What is my land now?
I'm going to go out on a limb here and identify some specific points that can be used to evaluate property in Costa Rica. At the moment, this practice has a tendency towards black art, since the basis of land values in the southern Pacific zone of Costa Rica has gone off the cliff along with the rest of the world economy.
One of my peers in real estate in Costa Rica developed a rather interesting property valuation formula: take what you paid for the land and add 25% per year, and then reduce that number by 40% to get the current market price. I find this technique brilliant, not so much for its accuracy (this would have been the subject of many debates), but because he actually came up with a method for valuing the earth, which sounds like it would take you somewhere soccer field.
The problem is that we don’t know where this stadium is now.
We work more with other real estate agencies here in the South Pacific in Costa Rica as we move towards a more cooperative real estate profession. One of our competitors invited us to look at a couple of houses in Oyohal, and we had to listen to how he addressed the question “What is my house worth?”. He replied: "You can follow the market, be in the market, or lead the market." To “follow the market” it would be realized that others have lowered their price, and therefore you followed this example. “Being in the market” means staying on the path, up or down, that you feel the market is in. Now, to “lead the market” means that you are expecting a market and lighting a trail with new prices that are compelling to the type of buyers that we now see here in the zone. In today's "low" market, this means that you are making unusually low prices to get a timely sale.
Problem:
The old market has left us. He had his annual ascending trajectory and its peak, and then he just left, leaving us standing here with our eyes down, wondering what to do next. How to evaluate a property when there is no comparable value in a completely rebuilt world?
The other day I went to an open house, showing a luxurious house on the hills above Dominican Costa Rica. What a wonderful home! $ 2,700,000, and this is yours. While I was there, I had a rather new idea that the house was worth every penny and that the world market would most likely agree. The problem here, in the southern Pacific zone of Costa Rica, is that we have to enter the world market in order to get our trade-offs for such property. The high-end home market is in its infancy. There have been several sales of more than $ 1,000,000, but at the moment these sales are a fictitious basis for any kind of market in the zone.
Perhaps this is what is happening in fledgling markets. They start with a few shoppers who know the value of a thing just by looking at it. The rest of us come later, looking for all the necessary data and comparative data to help us determine whether the value has value or not.
Most sellers mean that their property is worth. We ask well - What else could be at this price? By asking this question, we can really ignore some evaluation rules, such as: “Do not use ask prices as comparable. Use only completed sales. ” Well, what if ask prices - everything you have, since the market is gone? What if in this area there was no sale for more than a year, and during this year the world economy turned red, what do you do then?
Converse - talk about it.
Method:
We have adopted the "Conversation" method. Rod and I stand (or sit - depends) on property and discuss its virtues and curses.
Here are the rude criteria for the quality of property that we consider:
- Look
- access
- Number of land
- Amount of useful land
- Confidentiality
- Services - road, water, electric
- Air flow
- Distance from highway
- Who was the developer / was
- The overall "feeling" of ownership - how good?
- neighborhood
For this we apply filters:
- "What else can you get for this price?" and,
- “Where are you at Mr. Seller? (desperate / somewhat motivated / can wait)
Now we, most likely, have received our land value based on a historical understanding of how a property was valued in the market, and understanding that the property now has an inalienable value.
House valuation:
As soon as we establish our land value, we will consider the cost of building a house. This is relatively easy to do, as for building a house now, perhaps around $ 85.00 per foot, largely depending on the finish. At this level you will have several granite peaks and quite pleasant lighting and plumbing. Pool and landscaping are not included. You can transfer your price to a foot up or down, depending on how thoughtful or solid your design and finish are.
If you incur the cost of uncultivated land, the cost of building a house, and then add a "fee for the hassle", you will arrive at the place where you need to start. In addition to the hard costs that you just calculated, how much will the buyer be willing to pay you so that they don’t have to go out and build a house on their own? There is no formula for this number, so this is part of the sale price you can play with.
Bearing in mind the list of prices, you can now "follow the market, be in the market or lead the market."
