real estate Archives | Panama Relocation Tours

Last Updated on June 27, 2020 - by Jackie Lange

Panama Real Estate Post-Covid

Because of the Covid virus Panama’s real estate market took a nose dive. Real estate offices have been closed.. some may never open again. Most notary offices have been closed so you can’t go to a closing. Many contacts were cancelled too. Rentals sat vacant because Panama’s borders were closed and the quarantine prevented anyone from being away from their house for more than 2 hours to buy groceries. So, what’s the future of Panama’s real estate once Panama opens their borders again?

The basic principal of supply and demand indicate that Panama will have much more supply than demand for the next 3-5 years. To make matters worse, in 2020 there has been a big increase in properties and businesses for sale which will add to the already overloaded supply.

For this report about the future of real estate in Panama, I consulted with trusted real estate agents, the biggest developers in Panama and researched what the Panama’s association of real estate agents have to say. I’m also drawing on my 30 years of experience as a real estate investor who monitors real estate trends in Panama and in the United States.

RENT FIRST

Let me state up front that we at Panama Relocation Tours encourages you to rent for at least 6-12 months before you consider buying any property in Panama. Twelve months will give you time to make sure you like living in Panama. Twelve months will give you time to experience both the rainy and the dry season which can be dramatically different in some areas. Twelve months will give you more time to understand the “right” price for houses versus overpaying. In twelve months, you’ll know if you’ve picked the right area or if you need to keep looking at other locations or elevations in Panama.

It is easy to buy in Panama but it could take many years to sell. So, you should not rush to buy something regardless of how good you’ve been told the price might be.

WHY DOES IT TAKE SO LONG TO SELL A HOUSE IN PANAMA?

There are a lot of reasons that it takes many years, sometimes 5+ years, to sell a property in Panama. Most people selling real estate, including real estate agents, in Panama have no previous experience in real estate so they don’t know how to do marketing. We do not have a widely used MLS (multiple listing service) in Panama so it is very hard to determine the right price to list a house at and most sellers/agents start at a price that is WAY too high. Beware that some foreigners selling or renting real estate do not have a work permit so they are working illegally in Panama. Always ask to see their work permit.

Another obstacle is financing. Financing is available at banks but they will require 20-30% down and it could take months for the financing to be approved. Banks will require that you get a life insurance policy naming them as beneficiary just in case you die before paying off the loan. And banks loans must be paid off when you turn 70 which prevents many retirees from getting financing. You will probably not be able to get fixed rate financing.

Some developers offer short term, less than 5 year, financing for new construction.

The other reason it takes a long time to sell is because there is a mismatch between the price point that most buyers are looking for and the price of the inventory that is available for sale. Ninety-seven percent of the people who come on a Panama Relocation Tour are looking for homes under $200,000. But much of the inventory of homes for sale are prices at $250,000 or more. There are not enough buyers in the higher price points so it takes much longer for those properties to sell. Properties in good condition priced under $200,000 tend to sell quickly if they are in a good location.

GROWING INVENTORY = LOWER PRICES

During the 2008/2009 real estate crash, Panama saw far less drop in prices than other countries. But the Covid-19 impact is different. The borders of Panama have been closed so no foreigner buyers could come in. Even people already living in Panama cannot buy houses yet because real estate offices have been closed since mid-March and the notary offices, where you would go for a closing, have mostly been closed too. According to the Panama’s Association of Real Estate, sales are down 90% in Panama at least.

Construction projects were stopped during the quarantine too.

The president of the Association of Real Estate (Acobir), Frank Morrice Arias, stressed that, “in addition to this (covid-19), previously, they had already been facing a market hit due to the decrease in prices in the last four to five years.”

Prices in many areas in Panama were going down before the Covid-19 virus. And now, with even more inventory, we anticipate that prices will need to go down more if a seller really wants to sell.

Morris announced that, “in the residential sector, it will take about three to four years to absorb all the inventory they have and it will be necessary to carry out strategies to mitigate the situation; In the case of an office commercial, where for several years they had excess inventory, it will take five to seven years to recover.”

