Buying and selling real estate in Panama can be daunting, with very few clear controls and industry standards, and should be approached from an informed position.

When selling any property in Panama there are two very important issues that need to be determined:

1. Price
2. Ways to list and market your property in Panama

Pricing Real Estate In Panama

Price should be based on the average market price for comparable properties and the price a buyer is willing to pay. The seller needs to choose his price based on market research, and the demand for similar properties in Panama.

One thing sellers often get confused about is the price. Some think pricing for real estate sale has some relation to how much they paid for the property, or how much they'd like to receive as a profit, or even how much they think it's worth.

The real estate market sets the price. The buyers set the price. The seller, along with a competent realtor, can determine the real market value of the property and establish a competitive market price, thus avoiding the common real estate pricing mistakes.

Once the price is determined, a marketing strategy must be selected. Marketing real estate takes time and money and often the seller decides to list the property for sale with a realtor. Real estate companies in Panama do have to be licensed and bonded. The realtor will have agents with specific knowledge about the type of property being sold, as well as the proper channels and marketing strategy to provide maximum exposure of the property to the real estate buying market.

Real Estate Listings can be exclusive or non exclusive, each with pros and cons as discussed below. The key is to know the market: how much buyers are paying for similar properties and price your property accordingly. In today's information age buyers are well informed; it's unlikely that you will find a buyer that is willing to pay 10% or 20% over the market value for a property, due to ignorance about the market.

Exclusive Real Estate listing in Panama

For the seller, an Exclusive listing agreement with a good real estate company often makes sense, as the realtor can put more effort and devote more marketing funds into promoting and selling the property. An exclusive listing will be marketed by your realtor through in house marketing campaigns targeted to other real estate professionals in the business. Most realtors in Panama work in collaboration with other realtors and the sales commissions get split.

With an Exclusive listing it is often better to offer 6% commission, giving each cooperating side 3% commission, which will make all realtors work harder to sell the property at top value. Having an exclusive real estate agreement will give you one realtor that can handle all your questions and also sort out the viability and integrity of the offers and other realtors representing your listing. The seller will want to confirm that their exclusive listing realtor does collaborate with other realtors and will split commissions as needed to sell the property.

There are some realtors in Panama that refuse to work with outside realtors and having an exclusive listing with them will generally be a bad idea as it will greatly limit the exposure of their property. Also, the seller must price the property attractively so that a realtor will be willing to take the exclusive listing. The professional realtors in Panama can do market research to guide the seller in pricing the property.

Non-Exclusive real estate listing in Panama

A Non-Exclusive real estate listing means that the seller can list with many realtors, which may be a good option for a seller who is willing to put time and energy into managing and marketing the listing with the top 50 realtors in Panama and to keep all those realtors updated. This type of Property listing gives the seller flexibility and exposure through several realtors. With thousands of realtors in Panama, however, this will prove very tedious and may not yield optimum results, unless you the seller have a good marketing plan which includes email campaigns, good electronic brochures and a good prospect base.

With non-exclusive agreements, realtors assume the seller has it listed with other realtors, so there is little incentive to spend time and money marketing to other realtors that may already have the listing directly with the seller. If you are willing to make sure you have it listed with the top 50 realtors in Panama and to keep those realtors all updated then this can work well. But often you are better to give the listing to one top realtor that works with a network of other realtors and let them do the work of promoting your property.

Realty Commissions in Panama

The standard real estate commission in Panama is 5% of the gross selling price and as much as 10% in the countryside, depending on location and value of the listing.

Real estate commissions in Panama are normally due when the buy/sell agreement is signed and the buyer makes the non-refundable 10% down payment.

In Panama the non-refundable 10% down payment is used to cover the seller's transfer expenses including the real estate commission. The totally nonrefundable aspect of the initial 10% payment greatly reduces the number of offers that fall through at the end in the Panama real estate market and protects the seller from loss if the deal does fall through.

Farm or countryside properties commissions are often 10% of the gross selling price due to the added costs of managing and showing properties in the more remote areas.

Negotiating the commission is generally not done and is generally a bad idea for the seller if they actually want to sell the property. It's simple: most sales pay 5%, so the motivation level for any realtor to work for less is not very high. The best option for the motivated seller is to offer a higher commission or a performance bonus.

In some cases, if the seller is willing to discount the price of the property for a fast sale so that it's 20% below market, then it may be possible to negotiate a discount of the commission since it becomes a much easier sale for the realtor from a price point of view.

For example:
If you have a $200,000 property this would mean knocking $40,000 off the asking price to saving 1% (2,000) on the commission. Mathematically this is generally not a wise financial choice for the seller.

(Note: for a buyer hiring a Buyer's Agent in Panama can help them tap into these properties that have reduced commissions which have often been sitting on the market for a long time with poor marketing and can be purchased at reduced prices from anxious sellers).

Generally a seller will net more from the sale by offering commission bonuses such as a 6% commission for a sale if the selling price is within 5% of the asking price, and a 5% commission for any accepted offer of 5% below the asking price or an extra bonus from getting a sales agreement within the next 4 months for a quick sale. This gives an incentive to the realtor to sell the property and get top price for it. As long as the price is aligned with the market value, these incentives can help a property to sell faster and for a better price and better total net return to the owner.

Offering the 6% incentive can be especially effective with exclusive listings since the realtors marketing the property will undoubtedly involve other realtors and this gives them to opportunity to make the property a more interesting option to more realtors.

Real Estate Professionals know that it is more profitable to pay full commissions with an added incentive in most cases in order to maximize the marketing effort and exposure of the property for sale in Panama.