful of your property, and insures that all agents within the agency know about your property.
Most of the agencies will ask that you fill out a “Non-Exclusive Listing Agreement”. This document will give all the details of the listing, and will also state clearly the commission percentage so that there is no confusion at closing. 8% is the norm in Costa Rica’s southern zone for single family lots and houses. This can vary for farms and luxury properties.
Options You can give an exclusive listing to your brokerage. This sets things up as though there were an MLS in Costa Rica. What this means is that they become the listing broker, and that if the sale takes place during the term of the exclusive contract, the brokerage will receive a percentage of the sale, or all of it if they sell it in-house. The concern with this is that the exposure that your property gets on the market might be limited since your agency might decide to not tell the other real estate agencies about it.
I like to mention the standard so that we can use it as a – well, as a standard by which we measure the effectiveness of the other options. The Standard option above sets the bar and really represents the level of market exposure that can be achieved by an enterprising land seller in Costa Rica. It is against this standard that we need to compare all other marketing of a given piece of property.
Why would a seller want to do an exclusive?
The benefits are that, since we don’t have a multiple listing service here in Costa Rica, it takes a lot of feet-on-the-ground effort to keep the agencies mindful of the listing. To do the printouts, the initial visit to the agencies, subsequent visits, perhaps on a monthly basis, requires more than many land owners have to offer. Having a single point of contact here that does all of this for you is attractive to some sellers. Also, it may be that the seller has built up a trusting relationship with an agency and so would like to deal exclusively with them, effectively insulating the seller from the other agencies.
Why would an agency want an exclusive listing?
One might wonder at this question, thinking that the answer is obvious, but really its not so. As a real estate agent here for a number of years I can honestly say that I’m not real quick to offer to represent a property on an exclusive basis. It’s a lot of work. If I get the listing in a non-exclusive, general market sort of way, and I think that the property is a good one, I can probably sell it quickly to a client in my database, and get the whole commission without having to do any of that extra work. So, to answer the question: “because it might make good business sense”.
I might be in that “trusted” position with a client, in which case there is a certain sense of responsibility to continue to represent my client. If their desire is for me to market their property on an exclusive basis, I’m on it.
It also might make good financial sense to do the exclusive. With the exclusive listing, the listing agency is guaranteed a percentage of the sale, no matter who makes the sale.
The Objective
The objective then of the listing agent will be to make up the difference between the standard, and just having the listing in one house. To repeat: listing your property with an agency doesn’t guarantee that other agencies will know about the listing. There is a gap that the listing agency should try and fill with extraordinary marketing services.
My next article will deal with the mechanics of how to do a successful exclusive listing.
December 11, 2006
Am I seeing All There Is?
How can one be sure that they are seeing all of the possibilities that fit their real estate criterion?
There is no MLS here in Costa Rica. Its too bad. The MLS system in the US came about due to the needs of the customer, not the vendor of real estate. It truly is a superior system. But, having said that, all is not lost. One just needs to understand the Costa Rica system a bit and then make the best of it.
All of us real estate brokers want to have all of the available properties we can in our inventory. It is every agency for themself. So, we spend a good bit of our time driving around in the mountains and along the coast, scouring the countryside getting those oh-so-valuable listings. There is, as of this writing, a good amount of inventory in our portfolios. However, it is the good stuff that is getting scarce. A real estate agent here knows when he’s got a good thing. It is akin to falling off a log to sell a good listing here.
So, how can the land buyer feel that they are seeing whats out there? One is to be thorough with your web search. There are several really good Costa Rica real estate websites out there. Get familiar with the sizes and prices, what influences the value, and so on. Then, pick your agent.
I think that this is one of the more important steps, if not the most important. You want someone that is concerned about getting you your property. This is Costa Rica Real Estate, unencumbered by licensing and any sort of a qualification process. So the onus is on the buyer to be able to discern what is, in fact, going on. Understanding the system helps.
Since there is no MLS, the seller of a property will likely want to list their property with all of the real estate agencies. This is one of the inconveniences of our non-MLS system. The sellers have to manually make sure that all agencies know about their property and are up to date with pricing and availability, not to mention things like lot lines, water, electric and road systems for each property.