Elisa Suarez, executive director of the National Council of Housing Developers (Convivienda), explained that “… We are going to face a market where the demand will be quite contracted and where the supply will definitely have to be restructured. This leaves me to think that there is definitely a tendency for prices to fall in order to leave the inventory that we have so far.”
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Last Updated on December 17, 2020 - by Jackie Lange

Buying Real Estate In Panama

Update October 2020: Do Not Buy Real Estate In Panama… not yet! The pandemic has caused a worldwide recession. Panama has certainly been affected too. Real estate prices are coming down and will come down a LOT more over the next year. Most of what’s on the market now in Panama now is WAY overpriced. So, it’s better to just rent for at least a year before you even think about buying anything. This also gives you time to make sure you like living in Panama and that you like the area you think you want to live in. A year will give you time to learn the market and know the “right” price to pay. Definitely do not ever buy any real estate without coming to Panama to see it first.

I’ve been a real estate investor since 1992 and have bought and sold hundreds of properties so I know real estate. I’ve also bought and sold real estate in Panama. In Panama, the whole process of buying and selling are completely different.

Most foreigners selling real estate do not have a license. Just because a foreigner has a license to sell real estate in Panama does not mean they are trustworthy. Foreigners who sell real estate without a license are considered a “consultant” or associate. A foreigner cannot be a “licensed” real estate agent until they have been working with a broker for several years then take a test, in Spanish, to get a license. 99% of the foreigners who sell real estate are not licensed real estate agents.

WHO CAN YOU TRUST?

Any foreigner who is working in Panama or selling real estate is required to have a work permit. If you’re working with an expat (foreigner) to buy or sell or rent real estate, you should ask to see their work permit to verify that they are working legally. An owner can sell their own real estate without having a work permit… unless they have made a business out of buying and selling real estate then they need a work permit.

Most expat real estate agents or salespeople have absolutely no previous experience with real estate. Yet, they want to help you make the most expensive investment of your life so they can make a commission. In many ways, Panama is like the wild wild west when it comes to real estate. There is no code of ethics. Some real estate offices insist that everyone who works in their office operates ethically, but other real estate offices do not have that policy.

If a foreigner is advertising that they have a “real estate agency” in Panama, it could be an illegal operation. Chances are they do not have a work permit either. It is better to work with a company and salespeople who work legally in Panama. Avoid those who are not working legally. By the way, Panamanians do not need a work permit to work in Panama. Only foreigners need a work permit.

Neither the Panamanians nor the foreigners who sell real estate or help you buy real estate are obligated to fiduciary responsibility in Panama. Fiduciary responsibility means that they will put your interest above their own. It’s not required in Panama though some honest real estate agents/consultants do put your interest first and foremost. Others will say and do anything to get the sale and their commission. You would not believe the stories I’ve heard!

Some agents, but certainly not all, will put their commission above your best interest. That’s why it is important to always have your OWN attorney do a title search and create the purchase contract. Your attorney can also give you advice about what is needed to successfully buy real estate in Panama. Unfortunately, many real estate salespeople will not tell you that:

♦ You should always get the property inspected
♦ You should get the septic and water systems inspected
♦ You should verify that there is a Certificate of Occupancy filed
♦ You should verify that all taxes have been paid (even if in a corporation)
♦ Be aware of the pros, cons and dangers of Right of Possession property
♦ 3% capital gains tax (on full sales price) even if a corporation
♦ 2% transfer tax (on full sales price) even if a corporation
♦ Review the survey to verify what you are buying or get a new one
♦ If there is a tax exemption, it needs to be transferred to you
♦ The best way to take title for your situation

Your attorney will make sure that your interest is protected before any contracts are signed, money changes hands, or title is transferred. Most likely, all contracts and other documents will be in Spanish. Unless you are fluent in Spanish it is especially important to get YOUR attorney to create or at least review, all documents. Do not trust what someone other than your attorney says the documents say. You can request that the contract be in Spanish and English.

Closings are handled in a completely different way in Panama. There are no title companies or escrow offices. It is customary to give the seller 5% down when the contract is signed (it’s not held in escrow) so it is imperative that your attorney is involved before any money changes hands. Your attorney should not be the same attorney as the seller’s attorney and certainly not the real estate sales person’s attorney. You need to have an attorney who represents you and your interest. Your attorney will prepare the closing documents, then you and the seller will go to a notary to sign everything. Your attorney will record the documents once everything is notarized. There are slight variations in closings for right of possession properties.

