The Ultimate Guide to Selling Real Estate in Costa Rica: Seller’s Checklist

Costa Rica, with its stunning beaches, lush rainforests, and laid-back lifestyle, has long been a sought-after destination for property buyers from around the world. However, selling real estate in this tropical paradise comes with its own set of challenges and nuances. Whether you're a longtime resident looking to downsize or an investor ready to cash in on your Costa Rican property, this comprehensive guide will walk you through the essential steps and strategies to ensure a successful sale.

Pricing Your Property Right

One of the most crucial aspects of selling real estate in Costa Rica is setting the right price. Many properties in the country are overpriced and end up sitting on the market for years, which can send a negative message to potential buyers. Here are some key points to consider when pricing your property:

1. Listen to your agent's advice: A reputable local real estate agent with experience in your specific area can provide invaluable insights into current market conditions and comparable property values.
2. Research recent sales: Look at similar properties that have sold recently in your area to get a realistic idea of what buyers are willing to pay.
3. Be realistic: It's natural to have an emotional attachment to your property, but try to view it objectively. Overpricing can lead to prolonged time on the market, which may ultimately result in a lower final sale price.
4. Factor in room for negotiation: Do not set a “firm” price. Most properties sell at 5-10% discount off the asking price as long as it’s within the market and Costa Rican buyers expect some wiggle room in the price.
5. Consider seller financing: In some cases, offering seller financing can expand your pool of potential buyers. Discuss several ways to secure your interest with us while offering financing to your buyers.

Remember, pricing your property correctly from the start can lead to a quicker sale and potentially better offers.

Preparing Your Property for Sale

First impressions matter, especially in the competitive Costa Rican real estate market. Here's how to make your property stand out:

Staging and Getting Ready

1. Finish unfinished projects: Complete any half-done renovations or repairs. Buyers want to see a move-in ready property.
2. Declutter and deep clean: Remove excess furniture, personal items and photos. A clutter-free space looks bigger and allows potential buyers to envision themselves living there.
3. Neutralize odors: Be mindful of any lingering smells from pets, cooking, or smoke. Many buyers are sensitive to odors, which can be a dealbreaker.
4. Fresh paint: A new coat of paint can work wonders in freshening up your property. Stick to neutral colors that appeal to a wide range of tastes.
5. Enhance curb appeal: First impressions start outside. Invest in landscaping, add some colorful plants, and ensure the exterior of your property looks well-maintained.
6. Showcase the indoor/outdoor lifestyle: If you have outdoor living spaces, make sure they're properly staged to highlight the coveted Costa Rican lifestyle.
7. Create privacy: Many buyers value privacy. Consider strategic landscaping or other features that enhance the sense of seclusion.
8. Pool maintenance: If your property has a pool, ensure it's clean, well-maintained, and free of debris.
9. Vacant Land: For land sales it’s best to have the corners marked and the property cleared so the buyers can easily walk it

Mechanical and Practical Considerations

1. Address minor repairs: Fix leaky faucets, squeaky doors, electric outlets/switches, and other small issues that might catch a buyer's attention.
2. Prepare an inventory: As most homes come fully furnished and equipped in this region, create a detailed list of items excluded from the sale and do not deviate from it. This prevents misunderstandings later in the process.
3. Document important information: Compile a list of key information about the property, including:
   • Locations of main water valves, power switches, and breaker boxes
   • Septic tank details and maintenance history
   • Instructions for security systems, electric gates, and other unique features

By addressing these aspects, you'll present a property that's not only visually appealing but also practically sound, as buyers here want a vacation home where all is set for them to enjoy the Pura Vida lifestyle.

