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Dangers of Buying a Home Without A Real Estate Agent in Panama

Dangers of Buying a Home Without A Real Estate Agent in Panama

By in Exploring & Living in Panama with 0 Comments

No one ever wants to say “I told you so” but too often in the real estate world, agents are left wishing buyers had taken their advice from the get go. The number one issue we see when it comes to purchasing property in Panama is buyers who try to purchase without a real estate agent. Sure, it can be tempting to think you could get a better deal on your own, but ninety nine times out of a hundred, that isn’t the case here in Panama.

An experienced agent will make the property purchasing process easier every step of the way. Your agent is the expert when it comes to making a deal, finding the best lawyers, and negotiating. Agents are also useful when it comes to chasing down paperwork, following up with lawyers, and making sure everything moves along as smoothly as possible. Could you buy a property without an agent? Sure you could. But chances are it will cost more, take longer, and result in ten times as many headaches.

Below are just some of the reasons why working with a certified real estate agent will save you time, money, and hassle when it comes to purchasing a property.

Risk of Being Conned

No one wants to go into a real estate transaction worried about being conned, but the fact of the matter is – scams are everywhere and Panama is no exception. Obviously there are plenty of good and honest people working in real estate as well, but all it takes is one bad experience to cause you emotional and financial ruin.

The Panamanian real estate market is flooded with agents right now, and not all of them are trustworthy. There are plenty of red flags to watch out for, but unfortunately, many newcomers and foreigners don’t know what to look for, making them easy targets.

Some are North Americans and Europeans that are new to Panama and don’t know the rules yet. They’re contracted by brokerages as soon as they land as a means of tapping into their networks. They’re then paid purely in commission, so the brokerage doesn’t have an incentive to properly vet and train them.

Others are old-timers that have already burned so many people in Panama that they can only sell to foreigners who don’t know their reputation. We’ve seen that scams are most common on presale properties that are sold prior to construction being finished, but this isn’t the only place where buyers can get burned. Working with a reputable real estate agent is the best way to guarantee that you don’t get scammed.

Experienced agents have years of pre-existing knowledge about what firms and developers are reliable and which ones are bogus. Additionally, agents know how to vet developers and ask the right questions such as finding out what plans exist for the area surrounding a new development, the status of financing on the property from the bank, what presale levels look like as a function of construction starts, and the ratio of end users vs investors.

Buying the Wrong Property

To really understand what a property offers, it’s crucial to know everything there is to know about the past, present, and future of your immediate surroundings. It’s not just about the number of bedrooms or when the kitchen was renovated.

One place where this comes up often is with views. With so much coastline, there are plenty of buildings in Panama City that offer ocean views. In fact, a view of the ocean is one of the most commonly sought after property features for many apartment searchers. So what’s the problem? Well, many apartments that have an ocean view today may not have one a year or even a month from now. Unless you are right on the water, then you don’t ever have a guaranteed ocean view. Panama City is a growing metropolis and new buildings (and tall ones) are cropping up all the time.

Knowing what the zoning is like in front of the property you are getting ready to buy is incredibly important. If construction on a new high rise between your dream apartment and the ocean is set to start next month, you might have second thoughts.

Noise issues are another important consideration. New constructions nearby are both an eyesore and can provide an unwanted Saturday morning alarm. Construction isn’t the only thing to be aware of, though. What if there’s band practice at 8:00 every Sunday morning right next to the new apartment you’re thinking about buying? The 2 bedroom of your dreams could be a total nightmare without you even realizing it.

Working with an experienced real estate agent will help you ensure that you fully understand what you’re getting into, even if it means understanding aspects of a property that aren’t visible to the naked eye.  

Overpaying for the Property

There’s nothing worse than buying something you love and then finding the same product at a much lower price. Everyone loves a deal and the best way to get a deal is to fully understand the market you’re shopping in.

If you attempt to buy a property without a real estate agent in Panama you will absolutely overpay. As market information in Panama is very opaque it’s almost impossible to research the past history of a property, therefore making it difficult to get a good sense of what is a fair price.

This is where having a knowledgeable real estate agent really holds value. Real estate agents will help you navigate the market and know what you should be paying, based on in-house closed sales information, new listings coming on line and days on market for their current listings, instead of what the seller wants you to pay.

Another place where you’re likely to miss out on savings when attempting to buy a home without an agent is when it comes to negotiating for special deals. Particularly when working with new developers, there are plenty of perks that buyers can request to sweeten the deal. Why not ask for an extra storage space? Or a prime parking space? Or a free appliance package? Or a year’s worth of maintenance fees?

Developers have even been known to chip in thousands of dollars towards closing costs if you know how to negotiate. A certified agent will have a good sense of which asks make the most sense given the property price, specific developer, and scope of the development.  

Paying More in Time

When it comes to making a real estate transaction, your agent is like the quarterback of your team. Real estate agents keep all the parts and pieces moving forward with constant phone calls, emails and running paperwork back and forth.

In Panama, you need someone advocating for you full time to make sure that your transaction moves forward because in the real estate world, lawyers have 20 things on their desks. Developers have a hundred things on their desks. Bankers have a thousand things on their desks. The government has a million things on their desk. If you don’t have someone fighting for you, your paperwork is likely to get lost at the bottom of all these stacks.  

Transactions where neither side has the benefit of a real estate agent pushing things forward tend to drag on for months and are more likely to end in a breach of contract. While lawyers will deal with things as they come up, a good real estate agent will anticipate problems and are proactive about getting things done.

The sad reality is, there is very little proactivity in the real estate business in Panama. So if you agree with the adage that time is money, your real estate agent will be your best friend.  

Missing Out on the Best Buys

This last perk of working with an agent isn’t unique to Panama. Real estate agents have ways of knowing about new properties before the general public does. If you stick solely to what you can find on real estate websites, you’ll only be seeing a fraction of what’s actually on the market and won’t have the inside insight about what is and isn’t a good deal.

One of the remarkable (yet frustrating for some) things about how Panamanian property sales work is the diversity of ways that properties get listed. Some property listings are never officially published and there are those which are only published via WhatsApp.

There are listings that only get advertised by property managers, lawyers, or neighbors that the public never knows about. Often times, it’s these less formally advertised listings that offer the best deals, but without the help of a real estate agent, it’s hard to find these listings at all.

It’s always tempting to look for a cheaper way to get a job done. When it comes to real estate in Panama, though, paying a little more is almost always worth it. For one, the seller pays most of the commission for a real estate agent, meaning that hiring a good agent won’t even cost you much out of pocket. But given all the factors described above, an agent can save you plenty of money and hassle over the course of your transaction.

Have some real estate background and think you can handle all of the above elements on your own? You may very well be able to. But that doesn’t change the fact that an experienced real estate agent with specific knowledge of Panama will still likely do the job more efficiently and could save you money (and plenty of headaches) in the process.

About The Author

Kent Davis, founder and Managing Director at Panama Equity real estate, has been widely quoted in publications such as Wall Street Journal, Time Magazine, The Miami Herald and the Financial Times for his unabashed views on the Panama real estate market. Panama Equity is regarded as one of the most active real estate agencies in Panama and Kent’s articles, reports, and market research projects have been syndicated by press agencies including Bloomberg and the Associated Press.   Connect with the Author via: Email | LinkedIn | Facebook | Google+

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