Property Values In The New World
It would seem that life has settled into a routine now in our “new world” setting here in Uvita Costa Rica. What’s it been, 2 years since the global economy went into the stink house? My how time flies. Our real estate company is cooking right along actually doing some business. The business that happened so rarely during the recession was mostly for under $100k lot sales and $300k was the upper edge of house sales. The prices in our market have dropped 40% – 50% across the board. And there are still some highly motivated sellers out there. I’ve started a list of these sellers. Originally I was going to call it the “Desperate Sellers” list, but I have re-thunk it and come up with the “Motivated Sellers” list. Right now I’ve got 5 properties on the list. The top deal there at this writing is the 57 acres farm in Uvita for $250,000. (Updated: property sold or unavailable.)
The point is that the market has definitely re-defined itself and numerous sellers are adapting. We went through a time here in The Zone when it was pure death, nothing sold and there was no one looking. Some real estate offices closed down and others (like GITZ) tightened their belts and survived. Now we are watching and learning what the new world looks like. Here’s some of what we’re finding out.
Money is tight (duh!). But, there are buyers here, and they aren’t just the $100k lot or $300k house buyer variety. There is a recent sale of a Lagunas house for $750k and an Ojochal house at $850k, so we seem to be breaking out of the old restraints. This isn’t to say that things are hopping again here in the zone, but they are a sight better than they’ve been for a couple of years. The Guys In The Zone are enjoying doing some business, but again, it’s all been for steeply reduced pricing. We had a client come down looking for a $100k ocean view property, of which we have some to show, but these clients morphed their criteria while here, and were enamored with some very fine properties at great prices. End of the story? 2 lots at just a little over $500k. If you’d like to see what the properties were, click here for one, and here for the other. (Links no longer available).
Conversations about current values abound. Methods for establishing the values in the new world market are varied, but we are seeing a surprising level of consistency in our evaluation efforts among the agencies.
A Puzzling Tax Situation for Real Estate Agencies
One of the top issues of the day among the
agencies is what to do with the 13% property tax that Costa Rica requires. The 13% is based on the amount of commission paid. So, if there is a $10,000 commission, the seller would pay $1,300. The quirky thing about this tax is that Costa Rica has made the real estate agent the one responsible for collecting this tax. In practice, what ends up happening is that agencies that wish to do business legally end up just paying the tax themselves. Why?
Imagine this. You want to sell your property and so you begin listing it with the various agencies. You start with Agency A. You agree to pay their commission, the price is established and arrangements are made to visit the property. Then you go to Agency B, they agree to everything but you also notice in their listing agreement this note about a 13% tax that you are supposed to pay. You feel like there must be something wrong with this particular agency. The last agency didn’t say anything about this tax, maybe Agency C won’t either. So you retract your listing from Agency B and go on about your business.
The problem, dear seller, is that your listing – supposing that it is priced to sell – is vital to the welfare of Agency B’s business. So, instead of losing listings, Agency B decides to just go ahead and pay the commission out of their commission effectively affecting the bottom line for the agency. It ain’t fair, but it’s the way it is – more on this later.
Confused Weather Affects Mangos & Monkeys
Rainy season is having a hard time going away. We are currently getting some rather heavy rains during the night. After the heavy rains of November, many folks, including yours truly, rang up multi-thousand dollar bills in damages from erosion, roads crumbling, trees falling over and so on. Right now the effect may be to knock the exposed pollen buds off of the mango and coffee plants, rendering this a low harvest year. We’ll see. It seems like the weather patterns are all screwed up. Even the animals seem to be confused by the debacle. We are hearing howler monkeys at all times of the day. And whereas you used to be able to set your watch by the morning and evening arrival of the toucans and aracaris, now they are around at all hours of the day. Global climate change at work, I guess.
Car Seat Covers
My 1998 Turbo Diesel 4Runner was a deluxe model in its day. The aged leather seats look like someone’s great grandmother’s face that spent too much time in the sun. I asked around and found a company up in San Isidro that is made up of 3 gals that sit behind industrial grade sewing machines and sew seat covers out of fabric or – I don’t remember what they called the material that I ended up with – but it made my car look like new – for $100!!! I couldn’t believe it. The business is right on the highway in San Isidro heading out of town towards the Cerro de la Muerte. I’m happy to give you specifics if you’re interested in the service.
Selling My House
One final point, I’m selling my San Isidro home. It’s a 3 bedroom 3.5 bath, plus a 2 bedroom 1 bath guest house. It sits on 2.5 hectares of land, is located just the Dominical side of San Isidro, has a great view over the Rio San Isidro and sprawling sugar cane fields. Plenty of room to build cabinas, a commercial endeavor alongside the highway that runs to Dominical, or cultivate with any number of crops. I’ll post more on this later. You can see it by clicking here. (House sold so the link is no longer active.)