What's The Best Way To Shop For Real Estate In This Market?
(panama-guide.com) Emerging Buyer's Market: With the global economic slowdown, the Panamanian real estate market is becoming a solidly buyer's market. If you have the desire to buy a property and the cash or credit to do so, then you can expect there to be competition between the various builders and developers for your business. Realize this is a significant sea-change for them - for the past three to four years they have gotten spoiled by quick and easy sales and fast contract signings. Everything was go, go, go. But now, you can almost hear the sound of screeching brakes. As a result, buyers will be in a much better negotiating position when dealing with developers and builders.
Put The Real Estate Agents Back To Work: The number of real estate agents exploded in Panama in the past four years. There was so much money being made that a great many people ran out to study and get their real estate license. And why not? It was relatively easy money and not that much work. Once you've got a license, anyone can show new apartments in a sales office. With the turn-around in the market, a lot of those people are going to go back to doing whatever it was they were doing before, driving a cab or what have you. There's no longer enough buyers to keep them all afloat, and most of them probably never should have been selling real estate anyway.
Find A Buyer's Agent: While in theory real estate agents in Panama are supposed to be neutral middlemen who provide the service of acting as a go-between for the buyer and seller, in reality many of the larger real estate firms are hired or granted exclusivity to promote specific projects or developments, one over another. If you're talking to that kind of a person, realize they will be pushing or promoting those deals, and not showing you other stuff that might be a better deal for you. A buyer's agent will work primarily for you, to help you find exactly what you are looking for. They will know about and take you to the properties that are a best fit, and will not emphasize one over the other unless there's a good reason (for you.)
Start With Price Per Square Meter: The first selection criteria you should start with is price per square meter. This is the nuts and bolts of sorting through properties, and with all of the different and confusing variations, it's nice to be able to have a single number to use as a starting point as a standard to go between various buildings and property offers. Just find out how many meters the apartment measures, and then divide the size by the asking price. If they want $225,000 dollars and it's a 150 square meter apartment, then that's $1,500 per square meter.
What's A Good Starting Point? This goes to the basis of your original question. According to Stuart Jackson of GSL Real Estate, the builders and developers in Punta Pacifica have been asking for up to $3,000 per square meter for new construction in the Punta Pacifica area, and for a long time they have been getting those prices. Right now those same builders are lowing their asking prices down to the $2,600 per square meter range. Some people who paid just $1,500 per meter as speculators with the intention to flip those apartments are getting "itchy" and are offering them for as low as $2,000 to $2,100 per square meter, in recognition of current trends in the market. Stuart says he's seen changes in the market, "I'm not saying things have come to a crashing halt, but certainly things are moving much slower." Christmas time is always slow, and the best time of the year is usually the second or third week of January, "so we're waiting to see what happens this year to get a better idea," he said. Without a doubt the high-end sales are down but those properties priced up to $250,000 are still moving.
What's Going To Happen: Stuart thinks the fate of the future of the Panamanian real estate market rests in the economies of the United States, Europe, and Canada. It remains to be seen if the actions of governments with the various bailouts and economic stimulation packages will stop the bleeding and turn things around. He feels that if the other economies pick back up then we really won't see all that much of a change down here, but right now it's still too early to be able to accurately predict which way things are going to go. There are many people out there who invested in real estate in Panama as speculators with an intention to flip those properties for a profit who are now somewhat nervous. For whatever reason, due to losses in the US stock market or what have you, some now need the cash and want to simply liquidate their investments here in Panama and to get out of this market, even if it means just getting their original investment back.
The Effect of Currency Rates: Recently changes in currency exchange rates are particularly important to investors from Europe and the UK. In Panama real estate is bought and sold in US dollars, so the recent fluctuations in currency rates have had the effect of making local real estate less attractive to investors from Europe and the UK. What was a great or fantastic deal is now just a pretty good deal.
A Mixed Bag in a Changing Market: According to Lucy Haines from Panama Realtor.com, the market appears to be "mixed" right now, and there are some strange situations cropping up with regards to price points for properties. Lucy says it appears the market is in the process of switching over from a seller's market to a buyer's market, but in many cases the developers, promoters , builders, and sellers of high end properties don't seen to have caught on to the new reality yet, and "some of them are in denial." But, there are deals out there for people who are willing to put in the time and effort to shop around. "There are some older properties available for as little as $1,000 per square meter," she said. But, at the same time the marketplace is somewhat chaotic right now due to the external influences and mixed perceptions. Everyone is trying to figure out what's going to happen, some people have a better grasp of the new realities, and others are still getting dialed in.
Make Lots of Offers: You can also easily define what you are willing to spend, and again use price per square meter as a standard. If you just set in your mind that you are not willing to spend more than $1,250 per square meter (for anything) for example. Then you know you can quickly and easily make an offer of $375,000 for a 300 square meter apartment, or $308,750 for a 247 square meter apartment, or what have you. A good real estate agent can tell you what's the going price per area - Punta Pacifica is going to go for more per square meter than El Cangrejo, for example.
How Motivated Are You? Are you in a hurry to buy something? If so, why? Quite obviously, demand is coming down at the same time that inventory is going up, so the people who are most likely to be motivated are the sellers. This means you should be able to take your time, shop around, and make low-ball offers. Who knows, maybe someone will take your offer and you'll get a great deal on something nice. There will also be people out there offering property for sale who are basically panic selling because they had intended to quickly and easily flip apartments for huge profits, but now that the market has turned around they are afraid they will get stuck holding inventory they never really intended to buy anyway, so now they just want to dump them for a nice but smaller profit. In any case, shop around.
An Offer Is Not A Contract: Feel free to throw numbers around and to make offers to sellers to see what sticks. You are not obligated to spend a dime until it comes time to sign a contract and write a check. Up until then, it's all just talk. Make as many offers as you want as a way to test and gauge the market. Don't feel bad - when prices were skyrocketing property sellers would put a piece of property on the market at a certain price just to see if they could attract a buyer. Once they got an offer, they would say "never mind, I now want $300,000 more" and put it back on the market at the higher price. Of course the real estate agents got whipsawed in the middle of these games, but now that the market is headed the other way, the shoe is on the other foot so feel free to kick around a little.
Pushy Real Estate Agents? You've got to be kidding. Pushy? That's hilarious. As you're walking out of their office, suggest they update their resume because they are probably going to be looking for another line of work before too long. Your real estate agent should be working very hard to keep you as a customer and client. If they are "pushing" something, then they are not working for you. Either show them the door or walk away and find someone else.
Who Should You Use? I can easily and proudly recommend each and every real estate company that advertises on Panama-Guide. One of the things I do is gently "filter" the companies I allow to advertise on my website. If I hear things that are worrisome or troubling I simply do not take advertising from those guys. You will notice there are several highly visible and prominent real estate companies in Panama who are not advertising with me, and you can rest assured that in many cases they are not here because I don't want them here. On the flip side, most of the companies that do advertise here have been with me for years. And, they have developed admirable track records for customer service, responsiveness, and professional reliability.
Moving Target Alert: As always, anything having to do with Real Estate in Panama is a moving target. The market is in a steady state of flux and what was true yesterday might no longer be true tomorrow. As of right now, 22 December 2008, I consider the viewpoints contained in this article to be accurate and valid. Good luck. Let me know how it turns out.