Legal Considerations and Documentation

Selling property in Costa Rica involves several legal requirements and documents. Being prepared can help streamline the process and instill confidence in potential buyers. Here's what you need to have ready:

1. Corporate documents: If your property is held in a corporation (common in Costa Rica), ensure all corporate taxes are paid and books and declarations are up to date.
2. Tax compliance: Verify that all relevant taxes are current, including:
   • Luxury tax (if applicable) – most higher end homes are accessed a luxury tax and buyer’s attorney will need to verify that all is up to date. Best to get ahead of this prior to the sale as this may delay the sale.
   • Property tax – should be prorated at closing
   • Any applicable capital gains tax that may be due upon the sale (consult with your accountant and attorney) – know if applicable and how it will be handled after the closing.
3. HOA documentation: If your property is part of a homeowners association, have the following ready:
   • HOA rules and regulations
   • Recent meeting minutes
   • Current budget information
   • Proof that your HOA fees are up to date
4. Power of Attorney (POA): If you plan to be absent during any part of the sales process, ensure you have a valid POA in place. Best is to have the buyer’s attorney to review your POA to ensure it will work for this closing.
5. Utility accounts: Have all utility bills up to date and account information ready for buyer’s attorney’s review. These should be prorated at closing.
6. Building permits: Ensure all construction permits are in order and available for review.
7. Plano catastro: This official survey plan should be current and accurately reflect your property's boundaries.
8. Construction plans: If available, have the original construction plans ready for the buyer's review.
9. Employee/contractor information: If you have any employees or regular contractors associated with the property, be prepared to address their status before closing and have contact information to forward to new buyer.
10. Rental information: If the property has any future rental bookings, have this information available. Be prepared to cancel future bookings if buyers are not willing to take them over. If the property is currently rented ensure that your renters will cooperate with the showings. You may need to give them an incentive e.g. lower rent, flexible move out terms, etc. If the buyer is taking over the rentals, any deposits or future rents collected will be accounted for at closing.
11. Mortgage details: If there's an existing mortgage on the property, have the current balance and lender information ready.
12. Water and land use permits: For vacant land sales, obtain a current water availability letter and "Uso de Suelo" (land use permit).

Having these documents organized and readily available not only demonstrates your seriousness as a seller but also helps to expedite the due diligence process once you have an interested buyer.

Marketing Your Property

Effective marketing is crucial to attracting the right buyers in the Costa Rican market. Here are some strategies to consider:

1. Choose the right agent: Partner with a reputable real estate agent who has experience with properties similar to yours and can provide comprehensive marketing services.
2. High-quality photos and videos: Professional photography and videography is important to showcase your property's best features. Consider drone footage for larger properties or those with impressive views. When partnering with an agent they usually cover this service.
3. Online presence: Ensure your property is listed on popular real estate websites, both local and international. Your agent should have a strong online marketing strategy.
4. Social media marketing: Leverage platforms like Youtube, Instagram and Facebook to reach potential buyers and showcase the lifestyle associated with your property.
5. Network marketing: Costa Rica's real estate market often relies on word-of-mouth. Encourage your agent to network with other local agents and potential buyers. Tell them to share the marketing materials with all agents to feature on other agencies’ websites.
6. Highlight unique features: Whether it's sustainable design elements, proximity to amenities, or breathtaking views, make sure your marketing emphasizes what makes your property special in the Costa Rican context.

Handling Showings and Negotiations

Once your property is on the market, be prepared for showings and potential offers. Here's how to navigate this phase:

1. Be flexible with showings: Many potential buyers in Costa Rica are on vacation and may request last-minute viewings. Try to accommodate these requests whenever possible.
2. Do Not Be Present during showings: Allow potential buyers to view the property without your presence. This helps them feel more comfortable and allows them to envision themselves in the space.
3. Prepare for multiple visits: Serious buyers often want to see a property multiple times before making an offer. Be patient and accommodating with these requests.
4. Negotiate wisely: When you receive an offer, be prepared to negotiate. Consider not just the price, but also other terms like the closing timeline or included furnishings.
5. Be responsive: Quick responses to offers and questions can keep the momentum going and show buyers you're serious about selling.

Remember, selling a property in Costa Rica often involves buyers who are making a significant decision to purchase in a foreign country. Patience and flexibility can go a long way in securing a successful sale.

