Imagine this: you are interested in buying a piece of property in Costa Rica’s southern zone, so you walk in to one of the real estate offices in say – Uvita. You consult for awhile with an agent there. (For the sake of this article, lets call him “Ben” :o) and off you go looking at properties that fit your interest. After looking at all that Ben has to show you, nothing strikes you as the right piece (hard to imagine, but it has happened a time or two).
So far not a lot of imagination has been required. Here’s where it gets a little more difficult.
Ben says: “how ‘bout we pop on down to this other agency, some competitors of mine down by Ojochal, and see what they’ve got” or “Let’s go on up to an office of my peers in Dominical that’s been around for years. They’ve probably got a few listings that I don’t that may be a perfect fit”.
I know – hard to imagine, but stay with me here.
Last Saturday marked the 2nd meeting of… well frankly I’m not sure what. I’m not being evasive – we actually don’t know what to call it: Costa Ballena Realty Board? Association of Real Estate Professionals? There were a few other names tossed about: Think Tank, Master Mind Group, Coffee Talk… whatever it ends up being, it holds the key to making the real estate buying and selling experience in our zone 10 times better than what it currently is. (I like “Unified Realty Professionals”. This could have the distinguished acronym URP which would be said something like – well, like ‘urp’ which would bring to mind the satisfied feeling one has having just enjoyed a good meal.)
Ojochal, Uvita, Dominical, Hatillo Platanillo and San Isidro are the towns that make up “The Zone”. There are numerous real estate agencies in these towns. Some with recognizable names from other parts of the globe such as Coldwell Banker, Century 21 etc… Then there are the “no namers” such as yours truly with Dominical Dot Biz Select Properties, and there are many such private label real estate companies.
The objective of the meeting was to improve our ability, as a unified and cooperative group, to serve people who want to either buy, or to sell property in our zone. This is a beautiful, and much needed thing.
The meeting was attended by the owners of Osa Tropical Estates (Ojochal), two of the Coldwell Banker partners in the Dominical office, The Land Company (Dominical) principal and myself (Uvita). We all have knowledge of all areas of The Zone, but have greater expertise in some areas over others.
Problems Identified:
It was agreed that the non-MLS (Multiple Listing Service) business model in Costa Rica makes it difficult for sellers and buyers. The core problem is the lack of REPRESENTATION available to our buyers and sellers.
Buyer’s Problems:
When a buyer spends a day or two with a single realtor looking at property, they are only seeing what that particular real estate agency has for listings. To really know that they have seen everything, a buyer would have to visit all of the agencies, and probably go over already trodden ground to sift through everything – not good. Also, it may be that the buyer has developed a sense of trust with one agent, and really doesn’t want to go through the whole process again with someone else.
Seller’s Problems:
These were the most talked about problems – those poor sellers. How many times I’ve had to explain to sellers how to most effectively go about marketing their property in The Zone. They have to print up a flier that explains the property. Make a CD complete with photos of the property, and a survey, and distribute this to all the agencies in The Zone. This is usually done by the seller personally visiting each of the agencies and discussing their listing with someone there that will then, hopefully, put it on their website, and share the information with everyone else in the office. Then the seller has to visit the web sites of the various agencies, and make sure that their listing is there. Then, the seller should check in once a month or so to keep the various agents mindful of the listing. YUCK!
As an alternative, an exclusive listing can be given to a particular agency so that they do all this work. The downside of this is that all agencies, with the exception of the listing agency, will view this listing as one that doesn’t pay a full commission, since the listing agency will get some of the commission for taking on the work load.
Solution!
The real estate agencies get unified and work together as professionals to offer a superior service to our clients.
The MLS (Multiple Listing Service) of the U.S. is the model that we are shooting for. An actual MLS for our zone is yet for a future time, but there are some steps being taken towards that objective.
We are working on eliminating the bad connotation that a shared commission has in the minds of participating agents. There will be more of an effort to really work together, as real estate professionals to find the right property for each buyer.
Readers of my blog here know well how I have viewed exclusive listings. In the current construct they are flawed and, in my opinion, only work in certain situations. I might be changing my position on this.
What buyers and sellers really need here is “REPRESENTATION”, which in our current non-MLS model they don’t get. To implement representation of buyers, and of sellers, requires that we agencies work together.
How would that be, Mr. Seller? You give me the right to represent your property. I work with you to become expert on your property. I network with the other unified agencies in The Zone to get your listing on all their websites, and also trust that they are going to have your property in mind when talking with their prospective buyers. They won’t give preference to a “full commission” property over a “shared commission” property in their presentations because this sort of seller/agency relationship will become the norm.
Well, I’ve hit my 1,000 word mark here, but there is more to tell. Both of the meetings we’ve had so far have ended with an air of camaraderie and an upbeat feeling. Whatever ice there was has now been broken amongst those that have attended. This will likely spread out to include more agencies as we progress with making the land buying and selling experience here more agreeable for all sides.
Final note:
that word “unified” might not work after all. I just got to thinking about all the hub-bub going on around the United Auto Workers in the States right now. Hmmm – well, we’ll come up with something.
