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Agent/Broker Horror Story

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Written by Editor   
Tuesday, 10 April 2007 13:52
I understand the illusion of safety that airlines must instill in their customers. I really do. I'm willing to put up with taking off my shoes for x-rays, generic lineups which I can only assume were created exclusively for the purpose of giving terrorists time to reconsider their faith, and being shown how to put on a seat belt. What I don't understand, and don't appreciate, is why, in Row 10 of the Boeing 737 which was carrying me and my fellow passengers on the four and a half hour flight from Houston to Panama City, Continental Airlines decided that my chair should not recline. Apparently there was an emergency exit behind me and the 3 inches of travel my seatback should have had available would have compromised the otherwise impressive survival rate on airplane crashes. Needless to say I landed at Tocumen International Airport with a sore back and an uncomfortable numbness in my left butt cheek... but I'm likely sharing too much so let's get to the topic at hand.

I had been planning a trip to Panama for a couple months. My fellow investors and I were looking to explore what we believe is a burgeoning country in an effort to find some, as of yet, undiscovered piece of paradise we could call our own and then sell for a handsome profit when our plans for early retirement inevitably collapsed. Being from the U.S., and relatively experienced real estate investors and developers locally, we felt comfortable contacting a Panamanian affiliate of a renowned U.S. real estate agency to aid us with our search, assuming that they would provide the same kind of services we were used to back home.

This process turned out to be far more painful than the unfortunate incline of my airplane seat. If I can provide any advice for investors looking to find property in Panama, it would be to not assume you're buying in the U.S. Panama is a thoroughly different real estate market. Sure, if you want a nice condo on Avenida Balboa contacting one of the many real estate agencies could be a completely satisfying experience, however if your sense of adventure leads you off the beaten path you will be hugely disappointed.

To begin with, Panama does not operate on either exclusive or multiple listing systems. This means that agents have little to no access to the listings of other agents and are always worried that a listing they have will be sold by someone else as the owner is not contractually obligated to sell only through them. This structure breeds adversarial competition and in fact, Panamanian real estate agents appear to have developed a severe allergy to cooperating with anyone else in regards to sales of property.

Secondly, probably due to how hot the real estate market actually is, they are also loathe to sell anything they aren't personally listing so as not to cut into their share of the commission. I even witnessed this amongst agents operating out of the same office. There is very little sharing of information which makes the process entirely frustrating for an investor. In an undeveloped area, inhabited exclusively by mango trees and Atlas Beer advertisements you will be told that there are no available properties if your particular agent doesn't have a listing with someone. However, the 136 other agents who operate in the area will likely have the entire region up for sale amongst them. The trick is finding out exactly who has it and who is selling it, but getting this information on your own is about as enjoyable as a sticking your hand in a wood chipper.

Another frustrating aspect of this type of listing structure is that it is very difficult to compare prices due to the inherent secrecy the system breeds. Because you are limited in the number and type of properties you will see, the prices you will be quoted will be provided with no perspective. As an example I would be shown beachfront property for 20 USD/M2 which appeared to be an amazing deal, only to learn a day or two later that land in that particular area generally sells for about 7 USD/M2. This was information I gleaned only after I discovered the true secret to buying property in Panama: making friends.

Due to the nature of the real estate market structure what Panama desperately needs is a collection of land hunters: people who will work for you, look for you, inquire for you and generally try to get you the best deal available in the area you are interested in. Some agents will do this secretly so their office does not find out; and that's fine if you don't mind dealing with someone who clearly has the moral compass of a used car salesman. However, for investors this will likely be the only way they can get a true and complete picture of the real estate market and the value they are getting for their money. Otherwise, look online, do as much research as humanly possible, try to find people with a lot of information on the area and attempt to create as many relationships as possible.

To conclude then, buying property outside of Panama City for me was about as fun as gonorrhea and the real estate listing system does not work. Find someone you trust, work with them, establish a relationship, make sure they know you are serious about your purchase and go back a few times so you are entirely comfortable with what and where you are buying. Realize, that this will not come cheap: I am paying my special contact a handsome stipend to help me find what otherwise I wouldn't see. Panama is a great country with amazing potential and wonderful people, but nothing good is ever easy.
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Last Updated on Monday, 11 August 2008 21:04