How to Play the Real Estate Game in Costa Rica
The real estate game in Costa Rica has for years operated like poker in the Wild West…with few rules (all of which are made to be broken), lots of close-to-the-vest card holding, and cut-throat competition.
One aspect that makes things that way is that there really is no real regulated system of real estate brokerage. There’s no licensing of agents. There’s no MLS system to speak of, at least not a formal one. Most listings are “open”, which means the owner is not beholding to any one agent, but simply broadcasts his property out to all of them who want to take a crack at selling it.
All of that sort of makes things a bit of a mess when it comes to trying to do business as a real estate agent. Not to mention, trying to actually sell or buy a property.
This post will try to bring a bit of organization into the fray for buyers and sellers seeking the optimum manner of maneuvering the quagmire.
For many years the open listing was the norm. An open listing gives the listing agent a chance to sell and earn a commission only if that agent actually closes the deal. If another agent, also holding an open listing on the same property, beats him or her to the punch…too bad, so sad.
That has changed a bit in recent years, but open listings still predominate the real estate landscape. And it is for that reason, among others, that things are really a mess out there.
Why is that?
Well, open listings just do not encourage a high degree of professionalism. If you take a step back and think about that objectively you can easily see why. From the standpoint of the agent, the open listing is really a crap shoot. The agent takes the listing on the hopes that maybe he will get lucky and sell the property before one of the other 10 agents the owner is also listing with sells it. If he or she puts a lot of time and effort into doing so, and it ends up being sold by another agent in a different agency, well then all that effort has completely gone to waste. So, what does the agent do? He puts minimal effort into selling the property. His goal becomes one of a numbers game. He wants lots of opens with the hope of selling some small percentage of them before anyone else does.
From the seller’s perspective, the open makes a lot of sense…at first blush. He gets to have his property represented by multiple brokerages. He is even free to sell it himself, without owing a commission to anyone! Pretty good result, or is it?
Why would a seller want to list exclusively? Well, let’s explore that a bit…
These days more and more quality brokerages are encouraging their agents to list properties exclusively. I know that Coldwell Banker certainly encourages me to do so. As a result more properties are being listed in this manner and the effect is the development of a sort of informal MLS system. That’s because once I have the exclusive, it is to my benefit to share my listing with other agencies. They have nothing to lose and I have everything to gain by exposing my exclusive on their web sites and in their marketing. I will return that favor with regard to their agents’ exclusives. With opens that of course never happens. Why would I share my open listing with any other agency when they can just sell it out from under me?
In addition, with an exclusive listing I am incentivized to bring a higher level of professionalism and effort to my marketing efforts. After all, if the property sells within the contract period, I gain, no matter in what manner it is sold. So, as an agent, I am not at risk in putting significant time and money into marketing the listing. And part of that effort would be sharing it with other agencies.
So, in effect, the seller is getting much of the same perceived “exposure” benefit of listing openly with many agencies, by listing exclusively with just one. In fact, he or she is getting that same perceived benefit plus a whole lot more in the form of a much more committed agent, who’s willing to put more marketing “skin” in the game than just throwing the listing up on a site and then forgetting about it!
Of course, it pays for the seller to know exactly what the agent intends to do in order to earn an exclusive listing. The agent should be able to present a cogent and concise marketing plan. The track record of that agent and his agency should be evaluated. If all that meets expectations…
I believe that it’s in the seller’s best interest to list exclusively with the right agency that meets his needs and with which he feels comfortable. After all, the overall goal is to get the property sold, correct? And if listing exclusively improves the chances of achieving that most desired result, why not go for it.
As more and more agents in Costa Rica realize that in order to compete effectively, they have to be able to maintain an inventory of high quality exclusive listings, it should gradually bring more order into the Wild West poker match that the real estate game in Costa Rica has long resembled.