Unscrambling The Real Estate Biz

In California I was a REALTOR®.  Real Estate in California is highly regulated by the State and self controlled and monitored by one’s fellow REALTORS® in the local Real Estate Board.  REALTORS® must adhere to a Code of Ethics and if you step out of line either the State or other REALTORS® in your local Board will enforce the rules and Code of Ethics.  REALTOR® is a protected term, a litle that can only be used by members of the National Association of REALTORS®.

This Is Panama – “TIP”

In many different ways things are different in Panama, and particularly in real estate.  Some folks use that “realtor” term even although they are not licensed to do so.  Many of the things real estate sales people do routinely, if I had done those same things in California the State would have yanked my license.  But, as we often say, “TIP” or “This Is Panama.”  You move here because you like different, and it IS different in many ways.

In California “agency” is very important.  Real estate people must disclose who they are working for, either the seller, or the buyer, or both.  In Panama most people selling real estate are working primarily for themselves.  At best participants in a sale are agents for themselves, and also the buyer and seller.  Real estate sales people will show you only the properties where they make a commission and blatantly steer you to the properties where they make the most commission. I guess that makes sense, but only if you know that’s how it works.

Many properties are not “listed” by anyone.  Sometimes these are owned by people who are just so fed up with the whole real estate system that they prefer to take their chances and do it themselves.  There is no “escrow” system in Panama, nor traditional US-style multiple listings [There is an “MLS” operation which frankly plays on North American’s understanding of the term, but is not the same, i.e. a universal data base of everthing for sale.]  With a lot of research you can come up with “comparable” asking prices, but there is no way to come up with comparable sales prices.  There is no tradional North American style title insurance.

The best way to find properties is not the Internet, or the real estate hustlers, but by word of mouth.  Every property we’ve bought we found by word of mouth.  That means being here, talking with folks, following leads, learning some Spanish or finding some Spanish speaking friends who will help you just because they are you friends, and not because they are looking for a cut of the action.

The only professional you really need to buy and sell real estate in Panama is an honest lawyer.  And, just like everything else, don’t assume lawyers in Panama play by the same rules or ethics as North American lawyers, because the law in Panama is very different than in the US!  Most of the law you are likely familiar with is based on English Common Law, which is largely based on the accumulated legal judgement of past cases or bribeprecident.  Not so in Panama!  Panama law is based on old Spanish/French law where judges make the decisions without regard to any past decisions or precident.  In a region, and specifically a country, fraught with problems of corruption, lack of transparency, and bribery, this opens a Pandora’s box of challenges for ordinary citizens seeking justice, and opportunity for lawyers and judges to influence, interpret, predict, and even determine the outcome.  [Anyone who is thinking of moving to Panama should subscribe to and follow the daily NEWSROOM PANAMA which provides a daily dose of new headlines in English.  You will quickly note that much of the space is taken up with articles about governmental and judicial corruption.]

So what’s a person to do?

Do you write off an entire country, with all of the benefits and all of the positive features, because of a system that doesn’t always works, and is riddled with corruption?  If you would, just where in the world do you think you would find perfection?

So you deal with it, the best you can.  And you look for good advice.  In Boquete you can go to SUGAR & SPICE, the local expat morning hang out, and you will find a coffee shop FULL of experts eager to share their expert advice whether they’ve lived here 6 months or 6 years.

Jackie Lange, who owns and operates Panama Relocation Tours, has been giving out advice for 10 years.  She’s conducted over 100 tours.  You can read the reviews, you can talk with some of the folks at SUGAR & SPICE or at the Tuesday Market, and you can check up on the quality and accuracy of her advice.

So I particularly like this piece Jackie wrote about looking for properties in Panama.  If focuses on one aspect of the real estate problem.  For example, just this morning, I found three “listings” on line of my property, none of which I’ve authorized, but have just been cut and pasted off this blog, offered at three different prices!  “TIP!”

So here’s Jackie’s article which discusses the problem …

Beware of NET Listings in Panama

In 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.

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 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.


Not all real estate agents, sales people and property managers do net listings.  But it does seem to be common practice with many real estate professionals.

I posted information on Facebook about Net Listings and the board lit up with people in Panama talking about their ‘not so good’ net listing experiences. Here are some of the comments

Phil said, “ It’s actually worse than people think. Here they practice (net listing). Highly illegal in Canada The owner wants $50,000, the (realtor) lol asks $85,000 and it sells for $75,000, the realtor pockets the $25,000 extra plus 5 percent of the $50,000 lol. And it’s both, Gringo’s and locals that are practicing this, so be careful about who you are working with”

Barbara said, “Found a property to buy, with a $100.000 difference at different realtors…”

Lenore commented, ” One house we viewed, the neighbor told me ahead of time what the owners wanted…the realtor jacked it up another $35,000 when he showed it to us.”

