Why is it hard to get reliable market comps (and what to do about it)
This post is the fourth in a series that explains how the real estate market works in Central America. Here we look at why it’s hard to get reliable market comps (and what to do about it).
Market comparables (or ‘comps’) are the starting point for a buyer looking to cut a deal in any market. By looking at the price of similar properties, in similar condition, in similar locations a buyer can determine what’s good value and what’s not.
Trouble is, unlike in the US, real estate agents in Central America can’t draw on an industry database – such as the Multiple Listing Service – to bring out comps.
The other obstacle to good comps is how property gets recorded at the Public Registry. In the markets we cover it’s common for the recorded sales price to bear little resemblance to the actual sales price paid to the seller.
There are reasons for this and old precedents, but the upshot for buyers, sellers and agents is that it’s practically impossible to get any base data on sales.
Will “revealing” this feature of the market change the course of the real estate industry in Central America? No, probably not. But it’s important for buyers to understand how things work and to know that they have to rely on old-fashioned legwork and good contacts to get the information they need.
Ferreting out the real estate comps in Central America
We plan to write more on the subject of getting hold of comps in the region. (After all, it’s one of the reasons we set up this site and database of master planned communities.) But here are some steps to start with:
- Begin your research on the Internet. You won’t be able to find out how long properties have been on the market, or actual sales prices, but you will find asking prices. These don’t provide a perfect valuation – they often differ from actual sales prices – but in a world of imperfect data, asking prices are a good place to start.
- Speak with local real estate agents and market experts. The ones with a close ear to the ground will be able to outline actual sales price points for different property categories (e.g beachfront lots in San Juan del Sur or Ocean view condos in Panama City).
- Seek out the best-researched international real estate blogs and news websites for insight into how the market is doing.
- Head on over to Global Property Guide for some great data on global markets.
- Use this site if you’re interested in purchasing in a master planned community.
The point is to let the data drive your investment strategy. Only then will you be able to ferret out the best value real estate in the region.
What to know more about how real estate works in Central America?
Here are the other posts in the series:
Subscribe
Are brokers in Central America playing hard-to-get with their listings? « International real estate in Central America
Dec 05, 2009
[...] Why is it hard to get reliable market comps (and what to do about it) [...]
How real estate works in Central America (and why you need to know) « International real estate in Central America
Dec 05, 2009
[...] Why is it hard to get reliable market comps (and what to do about it) [...]
Why do you have that niggling feeling: “Have I seen all there is to see?” « International real estate in Central America
Dec 05, 2009
[...] Why is it hard to get reliable market comps (and what to do about it) [...]
Is now a good time to buy Panama Apartments? « International real estate in Central America
Jul 01, 2010
[...] accurate price and transaction data is hard to find in Panama – something we’ve written about before. Often the best insight into what the market is doing comes from special offers at individual [...]