Titled Versus Right of Possession Property

Not all property in Panama is titled. If you are considering buying a property, you should ask the seller or the real estate salesperson for the FINCA (farm) number. With the Finca number, your attorney can do a title search to verify that the person selling you the property is really the owner(s), can determine if there is a mortgage, the balance of the mortgage, if the payments are current, and if all taxes have been paid.

If the seller cannot supply you with a Finca number it is probably a “right of possession” property, meaning there is no title. These properties are usually priced much less than titled property. Because it is not titled, you are taking the risks that someone could come along later claiming that the property has been in their family for years. At that point, you lose your home and all the money you invested. It rarely happens but it does happen.

Right of possession property can be titled but the process takes about 5 years about costs about $6,000 to $100,000. I know some people who have been trying to get their property titled for 10 years with no success. I also know people who lost tens of $1,000s of dollars buying right of possession property. And I know people who have purchased right of possession property with no problems. If you do buy right of possession property, you still need to get your attorney to review all the documents that the seller has to claim their ownership of the property. Get your attorney to review the survey to verify what you are buying. Buyer beware of right of possession property.

Not all right of possession property can be built on. If you plan to build, verify that you can get a building permit before you give anyone any money. If there is a current building on the property, verify that it is legal and can stay.

If you buy titled property, you can avoid any right of possession problems because there is a clear and recorded chain of title.

TAX EXONERATION = NO PROPERTY TAXES

In 2008 the government stimulated the real estate industry by promising a 20-year tax exoneration for properties which were built prior to January 1, 2012. This tax exoneration, which only applies to titled property, can be transferred from one owner to the next. But you should be aware that the tax exoneration only applies to the improvements or construction. You will still need to pay taxes on the land.

The tax exoneration rules changed in 2012. You still get a break on property taxes for houses or condos built after 2012 but not a 20 year tax exemption. Depending on the price, the tax exoneration could be for 15 years to as little as 5 years.

Then in 2018, the property tax laws changed again. If you purchase a titled property for $120,000 or less, you will NEVER have property taxes. Properties valued at $120,000 to $750,000 only have a 0.50% property tax but that is only after the 20 year tax exoneration if it applies.

Right of possession properties currently pay zero property taxes. That’s a plus. But the Panamanian government is talking about requiring all right of possession property owners to title their property which could cost $6,000 to $100,000 depending on the size of the property.

HOW TO TAKE TITLE

In Panama, it is not customary to take title to a property in your own name. Instead, you would take title in the name of a corporation or a foundation. There are several reasons this is done including asset protection and estate planning. Some agents will tell you that you do not have to pay capital gains taxes if you just buy the shares of the corporation instead of the real estate. This is not accurate. If the seller does not pay the capital gains taxes when the property is sold, you could get stuck with the bill later.

There are pros and cons to taking title in a corporation. The biggest “pros” are asset protection and estate planning. You could avoid probate too. The biggest “cons” are the upfront cost in setting up a corporation which can be $1,000 to $1500 depending on which attorney you are working with. There is also a $300 annual renewal fee to keep the corporation alive. If you’re a US citizen, you will also have to report the “offshore corporation” to the IRS. If you take title in your own name, you can avoid these additional costs.

EASY TO BUY, NOT SO EASY TO SELL

If a property is priced right it will usually sell within six months But because there is no way to know what the right sales price is, most properties are not priced right. You cannot go by what other people are asking for their property. Generally, houses priced under $150,000 sell faster. Anything priced over $250,000 could take two or three years to sell. Properties priced over $500,000 could take five or more years to sell. Some houses have been on the market and priced too high for more than 5 years – yet the sellers refuse to lower their price. It’s crazy!

Some sellers try to justify their sales price based on replacement cost but that is not an accurate way to price properties in Panama because building costs vary considerably.

THINGS YOU SHOULD CONSIDER BEFORE BUYING IN PANAMA

If you have health problems you need to know where the closest medical facility is located and how long it will take to get there. It may be better to rent instead of buying.