The Closing Process

Once you've accepted an offer, the closing process begins. Here's what to expect:

1. Deposit and due diligence: Typically, the buyer will place a 10% deposit in escrow within 7-10 days of the offer acceptance. The due diligence period usually lasts 21-30 days, during which the buyer may conduct inspections (home inspection, survey/topography, additional physical inspection by buyer and/or their contractor, detailed inventory, etc.) and their attorney will review all property documentation.
2. Addressing issues: If any issues arise during inspections, be prepared to negotiate repairs or price adjustments. Alternatively, you may choose to address these issues yourself before closing.
3. Finalizing details: Work with your attorney to ensure all necessary paperwork is in order. Forward information regarding utilities, taxes, HOA, rentals, mortgage, corporate documents (if applicable), building plans, etc.
4. Closing timeline: The usual closing period is 30-45 days after the offer is accepted, but be prepared for potential delays. Flexibility is key, as paperwork can sometimes take longer than expected in Costa Rica. Ensure the property is looked after during this time if you are not living in it.
5. Closing day: On the day of closing, you'll need to either be present or have a valid Power of Attorney in place. Your attorney will represent your interests during this process. It’s common for the buyer to have the final pre-closing inspection. All keys and remotes will need to be handed over, and the home needs to be vacated and cleaned prior to closing. The escrow will disburse the final proceeds to the bank account you provide. Depending on where the escrow account is and where it is being sent, it can take up to 1-2 days to receive the funds (e.g. USA and Costa Rica).
6. Post-closing tasks: After the sale is complete, remember to cancel any ongoing services like TV/internet, and ensure utilities are transferred to the new owner. Your attorney may need to close off the corporation that held the real estate asset.
7. Holdback: It is common for the buyer to ask for a small holdback (e.g. $1,000 for 30 days) to cover any outstanding amounts that weren’t discovered during the due diligence. Keep an eye on this amount and ask for a refund when time comes. In some cases longer holdbacks are requested (e.g. potential luxury tax liability, upcoming assessment, etc).

Understanding the Costs of Selling

When selling property in Costa Rica, it's important to be aware of the associated costs:

1. Real estate commission: Typically 6% plus IVA (13% sales tax) of the purchase price, split between the buyer's and seller's agents. In some cases, particularly for remote or hard-to-sell properties, this may increase to 8-10%.
2. Closing costs: In the Papagayo and Gold Coast region, the buyer normally pays all closing fees (around 4.5-5% of the purchase price). However, be prepared for the possibility of splitting some of these costs in some cases.
3. Legal fees: Your attorney's fees will vary depending on the complexity of the transaction. It's best to discuss this upfront with your chosen legal representative.
4. Capital gains tax: Consult with your accountant and attorney to determine if this applies to your sale and how it will be handled.
5. Mortgage discharge fees: If you have an existing mortgage, there may be fees associated with discharging it at closing.
6. Outstanding amounts: Any unpaid utilities, bills, assessments, etc. will need to be settled at closing.

Understanding these costs upfront will help you set realistic expectations for your net proceeds from the sale.

Special Considerations for Costa Rica

Selling property in Costa Rica comes with some unique considerations:

1. Seasonal market: Be aware that the real estate market in Costa Rica can be seasonal, with more activity during the dry season (December to April) when more tourists and potential buyers visit.
2. Cultural differences: Be prepared for a potentially different pace of business and communication style than you might be used to in your home country.
3. Language barriers: While many real estate transactions in tourist areas are conducted in English, having a bilingual agent and attorney is crucial. All final documents (e.g. deed) is in Spanish, and the attorney will read it out in both languages during the closing if needed.
4. Legal system: Costa Rica's legal system may differ from what you're accustomed to. Always work with a reputable local attorney who specializes in real estate transactions.
5. Environmental considerations: Costa Rica places a high value on environmental protection. Be prepared to address any environmental impacts or conservation efforts related to your property.
6. Expat community: Leverage the expat community for networking and word-of-mouth marketing. Many buyers are introduced to properties through friends or acquaintances who already live in Costa Rica.

By keeping these factors in mind, you'll be better prepared to navigate the unique aspects of selling real estate in Costa Rica.

In conclusion, selling property in Costa Rica can be a rewarding experience when approached with the right preparation and mindset. By pricing your property correctly, preparing it thoughtfully for sale, understanding the legal requirements, marketing effectively, and navigating the closing process with patience, you'll be well-positioned for a successful transaction. Remember to work with experienced local professionals like Tony and Anna Velez, who can guide you through the nuances of the Costa Rican real estate market, and always be prepared for the unexpected. With its natural beauty and growing appeal to international buyers, Costa Rica offers exciting opportunities for property sellers who approach the market with knowledge and realistic expectations.