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Boquete Real Estate: The Art of Deception

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Written by Ezra Paskus   
Tuesday, 07 August 2007 01:00
Algebra 2 was a required course when I was in high school. At the end of the year, troche my teacher took me into the hall and told me I would receive a passing grade of 60% instead of the 40% I earned, provided that I did not take Algebra 3 the following year. I think his exact words were, “I’m passing you, don’t come back to my classroom”, or something to that effect. I assured him this would not be a problem. Apparently my brain is not suited to memorizing lengthy solutions and all of that x=y jazz. Luckily, the math involved in real estate purchasing and negotiating is not really algebra. I’m not talking amortization tables and fluctuating mortgage rates, I’m talking percentages for agents.

You like Boquete. At least that’s what you’ve been told. It’s the number one retirement location in the western hemisphere, or some such thing. It’s been hammered into your head by an untold amount of “tourism magazines”, internet sites, and even Stone Philips. Where else in the world can you have perfect climate, cheap cost of living, and a thousand other ex-pats just like you walking around with stunned looks on their faces?

I mean, there is a reason that over 28 developments exist in the Boquete region. And that reason is that there is no shortage of ex-pats from places like California, Florida, and other major cities that are able to sell their homes at a hefty profit and move to Panama off of said profits and still see a bargain. Besides, who’s really that fond of Cat 5 hurricanes and 6.5 earthquakes?

But for the retiree or the person that is just tired of their home country and searching for a better life, is Boquete really the bargain you’ve been led to believe? Think about it this way, when Century 21 and Coldwell Banker and ReMax come to town, do you think that it’s going to be easy to find a real deal? I met someone from LA a few months ago, he came to Boquete and I offered to show him around. He was into flipping properties in the states and was looking to set up shop here. After a few weeks he decided he liked it here and just wanted a place to live. But, he didn’t want to pay for a place he felt the seller would “make all the cream”. I helped him for a few days and then realized that the diesel engine in my Landcruiser would burn up before he ever found what he was looking for. I am dead serious when I tell you that this guy looked at a minimum of three properties a day for 126 days.

He finally found something 25 kilometers from Boquete in a town called Portrorios. What’s my point? Just this, if you are looking for properties in the Boquete region but you must have water, electricity, privacy, and a access road without potholes but don’t want to spend more than $3 USD/M2, than I know a nice place in rural Washington state that’s got your name all over it.

So where does this math part come in? Well, because the big real estate guns are now in town, you can actually have a contract mean something. Century 21 for example has exclusive Century 21 listings, something that wasn’t the case with mom and pop real estate offices a few years ago. Century 21 is asking 8% commission for listing with them. Believe me, they earn it. The average commission in Panama is 5%. The law is that the seller pays the commission. This 8% isn’t so bad, besides, it’s the sellers problem not the buyers, right? Well, here´s what happens. You come to town and go to a major real estate office cause there´s one on practically every corner. You see the listing prices and are somewhat flabbergasted.

So, why not strike out on your own? Or an agent takes you outside and says something like, “yes, I know these prices are a little high, but I tell you what, I call my friend, he has other properties with better price”.

“Oh, that’s good”, you thinks. So he and his friend take you for a drive to a quiet neighbourhood and there is a half acre lot with a nice, cozy, tidy Panamanian house sitting on the back of the lot. Perfect, you think. Ok, took the tour, met the owner, nice all around, how much? “Well, he’s asking $80,000, but I think you can offer $72,000 and he’ll take it”. Great this is just what you were looking for. “And your commission?” “Oh, its built into the price”. But here’s the real action. The agent has already talked to the owner, the owner wants $60,000 and is not willing to pay the commission. So the agent says $72,000 and either keeps the difference or works out something with the owner.

There is no listing, and no contract involved. Because here’s the thing you may not understand, it’s a sellers market. But that’s not all, see the average Panamanian owner has no need to sell. They will just keep on keeping on and/or pass the property to the next generation. So why not ask for some ridiculous price and if it gets sold, well, they’re set for life. So $72,000 may be a deal but isn’t $60,000 better?

Now armed with knowledge you are better equipped for the dirty business of real estate. War is hell.
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Ezra's Article
written by Mateo , August 07, 2007
Nice article Ezra. As a resident Boquetenean, what do you say to people like me who think it's the most boring place in the world and who don't understand any allure whatsoever? Are you seeing any young people move to the region, and if so, what do they like about Boquete more than elsewhere in Panama?
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thanks, matt
written by Ezra , August 08, 2007
Thanks. Well, I´d say the allure is the same one you talk about in your article about Altos de Maria, that is to say, the climate. Although as I write this its rainig hard enough to wash your friggin clothes off. I guess the low cost of living is also a perk, although I have notices a marked increase in that in the last 2 years. But for young people , its a toss up. The mayor has decreaded that bars close at midnite sunday thru friday. Most stay open until 2am on saturday. Other than that, David is 30 minutes +- and thats where the action is friday and saturday. I do have friends my age here, but most are here either cause their family is here, or they are like me, aspiring business people trying to take advantage of the low costs and money coming in from baby boomers. If you like the faster pace and better night life of panama city, then stay there, its your best option.
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but...
written by Mateo , August 08, 2007
Some questions/comments I've been dying to express:

Maybe I'm the only one here, but why do so many people feel the need to fly hundreds of miles south, nearly to the equator of a tropical country, to find "a cool temperate climate"?

Low Cost of Living: From what I've heard, things in Boquete are getting really expensive, the increase in costs going up almost as fast as in PTY? This especially represented in soaring land prices. True or just gossip?

David: People like to live in Boquete so they can leave and go to David? Huh?

Anyways, I honestly think you have really helpful insight. It seems like you are there to catch some of that money flying through, which appears to be the best reason to hit it up. Any interest in writing more articles on the 'Beast that is Boquete' in the future?

Anything else I'm missing? I just don't quite get it.
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Good article
written by Justin , September 13, 2012
Great article. This really applies to Boquete real estate as well.
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Last Updated on Monday, 11 August 2008 20:39
 
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