by Claudia Gonella, co-founder of Reveal Real Estate
Imagine you are looking for a house to buy in an overseas market. Let’s pick a country like Costa Rica or Panama, where there is no comprehensive Multiple Listing Service and the market is relatively un-regulated. You meet with a real estate agent and she shows you a few houses.
One of them looks great and you begin to formulate an offer.
But there’s something holding you back. You’ve got this niggling feeling that there are properties for sale that you’re not being shown. You start to wonder: Does your real estate agent have access to all the listing on the market?It’s the perfect question to ask when looking at property overseas. But unfortunately few buyers ask it. Instead they close too quickly on a property, often without realizing that they have only seen a tiny portion of what’s available for sale.
I’m speaking from experience.
When I started researching property in Nicaragua in the early 2000’s, I didn’t stop to ask the question. I thought the process of buying real estate would be the same as in the US. I assumed I could give my requirements to an agent and be shown all the properties for sale in my target area.
But that’s not the way markets work in many overseas countries.
We’re lucky in the US. The Multiple Listing Service (MLS) is a highly efficient mechanism for connecting buyers to sellers. It’s basically a giant shared database of every property for sale and is accessible by all real estate agents. It doesn’t matter very much which agent takes you on a property viewing; you should get a complete picture of what is available for sale.
But in Central America, across most of Latin America and in several European markets, MLS type systems don’t exist. Instead, every real estate agent maintains his or her own private, independent listing database. This means that if you go on a viewing with one agent you’re only going to see the listings that particular agent has managed to accumulate.
It gets even more complicated in some markets. In Nicaragua for example, anyone can sell real estate. In fact your hotel receptionist may be your best contact point for your perfect property, not a real estate agent. In fact, once I worked this out, I ended up buying one of my best performing investment properties through my hairdresser!
The key takeaway is this: If you want to access the best international real estate you have to position yourself firmly in the market. This means you should:
• Tell everyone you meet that you are looking for property (and I mean everyone)
• Go on multiple property viewings with all active agents in your target market.
• Spread the net as wide as possible, following up on every lead that presents itself.
In order to do this well you need to keep good records. Keep track of every property you have been shown and who showed it to you. There will be some overlap and it’s important to ensure that the person who first showed you the property is the one who receives the commission if you end up purchasing. After all, that’s only fair. If you are taken to a property you have already been shown, make this known as soon as possible.
When I was in the market for real estate in Nicaragua my record keeping evolved into a detailed spreadsheet where I also noted down the features, size and asking price of each property I was shown. This ended up being extremely helpful in building an accurate picture of what constituted value in my chosen markets.
You see, another feature of many international markets is the lack of reliable market data. There’s generally no official source of information on price trends, days on the market or sales transactions. The spreadsheet I built became my personal source of market comps and added a great deal of clarity to my decision-making.
So if you are considering purchasing property in a foreign market, do your homework first. Find out exactly how the market works on the ground before you take the plunge. If could make the difference between a good investment and a great one.
Reveal Real Estate is a FSBO listing site that connects buyers interested in property in Belize, Nicaragua, Costa Rica and Panama with sellers who have listed their property for sale. Reveal Real Estate has a free guide for owners looking to sell their overseas property.