Navigating the Real Estate Ocean in Panama

Real estate in Panama has many faces….it seems that everyone is selling real estate and, at times, it can feel like the wild, wild west.  There are some very important factors to consider when looking to purchase or sell real estate in Panama.  First of all, let’s talk about real estate agents, or representatives.  To legally represent a Seller or a Buyer in any real estate transaction in Panama (legally being the key word here) it is required that you have a real estate license or, that you work directly under a Licensed Real Estate Agent or Broker.  The first important factor is to ask your real estate representative what license number they work under as well as what is the corporation (or RUC) number.  A legitimate real estate representative will be working under a corporation where the Agent or Broker is the President and the partner or partners work under that license.  The Corporation pays yearly corporate taxes and maintenance fees, and is legally required to be insured to legally represent any real estate transaction.  This insurance, or Fianza, must be renewed every year and is a requirement by Panamanian law.  Along with the Corporation’s obligations, there is a need to have detailed book-keeping in order to track sales, taxes and expenses.  It is required by law that a certified accountant in Panama be hired to file quarterly tax reports for the Corporation.

Buyer beware; many folks ‘sell’ real estate by sitting in public areas, hotel restaurants or local wireless hot-spots, purposely listening in on others’ conversations and zeroing in on the folks who are vacationing, finding out if they are interested in real estate, and then presenting themselves as the ever kind resident who would be more than happy to ‘show them around.’  This is very common in Panama, particularly in the beach areas.

There are many individuals who are very experienced in operating this way.  They drive the neighborhoods, call any ‘for sale by owner’ signs and tell the owner they may have an interested party.  They negotiate with that owner about what their commission would be and begin to bring their targets (clients) for a ‘showing.’  It is important to ask yourself these questions, ‘is this real estate representative operating in accordance with Panamanian law, are they going to have my best interests in mind, will they be here for me after the sale?’  The safest way to proceed is to find a real estate representative who is legitimately working under a specific license and is paying corporate fees and taxes, who is willing to advertise their corporate name and who has professional references.

The second important factor to understand when buyer or selling real estate in Panama is that there is no Multiple Listing System (MLS).  This is very different from North America, where there is an MLS in place and, in general, an agency will work ‘exclusively’ for a Seller or Buyer.  Not so in Panama.  Be very careful about signing an ‘Exclusivity’ agreement with any agency.  It is not necessary and is certainly not in your best interest.  In the event that an agency tells you they will not list your property without you signing their exclusivity agreement, you may want to check into working with other agencies.

It is, however, common to sign an agreement that states a Seller will pay an Agent or Representative a commission for selling said property.  It is important that you check the language in these agreements.  Make certain that it is not generic in stating that, ‘when property XYZ is sold, seller will pay x% commission to said agency.’  If that is the case, ask the listing agency to change the language to read, ‘when property XYZ is sold by said agent, seller will pay x% commission.’  Make certain that you are not getting into a legally binding contract where the agency demands payment from you, even if another agent, or you yourself, sell the property.  If the agency refuses to make this language change, it would be wise to move on to an agency that has a more ethical approach.

Understanding these important nuances of Panama real estate can help in your approach to selling or purchasing properties.  It is also important to know that finding a reputable and reliable company to work with is readily available.  There are many well established, professional agencies in Panama that can help make your real estate experience a positive one.

Best of luck and happy sales!

Kaye Ashbridge
Concept Panama

www.conceptpanama.com
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