In the event that a seller doesn’t want to do all that, they may opt to give an exclusive listing to an agency. This is usually because they have had a good experience with the office, or more likely, with someone in the office. This may affect things a bit though since the seller will likely still want to spend the normal 8% commission on the sale of their property. So, it is conceivable that the other real estate agencies will be dis-incented to show a property that some other agency has an exclusive on. If they show you a property where they might only get half of what they would get by showing you another one, they/we might be tainted.
I would like to think that I am above all that, and maybe I am. But I suspect that all of us real estate agents down here in Costa Rica would say that we are. One would hope that their primary concern is getting the client the property that is right for them, regardless of how the commission is split up.
Once again, we come back around to the buyer using discernment. Although, this really is what we do throughout most of our days here on good ole Planet Earth. Costa Rica real estate isn’t the only arena that we are on the watch for those who are truly interested in our well being so that we can do business with them, and conversely, watching to avoid those that don’t seem like our welfare is all that important to them.
So to answer the question, I think that the way to feel that you are getting to see the options that could potentially be right for you, is to ally yourself with a real estate professional that works in the area that you are interested in, and that demonstrates an interest in your success here.
Real estate in Costa Rica is an ongoing process. Once the sale is made, it is frequently followed by a huge life change, that of re-locating. It is nice to feel that you’ve got an ally in the process.
October 14, 2004
About All Those Signs
There are two approaches to Dominical, well three actually if you count the approach from the south as though your trip originated in Panama. But most come in from the north, from San Jose. Coming down the coast is a lovely drive until you get just past Quepos where the road turns into what we like to call, “The Road From Hell”. It is still lovely mind you, but it is a car-breaking rough ride.
The other approach comes in from the PanAmerican highway. This is the main artery that connects Nicaragua to the north with Panama to the south. You take it south out of San Jose until you get to Costa Rica’s southern zone commercial center of San Isidro de Perez Zeledon, or San Isidro de el General. Don’t ask me why places here have more than one name, they just do. Anyway, you turn right at San Isidro and drive on down to Dominical. As one passes through the breathtakingly gorgeous mountains that ultimately drop down to the sea, one starts to notice the prevalence of real estate signs, and one starts to think, “is everything for sale here”? In a sense the answer to that question is “yes” but then not. It has well been said that everything has a price. Everything is for sale in that sense. Little by little the real estate in Costa Rica is getting owners that are reluctant to sell at almost any price. So then the question is, what is the deal with all those signs?
In the USA, a realtor’s sign on a property means that realtor is the listing agent for the property. Here it does not mean that, except in very rare cases. What it does mean is that realtor asked that property owner for permission to put a sign on his property as advertisement. That is why some properties may actually have more than one sign. Real estate in Costa Rica is sold in a very different way than what one has grown accustomed to in the US. Since there is no MLS (Multiple Listing Service) in Costa Rica, it is essentially, every realtor for himself. Everybody has the same inventory, provided they have gone out and beat the bushes, so to speak, to get the listings, and then all of the commission flows to the selling office, since there is no listing agent.
So what does this mean to prospectors coming to the Dominical area to purchase properties? If you see a property that you like, and it has a sign on it, you can call or visit that realtor. Or, you can visit any realtor you like and inquire about that property since it really doesn’t matter who you talk to about the property. Everybody is equal in their ability to sell a given property in Costa Rica. I suggest that the important thing for the prospective buyer is that they find a real estate agent that they feel comfortable with, and that indicates a clear adherence to good honest business practices.
So, as one approaches Dominical, there is abundant evidence of a “land rush” going on, real estate signs are everywhere. Granted, there are numerous signs announcing car rentals, lodgings, banks and more, the area is booming. Nonetheless, the realtors win the prize for being the most zealous of sign posters. If indeed this were to indicate anything other than advertising, one would conclude when they finally arrive from their long journey, that Dominical itself belongs to a real estate company. As one drives into town, past the “Welcome To Dominical” sign that features an oh-so-discreet realtor’s logo along it’s bottom edge.
