Buying a Property in Costa Rica - How Long Does It Take to Complete?
The process for finding and purchasing a property in Costa Rica can be a little longer than you may be accustomed to— especially when beginning your search from outside of the country. These days that search usually begins by searching the internet to see what is available and the price points for the different types of property in Costa Rica. If you are at this point, then you probably have heard from someone or seen something on social media about the possible destinations within Costa Rica. Connecting with a professional real estate agent is another way to determine what is available in the part of Costa Rica you may be interested in. This is probably the best way to discover what properties are available and in the price range you have established for yourself. The relationship you build with your real estate agent will allow you to obtain all the information you need to decide what is best for YOU!
Choosing your Real Estate Agent (1-30 days)
There doesn’t appear to be a ‘hard and fast method’ for choosing an agent. We highly recommend spending time researching the different agencies in the region. Because a realtor plays a critical role in a real estate transaction. Read more about the realtor's role in our previous blog. It is very important that buyers can trust their real estate agent, so we recommend vetting anyone you are looking to establish a relationship with to ensure that they are diligent, competent and honest. Ask for references from friends, neighbors, or others you’ve met and like in the area. Look to hire someone local who has intimate knowledge of the area in which you want to buy property in Costa Rica. Here are some questions to ask:
How long have you been in the business and in Costa Rica?
Is real estate your full-time job?
Is the Real Estate company and Broker licensed with the country’s authorities?
Can I please see some of your references?
Researching Potential Houses and Properties (3 weeks)
Thanks to the many uses of the internet, the process of searching for property in Costa Rica has become much more streamlined. With websites such as www.c21BallenaProperties.com buyers can often create a short list of properties they are interested in.
Because there is no official MLS in Costa Rica, it is difficult to search in the entire country, and even somewhat difficult to search the local area you are interested in. Real estate companies with recognizable brand names like C21, will have a large majority of the listings in the region on their websites. Our goal is to keep up-to-date on all the properties that are currently available in the area at all times.
With a good realtor, you should be able to give them your search parameters and obtain property portfolios and refined suggestions, better than what you might have received by searching on your own. But first, it is a good idea to spend time breaking up your housing criteria into needs, wants and desires. Find out what you can’t live without (your needs), what amenities might be nice to have (your wants), and what amenities would be absolutely wonderful if you can find them (your desires). Spend time with yourself and your family doing research and discussing options. Be prepared to revise your criteria after learning what’s available on the market and within your budget. You may already know what you want from previous experience. This is where a good realtor comes into play. They can help you to discover everything that is valuable to you about the area and the current real estate market.
Find a house and make an offer (time frame varies)
After your initial meeting with a realtor, you will receive a number of listings that meet your criteria. If you are not in the country, now is the time to start planning your trip to Costa Rica in order to view properties. It is best to come to Costa Rica, as soon as you find a few options that look interesting; especially if you see something that you might really love. Buyers are visiting our region of Costa Rica all throughout the year and well-priced or sought-after listings are often sold within a few months.
Once a buyer finds a property that they really love, the process moves more quickly. A “Letter of Intent / Offer to Purchase” is written and signed by the Buyer, and the Realtor will present the offer to the Seller. At this point, the Seller has three options: accept, reject or counter. Things that are often negotiated are the closing timeframe, closing costs, the results of inspections, and, of course, the price.
Opening an escrow account in Costa Rica is a very important and necessary step when it comes to moving funds into the country. Costa Rica is a complaint country when it comes to the world’s financial transparency laws, and opening an escrow account guarantees the transfer of funds without delays or further scrutiny. It is also a key component and clause in the “Sales and Purchase Agreement”, which is signed after the “Letter of Intent / Offer to Purchase” has been negotiated and agreed upon.
Opening an escrow account has special paperwork requirement that involves a detailed procedure that your trusted agent can help you prepare for prior to this stage. To complete the “Sales and Purchase Agreement,” the negotiated 10% deposit stipulated in the agreement is made into this escrow account. The balance of funds, due on the day of closing, can also be forwarded through the escrow account.
Completing the due diligence process (30 – 45 days)
Due diligence is a mandatory component of the “Sales and Purchase” agreement and is performed on any property prior to closing the sale. The purpose of the due diligence process is to do a thorough inspection of a property, both physically and through clarification of registered ownership documents at the Costa Rican Registro Nacional. In a home sale, this will include plumbing, electrical, foundation, and roof integrity, to name a few. On an undeveloped property, you will want to get a soil test, check for water, check if utilities are set up, and guarantee that you can easily get a construction permit. All types of properties (both homes and land purchases) require boundary verifications to be completed.
A home inspection typically takes a few hours. However, getting the inspector to the property can take a few days. Most real estate agents can recommend an inspector with whom they work frequently and trust with their clients. It is up to you to make sure that you choose a realtor who you can trust; who will set you up with the right relationships to make your Costa Rica property purchase a wonderful success.
The due diligence process will also include ensuring that detailed research on the corporation holding the property is verified and that the corporate structure does not have financial or legal encumbrances that could hinder the sale.
Closing the purchase (1 week)
Once due diligence is accepted, the rest of the money is deposited into escrow. Roughly a week later (5 business days) both parties will meet at the lawyer’s office to sign the final documents and the purchase can close. If for some reason you cannot be in the country to sign the legal documents; you can grant “Special Power of Attorney” for someone to sign in your place. Realtors and lawyers frequently perform these roles.
Congratulations! You are now the proud title holder of your own piece of paradise in Costa Rica!!
For more information about the process of buying or selling a property in Costa Rica, we recommend reading our previous blog.