Guys In The Zone: Costa Rica Real Estate

This series of articles is all about selling a property in Costa Rica.

Decide what the marketing fee will be.

• Part 1 dealt with the most common type of listing that sellers use in Costa Rica: the Open Listing.
• Part 2 discussed how agencies here in The Zone imitate the MLS (Multiple Listing Service) of the U. S. and other countries by offering Exclusive listings.

Now here, in Part 3, we are going to discuss an un-orthodox approach to selling a property in Costa Rica’s non-MLS marketplace. The incentive for doing this is the weaknesses, or flaws that were reviewed in Part 2 of our attempts to imitate the MLS of other countries.
I have been working in real estate here in Costa Rica’s southern pacific zone for years, and have always felt that the exclusive listing was a nearly sacred thing. It puts a tremendous responsibility on the agency that has the exclusive, but is also demanding on all of the agencies in that they must ignore the fact that the commission on this property is shared, when the majority of properties in their inventory are not.

I have been scratching and thinking about this topic and here is what I’ve come up with.

The Real Estate Agency’s Objective:
What we want to do is offer to sellers a better service, and in the process improve the professionalism of our industry. This is particularly appropriate when Continue Reading

If you haven’t read Part 1 of this topic yet, you might want to. You can do so by clicking here.  You don’t have to if you don’t want to.  This article stands up fine all by itself.  However, to get a good understanding of the open listing, which is the most common type of listing here in Costa Rica, you’ll probably want to.  All right?

The quandary of how to best sell a property in Costa Rica

When we last visited, we were left with the cliff hanger – “what is a seller to do if they don’t live in Costa Rica?”  The absentee owners don’t have time to go to each real estate agency and distribute photos, write-up, survey and contract with every real estate agency.  This could really mess up a family vacation.  Not to mention the follow-up-regular-visits to see how it’s going with showings of the listing.

Before going into that and satisfying the “edge of your seat” drama that I have created here with this compelling topic, I’d like to give you a glimpse inside the mind of this Costa Rica real estate agent and share with you an alternate option to what has been the standard practice in Costa Rica for the exclusive listing of a property.

We have always known that the MLS (Multiple Listing Service) market place of the US is superior to the Costa Rica open listing model.  In our (Zone real estate agencies) efforts to improve our market, and to offer a better service to both buyer and seller, we have defaulted to imitating the MLS market place, without having an actual MLS.  The reasoning is simple: the MLS is a superior model that has evolved over time in response to gazillions of problems and concerns and has resulted in what we see there now: a mature business model that offers representation to both buyer and seller of a given piece of property.  So, we try and come as close to working like and MLS without having the actual infrastructure of an MLS.

For various reasons, I’m starting to think that this premise might be flawed.  AND it may be that, if we think outside of this box we’re in here, we might even come up with a solution that rivals, or perhaps (could it be?!?) even exceeds the MLS model of other countries.  Bear with me here.

How Costa Rica imitates the MLS model… Continue Reading

Rod being attentive at the Camara de Bienes Raices course in San Jose Costa Rica.

The Guys just got themselves certified!  Rod & I are now card carrying Costa Rica real estate agents.  Imagine that.

I know – you’re saying: “I didn’t know that there was such a thing”. Well, in fact there isn’t, yet, but there is about to be, and so we have joined a number of our peers in anticipating the coming change to the U. S. (and elsewhere) model of licensing for real estate agents.

The organization is called CBR or “Camara de Bienes Raices” (Chamber of Real Estate).  Perhaps you’ve seen the CBR logo around on various websites. You’ll be seeing it on ours as well now.  It is a 4 day course of 8 hours a day.  We did it, enjoyed it (for the most part – butts are a little sore.), met & networked with lots of people and now feel just that much more entrenched with our chosen industry in Costa Rica.

CBR has proposed a law that they feel will become adopted this year of required licensing of Costa Rica real estate agents.  Our position is that this will be Continue Reading

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: Continue Reading

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.

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…
Continue Reading

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: Continue Reading

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 Continue Reading

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, Continue Reading

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.

Continue Reading

This is the continuation of an earlier article on How To Sell A Property In Costa Rica.  That article left off with the statement: “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.”

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.