House Hunting in Costa Rica!

Costa Rica has become a hotbed for Americans buying second homes.

The appeal of a country where locals greet you with “Pura Vida” (“simple life” or “pure life”) is immediately apparent. It is a magnificent country famous for its world-class surfing, rain forests, jungles, reserves and national parks. Thirty-five wildlife refuges protect more than twenty-five percent of Costa Rica’s territory.

All countries have negatives. I encountered one of the downsides of Costa Rica on this trip. A few minutes short of my alarm going off Tuesday morning, my bed suddenly felt like a waterbed. Since I knew there was an earthquake here on November 12, I figured I was dreaming about earthquakes.

But later that day I thought maybe that earthquake in my dream was a real one. So I googled, “Was there an earthquake in Costa Rica today?” Answer: “Magnitude 4.2 Earthquake 34 km from Puntarenas Province this morning.”

Whoa, my first earthquake!

Areas of Focus for Vacation Home

My buddy, Dan, and I, have been scouting properties in Puntarenas province hoping to buy a home here for about a year. The region is best known for its beautiful landscapes and laid-back lifestyle; hence, they say “Pura Vida” like we say “howdy” in Texas.

Puntarenas is in the western part of the country. It’s the southernmost province and covers much of Costa Rica’s Pacific Ocean coast.

To get here, we fly into San Jose International (SJO), then rent a car and drive south to Jaco (90 minutes from airport), Playa Hermosa (100 minutes from airport) and Quepos (150 minutes from airport)—all three are tourist destinations.

Manuel Antonio, 10-mins drive from Quepos, has the most visited national park in Costa Rica due to its white sand beaches and evergreen forest.

Jaco and Playa Hermosa are better known for surfing.

Searching for a Tico (Costa Rican) House

We met a real estate agent at his Keller Williams office, located on the main street in Jaco. It would be our first day of many house hunting expeditions.

Here was our criteria for buying a vacation home in Costa Rica:

• Located in Jaco, Playa Hermosa or Quepos
• Prefer a nice view (jungle, mountains, ocean)
• Biking distance to the beach
• Solid rental income potential
• $200,000 budget

Although we explained to the agent that our budget was around $200,000, he insisted on showing us properties listed at over $360,000. He knew of many “motivated sellers,” he said.

We started in Playa Hermosa, a sleepy surfer’s town 10 minutes from Jaco. There was an unpaved tree-lined road leading to the first neighborhood called Opera Salvaje. The area felt like a suburban jungle—lush green landscaping, sounds of insects chirping, and the faint smell of mud. You can barely hear a waterfall splashing off rocks in the distance when it’s quiet.

Every street in the neighborhood had at least one house for sale, which was cause for concern. I asked Bob why so many “For Sale” signs.

But Bob had an uncanny ability to ignore my questions. I had to repeat myself many times for him to acknowledge me. Then he would dodge. Not a good sign.

Listening to customers wasn’t Bob’s strong suit. No way I could do business with him. Imagine an accountant who doesn’t like numbers. Or a lifeguard who can’t swim.

Market Value of Houses in Costa Rica

Costa Rica doesn’t have a Multiple Listing Service; therefore, arriving at the market value of a property is hard, if not impossible. Without a database of sales data for the public or real estate agents to access, a house becomes absolutely worth the price someone will pay for it.

Unscrupulous Costa Rican real estate agents take advantage of the situation. They tend to show houses above a prospective buyer’s price range in hopes of selling a more expensive house; thereby, earning a higher commission.

We also looked at houses in the town of Jaco that first day. Bob would encourage (pressure) us to make an offer on any house we asked a question about.

I’d say, “Ok. The asking price is $360,000. What should we offer?”

His response, “Let’s put the offer in at $315,000, and see what happens.”

So I’d say, “Ok. Why $315,000?” And he would “dance.”

Another time he said, “Well, since I had the house listed down the street at $1.2 million and I think it sold for $1.05 million (as if that information is somehow relevant)…” Bob works for sellers. We fired Bob.

How Costa Rica is like The Wild West

The residential real estate business in Costa Rica resembles that of the United States in the 1980s before Buyer Agency Laws. At that time, American real estate brokers represented only sellers. Fortunately, we’ve since adopted stringent Buyer Agency laws in America. Agency laws vary state-by-state, but they’re arguably the best consumer protection laws ever devised by state legislatures.

Most real estate professionals in Costa Rica work for the seller by default since there are no Buyer Agency laws. Randomly find a real estate agent on the Internet and you’ll likely be steered toward listings offered by the listing agent’s brokerage. Since the listing agent’s allegiance is to the seller, he or she may not be forthcoming with important information, such as how long the property has been on the market, or whether the house is $100,000 overpriced.

It’s critical to find an agent you like and trust when shopping for a house in Costa Rica. Find someone who is honest and willing to work on your behalf.

A good Real Estate Agent is worth his weight in Bitcoin

Fortunately, after firing our first agent, we found someone we liked who offices in Quepos. He’s reputable, trustworthy and patient. He and his business partner have showed us properties on multiple trips to Puntarenas over the past year.

We knew we could trust him when he said that many homes in Puntarenas province are overpriced. As he says it, “Sellers often list their houses with the belief that an international ‘sucker’ is born every day.” He said it isn’t uncommon for inventory in places like Jaco, Playa Hermosa & Quepos, to sit on the market for 18-24 months.

There’s a lesson in there. Don’t be the sucker who falls in love with a house, overpays and perpetuates gringo stereotypes. Get a good real estate agent.

Best Time of Year to Visit Costa Rica

Neither of us plan to live in Costa Rica full-time. Ideally, we’d use the house only during “low season” (May – October), locally known as “green season,” a tourism-industry euphemism for rainy months. In the rainy months, there’s usually sunny weather in the morning, followed by showers in the afternoon. My favorite town in Costa Rica, Quepos, averages nineteen inches of rain in August, and even more in September and October.

Miriam doesn’t share my affinity for Quepos. It’s where a good hair day goes to die because of high humidity. Quepos also has steep hills which make it tough to navigate in a small vehicle. I’ve exited my stick-shift rental car more than once so a more experienced driver could climb inclined roads with sharp curves. I leave my “man card” on the dash.

Here are some Costa Rica fun facts:

• Taxes are very low = .25% of appraised value and registered by the city
• Mortgages interest rates are currently over 9%; most foreigners pay cash
• If you spend more than $200,000 on a house, you can apply for automatic citizenship.
• There is no army in Costa Rica; it was constitutionally abolished in 1949.
• It is more expensive to buy vehicles in Costa Rica than in the United States.
• The average Tico makes $6,000/year and the average wage labor is $10/day, the highest in Central America.

If you’re thinking about relocating or buying an investment property in the areas of Costa Rica mentioned above, let me know if I can help. If I can’t answer your question, I’ll help you find someone who can.

Surf’s up!

There are direct flights from most major airports in the States to Costa Rica’s capital, San José,

*All information should be independently verified.