What Buyers and Sellers in Costa Rica Need to Know about Property Appraisals

Whether you are simply interested in learning the value of your property or you are considering selling your home, an appraisal can be a good investment. Appraisals, which are simply a professional's opinion regarding the market value of your home, can be useful when you are refinancing and may also be required by the buyer's lender when you are selling your home to ensure it is actually worth the sale price. Regardless of why you may be considering pursuing an appraisal for your property in Costa Rica, there are a few things of which you should be aware.

It's Not Just About Your Home
First, it is important to be aware that while your property forms the centerpiece of the appraisal, it is not the only element that your appraiser will consider. Prior to arriving at your property, the appraiser will typically review local public records, the bank’s own property appraisal records as well as any relevant zoning. Along with confirming the location of your property against a the registered survey, the appraiser will also make a note of any damage and/or improvements as well as compare your property to other properties that have sold recently in the area to arrive at an estimate for your home's value.

Difficult to Get Sold Data
Costa Rica does not provide an MLS system making it especially hard for appraisers to get accurate sales data. The National Registry of Costa Rica, is responsible for all property title records would seem like the logical source to look for accurate data; however, the system has one major flaw. A majority of the values declared for the properties are grossly under estimated because buyers want to avoid paying more taxes on the transfer and subsequent annual property taxes.

Educate the Appraiser
Do not overlook the opportunity to educate the appraiser regarding elements of your home that he or she might not be able to glean from records or from visiting the property. Remember, a visit from an appraiser is an opportunity to showcase your home at its best. If there are any small repairs that need to be made, make sure they are completed prior to the appraiser's visit. While appraisers typically will not allow clutter to inform their valuation, cleaning up your home and yard certainly will not hurt. You should also take advantage of the opportunity to let the appraiser know about any improvements you may have made to the property.

Handling Low Appraisals
It is important to be aware that if the appraiser returns a low value for your property, this could impact a sale in progress and result in negotiations being reopened. This is particularly true if the buyer is seeking financing to purchase your property. If your home fails to appraise for the agreed upon sale price, the buyer likely will not be able to obtain a mortgage for a price above the appraised value. This could result in the deal falling apart completely or the need to agree to a lower price.

While the consequences of a low appraisal can obviously be serious, it should also be kept in mind that you have the right to challenge a low appraisal. If that should happen, do not hesitate to request a copy of the appraisal and ask your real estate agent to review it. Pay particular attention to the comparable homes selected by the appraiser. If the homes used a comparable home’s lack size or features that your property has, you may be able to ask your agent to submit a list of homes that are more suitable for comparison. You may also be able to submit documentation detailing features and improvements in your home that were overlooked by the appraiser. You’ll obviously want to know where the appraiser obtained the comparable homes since it is so difficult to obtain actual sales prices from public records.

Special Notes for Buyers
If you are a buyer considering the purchase of a home, it is also important that you pay careful attention to the final appraisal to ensure it is not inflated. To ensure an accurate appraisal, it is a good idea to ensure the appraiser is not only licensed but is also familiar with the local area. Furthermore, make certain that he or she actually visited the home in person. Request to receive a copy of the appraisal and check it thoroughly for accuracy.