Ben, I came across your blog a couple weeks ago and enjoy the read. I congratulate you on taking steps to work together and make the process better for both buyers and sellers. Working together clearly benefits everyone. I live in Colombia and this is not the norm, but it is changing. Keep me posted on your progress. One quick thing that I want to suggest is that you develop (if you haven't already) a data standard for listing information. In the United States the RETS (Real Estate Transaction Standard) is a standard that most larger agencies have adapted and it makes it easier as this collaborative approach starts to progress even further, especially as you begin to syndicate properties across numerous sites (either via XML or some other format). Data entry kills time and if property data sets come in multiple formats it makes it difficult to get maximum exposure across the Web. This is important, especially since your potential clients probably start their search online. Anyways, just my 2 Colones.
Brian,
Thanks for your colones man. It is easy to see how your suggestion would help immeasurably with listings. One of the big stumblers that we have right now is lack of cooperation between agencies, and even between agents. The construct of a non MLS system promotes individualism, protectionism, proprietarianism and vegetarianism… Ok, got a little carried away there.
It is understandable how we got to where we are. The forming of an association of realtors indicates that there is interest on the part of the agencies here to grow up and move on to a model that provides a better service for buyers and sellers – and by extension, increases the real estate professional's income.
I suspect that we are going to end up with a standardized system, essentially an MLS. I think that I'll bring up your thoughts regarding a standardized input format for listings at the next meeting and see what steps would need to be taken to implement it.
Thanks for you input Brian. I'd love to hear how your market works there in Columbia.
Ben
This is a great initiative! It's true, sometimes it's really hard without an MLS system (why don't we have one? I just don't get it!). It's necessary to work together in order to improve the service.
Nice post!
Hello Ben: I am a new reader and a land owner in Costa Rica. I have 55 acres of property above Playa Bejuco on the Pacific Coast, 5 miles north of Parrita. I originally bought the property with the plan to build my home for retirement. Since the purchase I have decided to market the property as 34 lots minimum 1.25 acres. I agree with you, the lack of MLS representation in Costa Rica makes it very difficult for sellers to bring their property to the attention of potential buyers without a major marketing company pushing through a website. I have experienced visiting agents in Jaco and Quepos and discussed the possibility of them listing and promoting my property – it falls on deaf ears as they don't want to leave the local comfort zone to show property that might be 20 miles away. An MLS system would dramatically assist buyer and seller alike. I am very close to achieving SETENA approval to move on the sub-division of the land. Any additional thought as to how I would market the property. I had even thought of pushing the right buttons through healthy commissions.
Hi Brian,
I know Bejuco well as I've been involved in a number of land transactions up there. Nice area!
We still haven't cracked the code for how best to sell a property, but here are some options.
One is, as you say, offer a fat commission. My associate Rod and I here in the office find that a high commission, or a "spiff", paid on top of the normal commission, is a nominal incentive. It's actually more of a bonus if we sell the property. I know, "what the heck does that mean?
Well, when prospective buyers come into the office and describe what they are looking for, we just focus on that: what they are looking for. Now, if we determine that a property by a given developer fits what they are looking for, we'll be delighted to recall, at that time, that there is a fat commission, or a spiff on the property. So, it might offer a slight edge to the seller, but probably not a marked change over just offering a standard commission. The commissions here are, of themselves, pretty good. We get 8%, and since there isn't an MLS, there isn't a listing agent/ selling agent split. So generally, the whole amount flows to one agency. There still remains, however, the problem of getting the listing information to all the agencies and following up to make sure that they are mindful of the listing.
A second option is to take advantage of this situation that is developing with the "Association of Realtors" or whatever it ends up being called. We have a meeting scheduled for the 24th of this month, and have been asked to bring our 3 favorite listings to share. I suppose that agreements will be made by participating agencies to definitely get the listings posted to websites, and present the properties to prospects. If in fact this arrangement works out like it proposes to, you could give your development to an agency as an exclusive listing, and have that agency represent your development to the Association so that all participating agencies would have the listing.
Commissions:
You can offer the standard 8% and negotiate the split in the event that another agency sells a property. It could be that 5% would go to the selling agency and 3% to the listing agency, or something similar.
If you are in the position to offer an amplified commission, you could structure your deal with the agency something like this: If the listing agency sells it, you will pay that agency 8% total commission. If another agency sells it, you will pay them 8% and 3% to your listing agency, or 11% total commission. Variations of this theme will work ie. 10% overall commission paid out on a 7/3% split, something like that. What this does is ensures compensation to the listing agency for any listing related work they do and still offers to all agencies the incentive of a full commission, even though it is shared.
Listing services provided by your listing agency could include, taking the time necessary to get to know the property well, understanding the water, electric and road situations. Knowing the status of permitting, soil stability, cost to build in the area, what, if any, seller financing is offered, etc… Your listing agent could also help other, lesser informed agencies with presentations of the property to their clients, since now there is something in it for them.
Otherwise, there is the old time tested method of visiting all the agencies personally, making sure that they all have your information, and just offer whatever commission directly to each one that you decide.
Please let me know if you'd like to meet to discuss ideas. My particular area of expertise is Uvita, so I'd be interested in a crack at marketing and selling your project.
Ben,
I am wondering if you would be interested in being interviewed for a real estate publication about Costa Rica. I really like your perspective on real estate in Costa Rica. Here is the site http://www.vivarealcostarica.com/
Hope that you have an excellent 2009!