Selling in Costa Rica? Consider Offering Financing

Costa Rica Real Estate is different than some other markets in that it’s made up of primarily cash purchases, especially in the beach areas. Financing in Costa Rica has traditionally been expensive, not to a mention a long and difficult process, specifically for foreigners. When economic times were better, cash purchases were fairly easy, but the last few years that has all changed. While many of the purchases in Costa Rica remain cash deals.........

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More and more sellers are trying to accommodate to the growing demand for seller financing. There has only been one problem, sellers are demanding too high of rates. Buyers interested in financing try to negotiate rates similar to the current U.S. mortgage rates, which are at all time lows. Sellers don’t bite at that and I don’t blame them. Those rates are low for a reason, and I don’t feel anyone can rationally argue that they should get the same rate in a foreign country on a private loan as they would with a bank on a primary residence in the United States. I also feel however that the traditional Costa Rica interest rates of 8-10% isn’t practical either. The real estate market has seen some corrections, but I feel seller financing is the next part of the sector to adapt. If you are selling your property in Costa Rica, and you don’t need to use the money from you sale all at once, I highly encourage you to consider offering seller financing at 5-6%. This might sound low, but its a rate that many buyers will actually start considering, and a rate that I think more and more sellers will begin accepting. This opens up a new pool of prospects for your property, and it also gives you an opportunity to make 5-6% interest rate on your money, not a rate too many can easily find these days in any investment. Buyers keep in mind that most sellers will still demand a hefty down payment of 20-50% down and some sort of balloon payment within 3-5 years, but if more sellers can offer financing at lower rates it just might be a win win situation for everyone.