In Panama, some things are done in a different way than you are familiar with. A good example is real estate sales and rental listings. In Panama, it’s common to see the same house listed at several different prices with different agents. Sometimes the “spread” can be as much as $100,000 difference for the same house!
Just this week, October 2020, a couple saw the same rental for $1800, $1500, and $1300. What’s the right price? The only way to know is to talk to the owner.
A few months ago, after a Panama Relocation Tour, a lady looking at a house for sale in Dolega, about halfway between David and Boquete. The real estate agent quoted the sales price at $100,000 more than the seller was asking. How did she find out? She drove by the house the next day and saw the owner outside. He told her what the right sales price was.
In North America, most houses for sale are listed as an exclusive listing. This means that one real estate office has the exclusive right to market the property. If that same office finds a buyer, they will typically take about a 6% commission. If an agent from a different office produces a qualified buyer, the “listing” agent will usually agree to split the 6% commission. In North America, a real estate agent has a fiduciary responsibility to the seller/buyer so all the dealings for the transaction are revealed: “on top of the table.”
There are some exclusive listings in Panama too. But most listings are NOT exclusive. Instead, the seller has agreed to pay a commission to whoever produces a qualified buyer. This is why you will see the same house listed with several different offices and at different prices. A typical commission in Panama is 5-6% of the sales price.
But sometimes, the seller has told the agent(s) that they need to NET a certain amount at closing and anything the agent can sell it for over that amount will be their profit. This is called a net listing. Net listings are illegal in most of North America, but it is business as usual in Panama. Here’s an example:
Joe and Mary need to walk away with $150,000 on the sale of their property. Real estate agent Sue advertises it for $220,000 – with room for negotiations, she’s hoping it will sell for $200,000 so she can walk away with a $50,000 commission versus the $12,000 commission she would have earned at 6%.
Maybe $200,000 is the right price for the house. But perhaps $150,000 is the right price. It’s hard to know in Panama because there is not a reliable MLS system to show comps of recent sales in the area. We do have an MLS system but most agents don’t use it and that’s why it’s not reliable.
HOW WIDESPREAD IS THE PROBLEM? [Read more…]