You will need to determine where the closest grocery store is located and if they have the items you need.

If you travel a lot, you’ll want to be close to an airport.

You may not be able to get fast internet or any internet or cable tv service in some areas. Yet other areas have fiber optics and you can get 100-600mbps internet speed.

You’re not just buying a house, you’re buying a neighborhood so it’s important that the surrounding houses are of equal or greater value to yours or you could have a really hard time selling later.

Always investigate the crime situation any area you are considering buying in. You can get on Facebook to ask people who live there if there have been any break-ins, drug busts or other crime problems. Most areas in Panama have very little crime. But some areas have seen an uptick in crime.

Because there is not an active MLS system in Panama, it is very difficult to determine value. You should not rely on what the real estate salesperson or the seller tells you: instead, you should do your own due diligence. it takes time to learn property values so that’s another reason to wait at least 12 months before buying.

FINANCING

Foreigners can get financing from a bank to buy real estate in Panama. You will need to put down 20-30%. All banks will require a life insurance policy for at least the amount of the mortgage naming the bank as beneficiary. The biggest problem is that banks require most loans to be paid off when you turn 70 years old. It could take several months to get financing through a bank.

You can avoid these hassles by buying with seller financing. Some developers offer 5-year seller financing. And many sellers who have been trying to sell their house a long time will offer seller financing (or you can ask for it) if you pay a 20-30% down payment. When sellers offer seller financing, you may be able to get 0% interest. I’ve helped many people from our tours buy houses with seller financing.

RENT FIRST!

I highly recommend that you rent for at least 12 months before you even think about buying anything in Panama. In that time, you can be sure you like the area. You will have time to keep track of the sales price of homes in the area so you will know the “right” price to pay when you do decide to buy. During the 6 months that you’re renting, you will get to know a lot of people and get referrals for good and honest real estate agents and consultants. You’ll also likely hear about a few salespeople to stay away from. You may hear about a hot deal before it is listed with a real estate agent. If you are moving to Panama, it will take about 6 months to get your permanent residency Visa which is another reason to wait 6 months to buy.

Speaking of listings… many properties you see for sale do not have an exclusive listing with one agent or company. Instead, the seller has told all the real estate sales people in town that they will pay a commission to whoever brings a qualified buyer. With this arrangement, you are likely to see the same property at many different prices on many different real estate websites.

If you are from Canada, do not assume you can trust real estate salespeople from Canada. If you are from the USA, do not assume you can trust real estate sales people from the US. Ditto from Europe, etc.

Panamanians are excellent real estate agents! There are a lot of really good expat real estate salespeople.

If a real estate salesperson goes to church, claims to be a Christian, frequents the Panama forums or Panama Facebook groups, it is NOT a sign that they are trustworthy… the could be just trolling for the next sale/commission. Scammers also frequent forums and facebook… so be careful.

There are a lot of really great real estate agents and salespeople in Panama. You’ll meet some of them during a Panama Relocation Tour and we have recommendations for honest real estate companies and agents n our Online Panama Relocation Guide It’s best to get a LOT of recommendations from locals before you start working with anyone to buy real estate.

EXAMPLES OF REAL ESTATE FOR SALE IN PANAMA

$105,000 Two bedrooms Two bath gated community next to the Pacific Ocean.
Many community amenities including, pools, club house, lake with paddle boats,
BBQ areas, tennis, golf. Only 5 minutes to Westwind Mall and 40 minutes to
Panama City

Only $245,000 for an ocean front house. Three bedroom three bath fully furnished house on two acres ocean front just east of David. It also has a casita on the property which could be rented out of used for guests. Amazing beach and views. It is fully furnished

$259,000 Ocean front condo. Three bedroom, Two bath, fully furnished. Amazing views
and ocean breeze. This is 2 miles to Coronado which has a hospital, many grocery stores,
restaurants and more. And it’s only one hour to Panama City

$69,000 in the cultural center of Panama, Las Tablas. Three bedrooms two baths.
Unfurnished. Fenced yard. Great neighborhood

$125,000 fully furnished 3 bedroom 2 bath 2 living area mountain home near Boquete.
Great investment property or place to live. Ten minutes to downtown Boquete or 20 minutes to David.
This one SOLD recently!

