Buying a new house is an emotional act as well as a business transaction, and it’s not something you should do on an impulse. When you go house-hunting, you want to purchase a house that you love, one that you can afford and one that has good resale potential.
Before you get to “Sold,” you need to go through the house-hunting process first, and this is the most dangerous time for you to make emotional mistakes. These emotional mistakes can do a lot of damage. Here’s a list of Costa Rica house-hunting pitfalls to avoid.
1. Do not fall in love with a house you cannot afford.
Over the years I have met many house buyers who started house-hunting at a much higher price than their budget, fell in love with a house but were not able to negotiate the price down to one they could afford.
Some Costa Rica real estate agents tend to show houses above the buyer’s budget limit, in hopes of selling a more expensive house and earning a higher commission.
After having fallen in love with a house, it is very difficult to find a comparable house within your budget and you will end up having nightmares about the house you love but can’t afford. I recommend you first look at houses that are listed within your budget and if that fails, you can go up a little bit in price, in the hope you can negotiate the seller down to make it affordable for you.
2. Do not set your standards higher than you can afford.
Quite often, I get calls from clients and even real estate agents from other areas in the Central Valley giving me specifics for a house they want to buy that does not fit their budget. Don’t we all want to live in a dream house and spend as little money as possible on the purchase? Well, the economics have to work.
Try to specify an approximate lot size and an approximate construction size, so it will be easier to calculate if you are hunting for the right house or if you should set different standards.
The Costa Rican tax authorities appraised most cities in Costa Rica when they created the luxury tax, or “impuesto solidario.” Though some of the appraisals you will find in the maps might be lower than the actual market value, you will be able to find the approximate value of the land in the area you are looking to buy. To find out more about the cost of construction that complies with the standards you are looking for, ask your real estate agent or an experienced builder.
3. Do not overlook important flaws the house might have
Before you make any serious decision, hire a home inspector to check on the house and the property. Small flaws can be overcome but a new roof, a new septic system, replacement of retainer walls and other large projects can put you in serious financial trouble after the purchase of the house.
4. Over- or underestimating a remodel
The perfect house doesn’t exist, as everyone’s taste is different and every contractor makes mistakes. Once you have the inspection report, it is usually quite easy to imagine what needs to be fixed and what changes you can make to the house you are planning to purchase.
If you have any plans for knocking out walls or extending the house, make those wishes clear to the home inspector, so he can check for load-bearing walls and other important issues that you might not have thought of.
Ask your home inspector to join you when meeting a contractor to discuss a remodel so you will not be over- or underestimating the cost of the remodel.
5. Do not drag your feet making an offer
Once you feel you have found the right house, don’t drag your feet — make an offer. Ask the help of your real estate agent, who will have the experience to negotiate for you so that you can purchase the house at the right price. If you drag your feet, you might come up empty-handed because another buyer got ahead of you.
Ivo Henfling is a Dutch national, resident in Costa Rica since 1980 and a Costa Rica real estate broker for over 20 years. He is the founder of GoDutch Realty, with offices in several locations in the Central Valley, including Escazú, Atenas, Cariari and Grecia. Ivo Henfling can be reached at (506) 2289-5125 / 8834-4515 or at [email protected].