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Beware of NET Listings in Panama

Last Updated - by Jackie Lange

Beware of NET Listings in Panama

Panama RentalIn Panama, some things are done in a different way than you are familiar with. A good example are 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!

In North America, most houses for sale are listed as an exclusive listing. This means that one real estate office as the exclusive right to market the property. If that same office finds a buyer, they will typically make 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 office and at different prices. A typical commission in Panama is 5-6% of the sales price.

volcan rental 1000But 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 there 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.

Last year, I had breakfast with the broker for a local real estate office. He was bragging about how me made $600,000 profit on a NET listing near Boquete.

HOW WIDESPREAD IS THE PROBLEM? [Read more…]

Where Will You Live in Panama?

Last Updated - by Jackie Lange

Where Will You Live in Panama?

panama rental gorgonaDuring a Panama Relocation Tours I go to a variety of beach and mountain communities that have a variety of different price points. I do this so you can see the huge variety of what’s available in Panama. Some areas are more expensive than others. Some areas are more “high end” than others. Some areas are much more affordable. Some areas are definitely rough around the edges.

Too often, people read about a certain town in Panama then decide that is exactly where they want to live… without even visiting first or looking at other areas in Panama. That’s a huge mistake! Sadly, when someone actually sees the area they have read about, they are sorely disappointed because the article they read was so sugar-coated.

I know from nine years of experience doing Panama Relocation Tours that 50% of the people who think they want to live in a beach community change their mind after spending a day or two in the heat and humidity. And 50% of those who think they want to live in the mountains change their mind thinking the weather is too cool for them. That’s why it is so important to visit a variety of different areas before you decide where you want to live.

panama long term rentalLuckily, there are plenty of towns that are half way between the beach and the mountains. So there is always a good compromise between the beach and the mountains. The temperature at sea level is 90 degrees +/- 5. Without an ocean breeze it can feel like 100! For every 1000 feet above sea level, the temperature drops 4 degrees. You can do the math to determine your ideal temperature. If you think 80-82 is your ideal temperature you will enjoy living at 2000 feet above sea level. If you like it a bit cooler, at 75-78, then you will want to search our communities in the 3000 – 3500 foot elevation. Pick the wrong elevation and it will be too hot or too cold for you.

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