$199,000 for TWO houses. The main house is a two bedroom two bath, fully furnished.
There is a one bedroom furnished rental casita next door for instant income.
This property is 8 minutes to downtown Boquete.

DON’T LEAVE YOUR BRAINS AT THE BORDER!

When you see that gorgeous ocean or mountain view and a house priced much less than you’d pay where you live now, don’t get so excited about the opportunity that you forgot to do the normal due diligence before buying real estate. Always get the property inspected. Never sign any documents or give anyone any money until your attorney has had a chance to review everything.

One other word of caution – don’t buy real estate then leave town trusting someone else to get repairs done or to build your house. You should be present while a house is being built or when repairs are being done.

NOTE: Panama Relocation Tours does not sell real estate. During a tour we will show you several rental properties just so you can get a general idea of what you get for your money in different areas and different price points. We will introduce you to trusted real estate sales people during the tour. Panama Relocation Tours does not accept commissions or “kick backs” for any real estate sales or rentals.

Last Updated on December 22, 2020 - by Panama Relocation Tours

Affordable Real Estate in Panama?

Every week we get emails from someone who is considering a move to Panama, but they are concerned that real estate prices have gone up so much that they cannot afford to buy in Panama. It is true that in certain areas, real estate prices are high. Panama City and the Coronado area are much more expensive than other areas in Panama. Yet, near those areas, you can often find some great real estate opportunities for 50% less or better.

Affordable means different things to different people. It depends on where you are moving from. If you currently live in a high-priced area, like California or Toronto, you will think Panama prices are a bargain.

I moved to Panama from Dallas, Texas. There is more affordable real estate in some parts of Dallas, but it certainly does not have the perfect weather and spectacular views that I have in Boquete. There are trade-offs.

Some Panamanian towns are much more affordable than others. There are many really affordable real estate opportunities in Panama for both an owner occupant and for investors.

Before moving to Panama, I was a real estate investor in Texas since 1992. Many of the same techniques I used to find real estate opportunities there work great in Panama too. The best way to find the best prices is to ask people who live in that area if they know anyone who needs to sell. Taxi drivers are a great resource. Talk to people at bars and restaurants too.

Some of the best real estate opportunities are not listed, don’t have a for sale (“se vende”) sign, and you won’t find them on a website anywhere. You can usually get the best prices on a vacant house especially if the yard is overgrown.

Are you thinking about moving to Panama? Check out our guide to living in Panama and learn more about our relocation tours.

You usually won’t find great deals (below market) listed with a real estate agent.. especially not an expat real estate agent.

Because MLS (Multiple Listing Service) is not widely used in Panama, there is no accurate way to determine a property’s value. Therefore, some sellers price their properties way too high. A good example is a neighbor on the road where I live. It’s on a steep slope with ocean views and mountain views. His house has been priced at $800,000 for more than 6 years. Realistically, it is worth $400,000 based on what other similar homes sold on the same street.

You’re not just buying a house, you’re buying a neighborhood. Some houses are in communities where all the houses are similar styles and price ranges. In those situations, it is easier to determine an accurate price for a house.

Other nice houses are built in an area surrounded by cheap little indigenous houses or shacks. This makes it much harder to determine the correct price because the less expensive homes drive down the price of other nicer homes on the same street. The same thing happens in the US and Canada when you spend $500,000 to build a house on a street with $40,000 houses.

In addition, you can’t really go by what it would cost to rebuild the house today because often it is much cheaper to buy an existing property than to build a new house. And building costs are so subjective depending on the costs of the land, who the builder is, and how the house is built. There is a huge difference in the price of land in Panama just a few miles apart.

If you are buying from the owner directly, you will usually get a much better price. But if the owner is Panamanian and you don’t speak Spanish, there will be a language barrier so it is best to use a Panamanian friend or real estate agent to assist with the negotiations. It’s unfortunate, but sometimes prices go up if the seller knows a foreigner is interested in their property.

SMALL COFFEE FARM IN BOQUETE FOR $120,000

I purchased my 2 bedrooms 2 bath house on a 1/2 an acre coffee farm for $120,000. It has an open floor plan with vaulted ceilings and lots of windows for natural light.