Enny ran in to a similar problem. She wrote, “This is very accurate. I wanted to purchase a home in las cumbres. The real estate agent told me it was $240k I send him an offer. I drove by the house one day and saw a guy closing the door so I asked him if the house was sold, he answered “no” he was the owners friend and if I was interested. I told him I was. He told me that the house was on sale for $200k. So, I asked him the owners name and he only gave me the first name. With that I started to ask around until I was able to find the owner. Contacted him and for my surprise…he was selling the house for $160k. So, the agent wanted almost the double and his friend $40k more. I offered the owner $140k and he accepted on the spot. Today I am a happy homeowner. Stay away from those sharks and try to find the owners.”

Frank said, “The same house was advertised for three different rents with three different agents and one told me I had to pay an extra $250 a month for HOA fees and utilities but the other agents told me they were included!”

It’s like the wild wild west! It’s a crazy situation which makes it hard for you to know what the right price is to pay or who to trust. Keep reading for a solution….



Last week, our tour group saw a 3-bedroom 3 bath furnished rental advertised for $1300. Just as we were leaving, we ran in to a previous tour client who told us she had been to that house three times with three different real estate agents. It was advertised with one agent for $1100. Another agent for $1300. And a third agent for $1400. Because it was all different prices, the tour clients thought it was a different house.

Most likely the owner of the house said they want to get $1000 a month rent. And instead of the agents taking a typical property management commission of 5-7%, they are hoping to make $100 – $400 per month profit PLUS the management fee.

The same thing happened when my son moved to Panama. He looked at a 2-bedroom house that was advertised for $650. Later that day he saw an ad for a 2-bedroom house for $850 advertised with a local real estate office in Boquete. Because it was different prices, he thought it was a different house. To his surprise, it was the SAME house. Guess who was hoping to put an extra $200+ a month in their pocket.?!!


It seems everyone is trying to get in on the action (at your expense).

A hotel owner in Boquete is now offering to help people find a rental if they pay him 50% of their first months rent. He’s also getting 50% of the rent from the owner of the house. So, for a $1000 a month house, the new tenant (YOU) must pay the owner $1000 plus pay the hotel owner $500 for his help in finding the property. It cost the tenant $500 more to use him to help find a rental.

Throughout Panama, people are selling or renting houses who are not legally working in Panama. If you’re working with a foreigner, ask to see their work permit. If they don’t have one, they are working illegally and the government will not get involved if you run in to a problem.  What could go wrong?

Last month, I was contacted by someone who rented a house in Panama and asked for my help. They paid the first and last month’s rent plus a security deposit (unusual for Panama) to the property manager. By the way, the property manager is working illegally (no work permit) with a local Boquete real estate office. One day, the owner of the house knocked on the door and asked who they were and what were they doing in her house. They had a copy of the lease they signed and a receipt for the payments made. Apparently, the property manager, kept the ALL deposit and rent money and never told the owner the house was rented. With a little help from me, they were finally able to get most of their money back but it sure did leave a bad taste in the mouth about dealing with real estate people in Panama. It’s not the first time I’ve heard of something like this happening in Panama.


The solution to avoiding these NET listing situations, where you over pay, is to deal with the owner directly when possible or to at least ask to speak to the owner to get the straight scoop on what the property is for sale or for rent for.

Instead of walking in to a real estate office or contacting a real estate sales person to help you find a house to buy or to rent, take matters in to your own hands. Many properties are not listed with a real estate office. Look on facebook for property for sale or rent in the town you are interested in. Search craigslist for Panama. And check http://www.encuentra24.com.

Honestly, the best way to find a rental is word of mouth – you just need to start asking people if they know of a rental like you are looking for. You’ll be surprised how many leads you can get in a short time.

If you rent a car and drive around, you’ll find for rent and for sale signs for properties which are not listed on any website or real estate office anywhere.

Remember, don’t buy or rent anything without seeing it first. And, it’s better to RENT for at least 12 months before you even think about buying. Twelve months in Panama will give you time to make sure you love living in Panama and that you have picked the right town and microclimate.

During a Panama Relocation Tour, we will introduce you to trusted real estate professionals who can help you find a rental or home to buy – all while avoiding a net listing situation.