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Hi there,
I am looking into various real estate options in CR and wondered what is required if I decide to buy a condo in development straight from the developer rather than get a real estate agent involved. If I have knowledge that the developer has a good track record and the construction firm/architechts etc all look to be experienced, then what real value does the agent have in the transaction except to drive up my costs of purchase? If I decide to purchase without involving an agent, then do I just need to contact a reputable attorney (the developer has recommended one, but I would want my own) and get a title guarantee from Stewart Title (as the developer is offering), or am I missing an important step in the process? I am finding that most new developments advertise low prices that have since gone up tremendously, so anyway I can save some money on the transaction is worth it to me but only if I can be assured the developer is viable. The particular development I have in mind is already in construction, so water/electricity already there and building infrastructure as we speak. Any thoughts on this would be appreciated! Scott, if you have a list of reputable developers somewhere on your site that would be very helpful to members. Thanks.
Having your own Attorney, rather than using the Developer’s Attorney, would be an important part of the process. Also, if the condominium is in the planning stages, or under construction, it would be important that all deposit funds paid by you, be held in a third party escrow account on specific terms, that the funds be held until it can be ascertained that the Developer has acquired all of the necessary Governmental approvals and permits for the construction of the condominium, and that legal, registered, clear title to the condominum lot in the National Registry, is able to be delivered to you, on the completion date for the purchase.
Note From Scott: ‘WatchDog’ is the username for my friend and attorney Richard (Rick) Philps who is a Canadian citizen, naturalized as a citizen of Costa Rica. Rick practiced law in Canada as a member of the Law Society of British Columbia, for fourteen years, prior to moving to Costa Rica in 1998. Mr. Philps the earned his Bachelor of Laws and Licensing Degrees (Civil Law), and a Post-Graduate Degree in Notary and Registry Law, from the Escuela Libre de Derecho University, in San Jose and is a member of the Costa Rica College of Lawyers, and has practiced law in Costa Rica for five years. Mr. Philps practices law in the areas of real estate and development, corporate, commercial, contract, and banking.
To contact Rick and his associate attorney Roger Petersen, please use the Contact Form at the bottom of [ https://www.welovecostarica.com/members/417.cfm ]
There are developers that will happily sell you a condo and discount whatever sales commission they would have paid to the real estate salesman but there are many developments that will sell their property at the same price whether you work with a Realtor or not.
Finding the right Realtor can be an incredibly difficult thing to do anywhere (certainly is here) and remembering that they are paid by the seller and not you the buyer means that although some may have your best interests at heart, they still get paid by the person that is selling you the property.
A trustworthy Realtor understands that over the long term, ‘if’ they look after their customers well and make sure they are educated and buy the best property for the buyer, the Realtor will make a LOT more money than focusing on the short term gains.
You do NOT work with the attorney that the developer recommends – you find your own attorney that works for you and looks out for you…
We’ll be featuring some controversial articles about title insurance in the near future which I think is pretty much bloody useless in most cases…
Scott Oliver – Founder
WeLoveCostaRica.comJust want to make sure I have this correct….So in any purchasing transaction with a developer, the real estate agent will be paid by the developer and not by me, correct? If the developer is willing to discount off the real estate agents fee and I get my own lawyer to review the purchase agreement and condo by-laws and also get title insurance to protect myself then I should be ok, is that right? Or do you still suggest I use a realtor in all circumstances? Just exploring my options and appreciate your input.
The Realtor is nearly always paid by the developer and not the buyer – correct!
If you are happy doing all your own research and feel comfortable with the developer and the area in which you are buying and the developer is willing to discount the sale and you have your own attorney to look things over – great!
Nobody says you MUST use a Realtor although it has been my personal experience that a GOOD REALTOR deserves every penny he/she makes in commissions.
Scott Oliver – Founder
WeLoveCostaRica.comOne thing to consider also when using an honest, qualified real estate agent is that you will have someone on the ground in the area to follow up for you after the sale. In most cases the buyer is only in the country for a short period of time up to the time of purchase and may not be planning on moving to the area for some time. Most buyers are not in the area during the bulk of the construction of their home, condo, or development of the infastructure of a community. A good agent will keep you updated on a regular basis with pictures and information as the project progresses. A good agent will spend as much if not more time working for you after the sale as they do before the sale.
On the note of the seller paying the commission, as Scott said, that is the case nearly all the time. I do know of agents or brokers that require a commission from the buyer and I would question this type of practice because in most cases I believe these agents would also be getting a commission from the seller in almost every case.
Not necessarily…Although it is customary, in most places I’m familiar with, that the Realtor obtains his/her commission from the seller (homeowner or developer) there are legal arrangements where the seller is not willing to pay a commission and so there are Buyer’s Agent agreements that can be entered into where the commission will come from the buyer if the buyer in fact would like that agent to represent them throughout the transaction. Agency, whether buyer, seller or dual needs to be made clear and who will be responsible for paying the commissions so that there are no murky waters left behind to muddy up the transaction. The point is disclosure. It’s in the lack of disclosure that suspicion will and maybe should arise…
I did say, almost every case. There are always exceptions to the rule, but it should definitely be a red flag to buyers to make sure as you said they get full disclosure from everyone. The problem is the buyer is not always privy to information between the seller, and the agent listing the property and representing the buyer. The agents I know of personally here that take a commission from the buyer are not ones that I would recommend to anyone.
Janeyo
As a reputable developer, I find it benefiial to have my own sales people for any particular project. I hand pick people who will market my project in an honest manner. In addition I try to have my architect, lawyer and myself available at all times. That is where you are getting mixed up. We all work as a team with the potential customer. If an outside realtor sends us a referral they will get paid a commission but I will want my team to take over and answer your questions So you have found a development. That is great. Now is the busy season so find your self an honest lawyer you can get a hold of and an architect who can give you an unbiased opinion of the project. You are welcome to use mine or can shop around. They tend to get pretty busy now. Have you read Scott’s book or Peterson’s book. They both are a must read.
I would be glad to answer any questions you might have.
Good Luck
Stan Putra
262 554 6041
Racine Wi
Parrital CREdited on Feb 10, 2008 07:06
Edited on Feb 11, 2008 07:59
This is all great and valuable info. I am about to purchase property directly from a developer who I am confidant is reputable and honest. I am a real estate agent in the states, so I feel quite comfortable witht he transaction. My question is HOW does one find an “honest attorney” which I have heard reference to so many times. With that suggestion, it seems that there must be many “dishonest” attorneys. So how does one find a good attorney??
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