A year ago, the Santa Teresa real estate market experienced a rapid increase in pricing, fueled by the urgency and demand during the pandemic as people from cities around the globe dreamt of relocating to places like Costa Rica. The influx of home buyers from around the world was unprecedented, resulting in low inventory and a strong seller’s market.
This gold rush market kept us on our toes, helping our clients navigate the fast-paced market and make informed decisions, despite the unpredictability of this type of market.
As expected, the market has cooled down, and with increased inventory, we are experiencing a healthy correction with sellers adjusting their asking prices to attract potential buyers. Santa Teresa continues to stand out for many buyers for various reasons, including natural beauty, international crowd, fast internet connection, a similar time zone as the USA, good travel connections, international schools, healthy lifestyle, and excellent surf. The pandemic-fueled sense of urgency for an alternative lifestyle has made room for a desire to find a balanced investment.
In this market, motivated sellers will be cashing out quicker, but how does one set the correct asking price? How does one find the balance between a price that’s too high and one that’s too low?
Strategies for setting a correct asking price in a changing real estate market
There are two types of approaches that can help you find the right price: a top-down approach and a bottom-up approach.
With a top-down approach, the question asked is, “how much can I ask?” Hereby, setting your upper limit, the maximum asking price. When doing so, one needs to consider the following essential factors:
- The state of the real estate market
- Location
- Size and condition
- Comparable properties
It’s essential to research similar properties in your area and their selling prices to determine a fair asking price for your property. A real estate agent has access to comprehensive data on comparable properties in your area and can advise you.
In a correcting market, it is harder to assess whether your neighbors have set a balanced price. We believe the only way out is an open conversation with your trusted and experienced real estate market. A trusted realtor active in your area knows what the current buyer is looking for and can help you advise.
Jeffe Tanghe , Nativu Santa Teresa advisorThe second approach is a bottom-up approach, the question asked is, “how much should I ask?” Hereby setting your lower limit, the minimum asking price. When doing so, one needs to answer the following questions:
- How much did it cost me to acquire the land?
- How much did the construction cost me?
- How much would it cost someone to create the same property today?
- How do I value the time and effort required to get the property to where it is today?
To determine your position between your minimum and maximum price, you need to consider your goals. If you’re looking to sell quickly, you may need to set a lower price to attract more buyers. On the other hand, if you’re not in a rush to sell and want to maximize your profits, you may be able to set a higher price and wait for the right buyer to come along.
In conclusion, determining the asking price for your property requires careful consideration of various factors. Only when you set a fair and competitive price, will you be able to attract the correct buyer within the time frame you need and as such maximize your profits.
