It is an unfortunate consequence of a hot real estate market that everyone and their dog wants to become a realtor. This means that our exciting Costa Ballena real estate market is currently filled with amateur realtors who do not know how to do a proper Comparative Market Analysis for their clients. This is a disservice to both sellers and buyers of real estate in Dominical, Uvita, and Ojochal. How much money are you leaving on the table as a seller? Are you getting the best bang for your buck as a buyer? Read on to find out what you’ve been missing.
Understanding The Local Real Estate Market
At Osa Tropical Properties, our team of realtors are veterans of the Costa Ballena real estate market, operating in the Costa Ballena region since 2005. We have all worked in real estate in Costa Rica for a number of years and we have seen the many peaks and dips in our local real estate market. We know that prices change and that a Comparative Market Analysis is an important tool in determining the current market value of a home.
Our office has sold numerous listings multiple times and we will never price a listing the same twice. Nor do we take into account what a property was bought and sold for in the past. Previous sales prices are interesting in understanding the changes in the market from seasons past, but they cannot tell us what the price of a listing should be today.
What is a Comparative Market Analysis?
A Comparative Market Analysis, commonly abbreviated as CMA, is a report prepared by a realtor to help a property seller determine the current market value of a property. The report analyzes three or more recently sold properties similar to the one in question. These are chosen based on their size, location, age, and quality similarities.
CMAs will include descriptions and data points for the comparable properties (called “comps” for short) that help sellers decide on the fair market value of their property. The most accurate comparables are typically sold within the past three to six months. In slower real estate markets, it can be challenging to find recently sold comps.
Active listings are typically omitted from a CMA because they may be mispriced. There is no way of knowing a home’s current market value until it has sold. This is especially the case in listings that have been for sale for more than six months in a hot market like ours. If a listing today is not selling, it is typically related to price more often than not.
However, active listings are interesting to include in a Comparative Market Analysis in Costa Ballena because it will show the seller what their competition is and how others have chosen to position their listings today. It will give insight on what type of offers to expect and if the real estate market is on par with comparable sold listings.
Osa Tropical Properties CMAs
When a property seller asks an Osa Tropical Properties realtor to value their property, we will schedule an appointment to visit and tour the listing. We will make notes and take pictures so that we can go home and start our research. We never give a price or even an estimation at the listing. It is essential that we spend time researching comparables. Nor do we bring a laptop and do the research at the listing because it takes time and precision.
Your Osa Tropical Properties agent will compile a list of comps based on the following criteria in order to prepare a comparative market analysis for you. This will include items like the sold date, location, size, year built, quality construction, and taxes and fees. Price per square foot may also be included. All factors between comps should be close to equal.
Of course, no two homes are identical, so agents will get as close as they can to the home in question, then adjust as necessary to make an informed recommendation as to the home’s value. In our diverse real estate market in South Pacific Costa Rica, there are myriad nuanced differences between every listing on the market. Costa Rica is a country where people come to build their dream homes in paradise. Those whose dreams change over time are hopeful that someone else will want to buy their dreams for the value that they feel their property has. However, the true value of the popular market has a number and it can be found by doing a Comparative Market Analysis.
As local real estate experts, we have access to more market details than a layperson. We have access to additional information that buyers may not. For example, if an OTP agent sees that a comparable property sold for an unusually high price, they may be able to call the listing agent to find out why — perhaps the seller’s closing costs played a part in the high price. Or, if a property sold for less than anticipated, it could be because it was sold to a cash buyer who was willing to close quickly.
Every individual real estate market is unique, and competent realtors know how to adjust prices to account for differences in homes that are more or less valuable in your specific area. We also know which neighborhoods and types of homes are in the highest demand. And in today’s hot market, we will often price slightly higher than our market analysis dictates because of how quickly interest in Costa Ballena real estate is growing.
Amateur Realtors in Costa Ballena
Some agents price listings too high or too low because they haven’t done a CMA and therefore don’t know the actual market value of properties right now. Realtors who simply walk into a home and claim to know the correct market value by just looking at it are fooling the property seller. They may know what it costs to build a home or how to estimate the value of the furnishings. But they do not know what the market is willing to pay for a property in Costa Rica today without looking at the comparable listings that have recently sold.
It is a great thing to sell a property quickly but there is such a thing as ‘too quick’ in a hot market. Today, property sellers in Costa Ballena are being approached by real estate agents today who say that they have buyers for their home and suggest a price to list it with them. And this price may sound good compared to what the property owner paid for it. However, without doing a Comparative Market Analysis, an agent cannot know the correct market valuation off the top of their head.
CMAs are Proof of Work
If a realtor approaches you with buyers for your property without showing you proof of their work for how they arrived at their offer price then you can be sure that they are working for their buyers rather than you as a potential seller.
Remember math class? You must show proof of your work! A realtor’s work is understanding the economics of the real estate market and explaining it to their clients. They must show the comparable listings as well as what the seller will earn when they sell for the realtor’s recommended price, including all of the costs incurred when selling, and give a net total that the seller can look forward to.
Since our office releases quarterly market reports, we know that properties are selling for an average of 95% of the list price in this area, with great listings selling for closer to 100% (and sometimes more). This tells us that the most popular listings are being undervalued, and maybe that is for a reason. Developers may want to sell quickly to have more capital to reinvest. But most real estate in Costa Rica was bought with cash and sellers are generally happy to wait a few months for the best offer since most sensible buyers will need time to travel to Costa Rica to view the property.
CMAs for Buyers
CMAs are an important tool in the home buying process. Without a properly prepared CMA, you risk overpaying for a home, which is likely your biggest investment. Overpaying for a home can cause the inability to make a good return on your investment when you sell the home down the road.
If you’re working with a licensed real estate agent in Costa Rica, they can provide you with a CMA for every home you’re interested in putting an offer on during the course of your home shopping process. Our team of agents will usually do this without you even asking. It’s part of our job to help you determine the best offer price for a home, business, or land in Costa Rica.
If you’re not currently working with an agent, you can find one on our Osa Tropical Properties agent page. This helpful page lets you learn about the different members of our team and see which one best matches your personality. Each of them will offer great CMAs done in their own style. Plus, you can read reviews of our agents from other buyers and sellers.