This is a house I had previously rented for $600 a month (fully furnished).

It’s just right for my needs and only an 8-minute drive to downtown Boquete.

Sorry… it is not for sale!

I did a quick search on several websites and Craigslist Panama to see what kind of real estate opportunities are out there. There are MANY! Here’s an example of one mountain property and one beach property.

OCEANFRONT PROPERTY AND HOUSE FOR $100,000 IN THE AZUERO

Sometimes the house is not exactly what you are looking for but the views are amazing. This small house on a large lot with amazing ocean views is only $100,000 in the Azuero Peninsula. In areas where there are fewer expats you will find better prices than areas that have a high concentration of expats.

ONE ACRE PACIFIC VIEW LANDSCAPED GARDEN HOME – $169,500

19th FLOOR CONDO IN CORONADO WITH OCEAN VIEWS – $249,000

This condo is not right on the ocean but it does have incredible ocean views. Condos on the ocean will cost about $50,000 to $150,000 more and be half as big! A friend is renting a similar unit for $950 a month with a one year lease. Short term leases always cost much more.

Sometimes it’s hard to know where to look. I mean, you’ve got the ocean. And the mountains. Plus the golf course. All of that from pretty much any point in your new 19th-floor Coronado condo. And it is now being offered for the reduced price of $249,000!The open living/dining/kitchen area features floor to ceiling windows.

This Coronado condo is a great place to call home, at least in part because it’s in a golf community with ocean views. The condo comes with a transferable membership which grants you access to the course, the golf and beach clubs, the equestrian club, restaurants, bars, an Olympic-sized swimming pool, a spa, and another gym that regularly hosts pilates and yoga classes.

LOOK FOR LISTINGS IN SPANISH

In Panama, the BEST deals (realistic prices) are usually in Spanish… not English! The ads that are exclusively in English are targeting “gringos” or expats usually. That’s why it is better to work with a Panamanian friend or Real Estate Agent. I know a guy who bought a nice house in Caldera for $35,000 working with a Panamanian friend to do the negotiating with the seller. Here’s an example of a $55,000 property just outside of Boquete. YES, there are affordable houses near Boquete too! The style may not be what you are familiar with but it’s comfortable and it is very easy and affordable to make modifications to any property. KEEP AN OPEN MIND!

In Panama, you cannot walk into a real estate office to find out about ALL the properties for sale in an area. Many real estate agents will ONLY show their listings, and many do not share commissions, so they won’t allow other agents to show their listings. It has been my experience, that many properties are for sale and for rent with no sign out front. You will not find them listed anywhere on the internet. Sometimes Panamanian real estate agents know about these “off-market” opportunities. Many Panamanian real estate agents were born and raised in the town and know everyone, and everyone knows and trusts them. If a property is advertised by a real estate agent, it is rarely an exclusive listing. It’s common to see the same house advertised on 5 or 6 real estate websites (often with different prices). The seller has agreed to pay a commission to whoever finds a buyer.

ALWAYS go see the property before you agree to buy. Never sign anything until YOUR attorney has done a complete title search to ensure the person selling the property is the owner. Always have your attorney create the purchase agreement.

You can get a mortgage in Panama, but it will require 20-30% down. And you will be required to get life insurance naming the mortgage company as beneficiary. The mortgage will need to be paid off by the time you are 70 years old.

Even though it is not advertised, some sellers will sell with seller financing. It does not hurt to ask if the seller will take a down payment then monthly payments until the house is paid off. We’ve helped many Panama Relocation Tour clients buy houses with seller financing and zero interest.

I don’t recommend building anything in Panama unless you are here every day during the building process so you can keep an eye on everything.

I don’t recommend buying a fixer-upper house unless you can do all the repairs yourself OR already know reliable contractors in the area. In some areas, it is almost impossible to find good contractors. (Ask me how I know) If a real estate agent says they will help line up contractors to fix the house, do not believe them. It is better to buy a move-in ready house.

One other warning, do NOT buy real estate until you have your permanent residency Visa. You want to make sure you can live in Panama indefinitely before you buy real estate.

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