Current market info written by CR Beach agent Colin, to a Seller, who is now more motivated!
The owner of a home in Jaco that has been for sale under another agency's " Exclusive" agreement for more than 3 years, without success, asked Colin about current market conditions and how we could help her sell her home now that she is highly motivated. I thought this would be good to share with you all. The home had been rented most of the time, but now she really wants to sell. This is what CR Beach agent Colin Miller wrote to her on August 21, 2012, with a few extra comments by me, Jeff-owner/broker CR Beach.
a. The market is currently a Buyer’s Market, most owners here in CR paid cash for their properties and so there are not many foreclosures. However, savvy Buyers (mainly Americans and Canadians) know, or at least want to be under the impression, that they are getting a FIRESALE or a very large discount off of a property that formerly had been priced in a speculative, booming, pre-crash market.
Also, we know we are competing with other USA markets as well. We may have a Seller wanting to sell their property here to leverage a great deal in the USA, or Buyers weighing options in places like discounted Florida beach inventory vs. Costa Rica. For Sellers, it's no longer a matter of reducing the price 20% off of the ¨Speculation Era Price¨, but rather a 10-20% off the readjusted current ¨Buyers Market Price¨ or even 10 to 20% off the total amount invested in the property. Some Sellers are willing to do this as they have plans to take a loss of 20% and then go buy something thats' reduced 30% to 70% in the U.S. or buy something else in Costa Rica thats reduced 25% or more.
b. OWNER FINANCING is a good option that many Buyers are taking advantage of; most owners want half down in cash, and will carry the rest for three to five years with a balloon at interest rates varying from 5% to 8%. Property/Title is held in a Guaranteed Trust until property is paid off. This extremely protective trust option makes it much easier (cheaper-faster) for the owner to foreclose on the Buyer if the Buyer does not honor the contract. If you are a Seller, why not offer owner financing at 5% instead of having your money sitting in a bank earning one percent or less?
c. PRICE MOTIVATION. If the price you have has not generated a sale at this point, you will need to think about your level of motivation and reduce your price based on that level of motivation. You'll need to consider investing more money in "curb appeal" and see if there are improvements that can be made for small amounts
of money and time invested.
Buyers will never want to buy a property and inherit problems, be it legal issues, construction problems, unsightly finishes, damage to the home, neglect, unkempt and unsightly yards, etc. especially in a foreign country where Buyers may not have a network of people or resources to remedy the problems. Logically, the Seller must do thier part to deliver a property that has been taken care of and in excellent condition. If not, expect Buyers to lower thier asking price even further.
Additionally, a good agent will inform both Buyer and Seller of "comps" for similar properties in this market area so we can help price a property more accurately.
d. Sellers, PAY ATTENTION! EXCLUSIVE vs. NON EXCLUSIVE Listing agreements. What to do?. Many real estate agencies here in CR automatically ask Sellers for an Exclusive Contract. An unscrupulous agent may make promises to post your property on the Costa Rica MLS (Multiple Listing Service), even there is no USA type of MLS system in place in CR. Exclusivie listing contracts in the USA relies on the MLS in order to function! The MLS creates the role of exclusive listing agent and buyers agent. In CR, many agents act as both. The agent that asks for an exclusive and states that they need it to post on the ¨Costa Rica MLS¨ may conveniently fail to mention this to you and instead rely on your ignorance as you sign an exclusive. Remember, do not operate under the assumption that laws here for realtors are the same as your home country.
Without the strong participation by all licensed real estate agencies working in conjunction with the Costa Rica government to create and use a bona fide MLS; and without strong national legislation demanding that real estate agents be educated and licensed, what we currently have as MLS in Costa Rica are some private companies who have websites that attempt to call themselves, a Costa Rica MLS. These sites have no government backing, no realtor unions on board, and as a result very few enforceable contracts and rules and regulations. Furthermore, most properties in Costa Rica have no numeric address or street location! Good luck with an effective MLS!
Thankfully, the laws in CR regarding ownership and transfer of property give you the same right as the President of Costa Rica to own fee simple property, that has always been a major attraction to foreign investment. But the laws here are very lax regarding the real estate industry. The problem is compounded by the fact that anyone can sell real estate here in Costa Rica: taxi drivers, tour guides, bartenders, backpackers, surfers on holiday, etc.
The difference between the U.S. real estate transaction and Costa Rica transactions is that more power rests with the attorneys to provide the legal framework. The Costa Rica real estate "profession" is evolving and we expect strong legislation in the near future.
I know that the policy with some of our competitors is to always ask for the exclusive and only list exclusives, even before listening to the all the facts about the property, doing a purchase price analysis, actually visiting the property, and some don’t even bother to remove the other agencies sign or take new pictures !
Many Sellers that have granted "Exclusives" have told us that they were not even aware that they had signed
an exclusive agreement. They weren't aware that it was possible to terminate the agreement before the time frame was up. We have seen some agents totally misrepresent the Sellers' property, and then when the Seller wanted to terminate the "exclusive" they were told, "sorry, that´s impossible."
Some agents exhibit a "knee jerk reaction" (based on greed, blind policy, etc) to ask for the exclusive and then do nothing except put it on the website and wait and see what happens.
Why give an exclusive without checking:
1. The agencies website, do they update it regularly? Are there listings there
for properties that sold 4 years ago or developments that never got built?
2. Do they have an office? a Secretary/Receptionist? An 800-toll free number?
3. How long have the Agents been in Costa Rica? Are they legal residents?
4. Search engine position-can potential. Can buyers find the website easily?
5. The advertising plan or ideas on how that agency will market your property-
OVER AND ABOVE just sticking it on the website?
6. How quickly your emails are answered, or your phone calls returned?
The biggest complaint we hear about other agencies is the failure to communicate.
If an agency is interested enough and confident enough to ask for the "Exclusive" they should check out on all of these points and more.
e. COMPS in your area.
If your next door neighbor had his home on the market at $299K for months with various agencies, down from an original asking price in the $350K range, and its very similar to your home, then we need to do things differently. Either starting at a lower price or by offering owner financing. We need to position your home to be the one that sells first!
These are some current thoughts we have regarding how we may assist you with the sale of your property.
To contact us, please call toll free from the U.S. or Canada: 888-782-1119 or locally 2643-4334, 2643-3672.