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You are selling a property in Costa Rica, your counteroffer was accepted, and now what?
In Costa Rica real estate it is common to have sellers from different nationalities. They all have sold houses in their home country. And now they think they have experience in selling a property in Costa Rica. They might be in for a few surprises.
Business in Costa Rica is done quite differently than you might have been used to in your home country. So do not be surprised to run into unsuspected setbacks.
There are many things that can go wrong during the process while selling a property in Costa Rica. Especially if the buyer will apply for a mortgage. I’d like to point out 6 tips that might come in handy during the sales process.
Then there won’t be any need for you to freak out…
1. Your real estate agent, who is your representative in a Costa Rica real estate purchase–sale process has no control over a bank mortgage process.
2. Costa Rica has different laws, different ways of doing things, a different thought process, and a different way of handling deadlines by everyone involved than what you might be used to.
3. Banks in Costa Rica have different protocols and documents which get easily misplaced or lost.
4. In Costa Rica, escrow companies only handle receive the money involved in a closing, nothing more, nothing less.
5. To be able to formalize a purchase option for a buyer to request a bank mortgage, you need to supply the name of the owner and ID number (personal or corporate), the property information, and a phone number and email address to be notified.
6. If you are still stressed, drink some water, breathe deep, meditate, take Bach flowers, use homeopathy against nervous breakdowns and take it easy, the last thing we need now is a stressed-out, anxious seller who will mess up a perfectly good real estate transaction.
The sales process
Allow me to explain a little bit about the process of selling a property in Costa Rica, so you have a better understanding of what needs to be done, to help take away some of the unnecessary stress:
1. The real estate agent takes the buyer to visit the property for sale.
2. When the buyer likes the property, the real estate agent makes the offer in writing and sends it to the seller for negotiation or approval.
3. Once the buyer and seller agree on the sales price and the negotiated details, the purchase option (requirement of all financial institutions in case of a mortgage and necessary when earnest money is deposited in escrow) is signed, usually to close in 3 months (in a cash deal, closing date depends on both buyer and seller’s decision?.
If the buyer applies for a bank mortgage, the bank will tell the buyer that the process of selling a property in Costa Rica is really simple. A professional real estate agent will help the buyer to complete all the necessary documents (because buyers don’t have the patience to do it) and the following is needed:
1. Scan every property-related document the bank request. If you need document digitization there are some great solutions.
2. Proof of income as well as all the debts like house payments, car payments, and credit card debt
3. Make a photocopy of each document and arm a file for the loan officer.
4. Smile (nobody wants to work for a bitter person), be polite, arm yourself with patience. Costa Rica is Pura Vida!!!
Bank mortgage application requirements
Usually, banks never give the mortgage applicant a complete list of all the documents necessary for the application. It is very normal that once the first set of documents is approved, the bank will ask you to supply even more documents, so now even more patience is required:
1. Proof of the property registration in the form of a certification by the National Register.
2. A copy of the cadastral plan – survey map.
3. Certification by the Municipality where the property is located, demonstrating that the owner is current with property tax payments, garbage, and public services.
4. A letter of the Condominium that demonstrates that the owner is up to date with the HOA payments (if this applies).
5. The Purchase option.
6. In the case of a corporation, they will ask for the legal status, certification of the powers of attorney, and proof of the up-to-date corporation taxes.
7. A photocopy of your ID (cédula or passport).
More bank requirements
Once all documents are delivered, the bank may request even more requirements.
1. The bank will send an appraiser who will send a report to the bank. This appraisal will take 1 – 2 weeks to get to the loan officer.
2. Once the buyer has been pre-qualified for the loan, the approval will take about 4 weeks to get approved from the moment all documents are presented.
3. The real estate agent needs to follow up constantly with the loan officer to keep the documents moving and after final approval of the mortgage, it will take about 2 weeks to get an appointment from the bank’s notary public/attorney who will do the closing.
4. The real estate agent has to organize the cash flow for payments between buyer (bank), escrow (where the earnest money is), and the seller to receive the cashier’s check or wire transfer. Usually, the real estate agent gets paid at the same time.
5. The bank checks all wire instructions in case of an international wire for money laundering issues. So is no delay in receiving the full amount. Check 2 weeks ahead of the closing by wiring $100 to that account.
6. A week before the closing, the real estate agent will tour the property with the buyers so the seller can explain all the necessary operational issues such as water valves, septic system, pool issues, location of breaker boxes, etc.
On closing day
Finally, it’s the big day *Closing Day* and the end of the process of selling a property in Costa Rica. Make the closing appointment before 3 pm. Then you still have time to reach your bank to deposit your check or you can get a friend to drive you to avoid searching parking with so much money in your wallet.
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