Buying a Property in Costa Rica: A Step-by-Step Guide
At Hidden Coast Realty, our mission is to make your experience of buying a property in Costa Rica as easy and pleasurable as possible. From the moment you start dreaming about owning a property in Costa Rica until the final documents are signed, we’ll guide you every step of the way with expertise and care. We are highly experienced, counting hundreds of transactions under our belts, and have assisted hundreds of clients from all over the world over the past 20+ years. Let us guide you next.
Step 1: Define what area is right for you
There are various communities and beach towns within our area, despite the fact that we can provide you with guidance on where to start, only you will know which area is right for your taste and needs. We recommend that you start familiarizing yourself with the different areas and their pros and cons through our area page. Each area has a different feel, range of amenities, accessibility, and different price ranges. The next best thing to do is to come to visit us, just jump on a flight and come visit us for a few days! We will be happy to show you the different areas surrounding, including Tamarindo, so that you can determine which area feels right for YOU. The good news is, all of the communities are different from one another and there is basically a perfect match for everyone. From complete privacy and seclusion in nature to a fun and thriving town and everything in between.
Step 2: Search for Properties
Once you have defined the right area, we will assist with your real estate property search. Navigating the Costa Rica real estate market can be tricky sometimes, no real MLS, websites that are not up to date, and sometimes even different prices on the same property. We have built a massive network of real estate professionals in the area over the past 20 years and are very efficient when it comes to searching for suitable properties. We will ensure you get to see everything in your price range and within your areas of interest, plus we often have access to off-market deals, and/or know about properties for sale before they even hit the market thanks to the excellent relationships we maintain with our colleagues in the area. Once our list of properties of interest is defined we take our qualified clients on a tour to see these properties in person or via virtual means. We will gladly provide you with advice and feedback on the property’s location, potential for appreciation, market comps, rentability, and construction quality, to ensure you make an educated and good investment.
Step 2: Negotiation and Offer to Purchase
Once you’ve found the property you love, we’ll assist you with writing up an offer that will detail the purchase price, which will be defined jointly with you after cautiously analyzing the market, and the property’s potential for rental income. It will also include the main terms of the agreement such as timeframes for earnest money deposit, due diligence length, closing costs, and closing date.
From the day that you present an offer with us, we will provide you with accurate projections of your closing costs so that you know exactly how much the transaction will cost all together.
When it comes to negotiation, we will work together to strategize our approach and ensure that we can get you the best price possible. We have handled hundreds of transactions and definitely have a few tips you can benefit from when it comes to negotiation.
Now, once we have an agreement signed by both parties, we will introduce you to trustworthy real estate attorneys from the area, who will offer expert knowledge, legal advice and effective communication while representing you on the transaction.
On our side, we will also, oversee every step of the transaction to ensure everything goes smoothly and that our client is safe and well-represented.
Step 4: The Transaction
In every real estate transaction, a neutral Escrow account to wire the Earnest money deposit (down payment) as well as the final balance for the purchase of a property should be used. Opening the escrow account will be the first step, and the escrow company will request various documents for you to prove the origin of the funds you will use for the transaction.
Once the escrow account is opened, you will transfer a 10% earnest money deposit ( usually within 10 business days after the agreement is signed ), which will remain completely refundable during the entirety of the due diligence period. A standard DD period is around 21 calendar days.
During Due Diligence, your attorney will check various legal aspects of the property to ensure the transaction is safe. Some of the things the attorney and other professionals will analyze during due diligence are:
- Property Title
- Property taxes
- Utility Bills
- Survey Inspection
- Construction Inspection
- Inventory
- & more – to see the full list, please visit our FAQ page.
Once the Due Diligence period is over, you will get a report from the attorney including all of the results of the Due Diligence on the property, if the results are positive, you can decide to move forward towards closing. At this moment, and only by written authorization the 10% deposit becomes hard money.
The next step from there is to prepare the closing statements which will include the disbursement information and amounts to all parties involved in the transaction. The closing statements will then be reviewed approved and signed by all parties.
Also at this point, you will transfer the balance of the funds along with the funds allocated to your closing costs to the escrow account. The funds will remain in escrow until the closing has been executed.
Additionally, the transfer deed will be drafted by the public notary in charge of the execution of the transaction ( usually the buyer’s attorney ).
A date, time, and place will be defined for closing following the terms of the contract.
At closing, each party will sign the transfer deed and the property title will be transferred to the new owner. In case one or both of the parties cannot be physically present at the day of closing it is possible to use a power of attorney to execute the transfer deed.
Timelines:
- Under Contract ( Day 1 ) Signed agreement by both parties detailing purchase price and terms.
- Start of Due Diligence. As soon as the agreement has been signed by both parties.
- 10% Earnest money deposit in escrow. The deposit should be sent within 10 business days after the execution of the agreement.
- End of Due diligence. Usually 21 calendar days after the execution of the agreement.
- Closing. Usually 5-6 weeks after the execution of the agreement.
Step 5: The after-sale
Now that you are the owner of a property in paradise, what’s next?
Lots of questions, how do I pay my bills? who will take care of the property while I’m not there? how should I approach putting the property on the rental market?
Don’t worry, we got you covered and will be more than happy to continue assisting you with these next steps.
One of the first things we can assist you with is to assist with securing a good property manager. You’ll have the opportunity to either work with us or a trustworthy local property management company we can recommend to take care of your property while you are not there. The property manager will ensure the bills are paid, the maintenance is done, and can take on the entire responsibility of the property making it completely hands-free. If you are looking for rental income, they will put your property on the rental market and take care of every aspect, check-ins/out, arrange for cleaning, provide concierge services to your clients, ensure the property is marketed property and priced effectively to maximize rental income.
We only work/recommend the best and will ensure that you are connected to the best property management company according to your needs and your area.
We are also happy to provide guidance about every aspect of living or owning property in Costa Rica and have an amazing network of professionals in all industries and are happy to share these contacts with our clients.
For any other practical questions, please visit our FAQ page and if you still have questions, just shoot us an email or give us a call.
We hope this article was helpful and look forward to assisting you further in pursuing your dreams of owning property in our beautiful region!
Contact us: [email protected] or by WhatsApp at +506 8582-0027
