You will see properties “on the market” in Costa Rica which are advertised at outlandish prices just in case someone comes along and decides that they love the property so much that they are willing to pay anything to have it. The seller is thinking “Of course someone would be willing to pay a million dollars for my one-acre lot next to the soccer field.” And then they wait for that unsuspecting buyer to show up.
However, you likely fall into the category of seller like the majority who really do need to sell and soon. That is why it is so it’s important to know how to price your property. This is where a good Realtor can help you determine the value of your property. And that can mean the difference between your property selling relatively quickly or sitting on the market for years.
Timing is everything. Just because the market last year was moving doesn’t mean it is like that this year, so you have to be willing to adjust to that and other factors.
1) Pricing based on market value. In the States, agents pull up comparatives on the MLS (multiple listing system) and see what similar properties have sold for in the last six months or so. In Costa Rica, we have the MLS, but it doesn’t have the final selling price, just the current listing price, so it’s a little harder. Someone can, and should, check what comparable properties are currently listed but it is important to know how long that has been listed at that price and if it is priced right to begin with. A Realtor who knows the market can help you with that.
2) Pricing based on construction values. What would your house cost today if someone went and bought a similar lot and then built the same home? Because that is also your competition. Buyers can say, “Well, I can build a brand-new house for cheaper than buying this one that is already 10 years old.” Again, a Realtor who has knowledge of construction values can help you here.
3) Other considerations—how fast do you need to sell your home? The more patient you are, the more likely you will find a buyer at your price. The more desperate you become, the more likely you will take a hit on the price, selling at below the value. Also, what do you have to get out of your home? Now, this is NOT what you WANT to get out of your home, but what do you NEED to cover mortgages and commissions? Just because the market went up in the past does not mean that you might not lose money on your home in a down market.
4) Finally, do you price for negotiating room? Everyone loves to bargain and get a good deal. So, should you price it above to give you that cushion? There are different opinions on that and to be honest, it depends a lot on the culture. Some cultures consider negotiating $10,000 to be a large amount and for some, they would start at half price. My suggestion is to price based on the first two pricing considerations above, possibly with a small amount for negotiation to make everyone happy in the end, but to not inflate your price because it may deter buyers completely.
In the end, hire a good, experienced Realtor and then listen to them. An agent knows what is selling and is not emotionally attached to your home. Even as an agent, I like to take fellow agents along to show them the home after listing and ask their opinions on the pricing. It can either open my eyes to issues I did not see in the home or confirm my evaluation.
Look for future articles on negotiating your contract. Check out the Tristan & Newton website for properties and the Chamber of Realtors MLS at http://mls.mls-cr.com/ The MLS listings are also on http://www.realtor.com/international too. Follow us on Facebook for the most up to date information!