15 Questions to ask when purchasing a property in Panama:
Property purchase in Panama is pretty simple: get a real estate agent and start looking in the area where you want to live. But, I’ve lived in Panama for long enough to know that you don’t always get all the answers offered up on a silver platter when you are looking to purchase. So, here I offer some questions you might ask.
Let’s start with the obvious questions:
1. Why Are You Selling?
People move from Panama because of job relocation, life events (marriage, the birth of a child, death of a spouse, or other reason), or simply because they want to upsize or downsize their home. They may decide it’s time to move overseas, or simply to a different part of Panama. But find out why they are selling and moving from this particular house.
Length of Time on Market
How long has this particular home been on the market? In certain areas of Panama, houses are selling very slowly. It could well be, that the house was priced too high, to begin with. If the home has been on the market for a long time, you have a motived seller, willing to negotiate. On the other hand, it may be that other potential buyers found something wrong with it!
2. Previous Selling Prices
Knowing how much the seller paid is helpful for a couple of reasons. First, it tells you if values in the local market have gone up or down since the seller purchased the home. Second, it may help you determine how open the sellers may be to negotiation, and here’s why: If the sellers bought the home at rock bottom, they may be more willing to move down on price since they will still make a reasonable profit. If your sellers purchased the home for close to or more than the asking price, however, they probably won’t be willing to move much—if at all—on price.
3. What’s included in the sale?
I recently had a sale where the parties agreed that certain things would be included, but the seller was taking all personal items. They indicated that this included their bed. The buyer was later upset that the bed was not included in the sale, although it had been indicated and listed in closing documents. Anything that’s considered a fixture is typically included when purchasing a house — think cabinets, faucets and window blinds. However, there could be items that you think are included with the home but actually aren’t. In the case of doubts – ask for a written list as an addenda to the contract.
4. What are Monthly Utility Costs?
This is particularly important in Panama – different areas of towns have different rates. The government subsidises the costs of some areas, but not all. You can’t get away from paying utilities, so know what your monthly budget is up against. Be sure to get an average cost — not the lowest monthly bill — and ask when peak months are.
5. What are the neighbors like?
Getting the true feel of a neighbourhood can be difficult before moving in, but at the very least ask about the neighbours next door! Are they noisy or quiet?
Is the neighbourhood pet-friendly – is it safe to take your dog for a walk or are some of the neighbourhood’s dogs roaming free on the streets? Are there any packs that you should be aware of?
Are there any local social areas that you might find a great place to meet your neighbours and get more involved in the community?
Legal & closing costs: property purchase in Panama
6. How much will I pay in closing costs?
To get a quote for legal fees and closing costs from Gray & Co, please contact us.
In Panama – the seller will pay:
- realtors commissions
- property taxes for the sale – 2% & 3%
The purchaser is responsible for:
- the contract costs (legal fees for drafting up the deed)
- notary fees for the closing & stamp duty
- public registry fees for registration of the public deed
- updating tax department records once the sale has been completed.
If you are purchasing with a mortgage, expect the sale to be done by the bank’s legal department – and you will pay for their fees & costs.
Questions about the area:
7. How much have homes sold for in the neighborhood?
Ask your realtor for a list of comparable listing data for the area or for similar areas. Find out what homes have sold for in the last six months, as well as this month last year – because Panama’s market does fluctuate throughout the year. This may also give you a good idea of what you can expect in the future.
8. Look at the traffic in the area, particularly first thing in the morning and at rush hour
I remember, years ago, before there were two bridges to get to the west side of the Canal, looking at a house in Veracruz. I was in love with this house! But there was something nagging me about it not being right. So after work, I got in the car and went to see it again. I never made it across the Bridge of the Americas that afternoon! There was a car accident further ahead on the way to Arraijan, and traffic was backed up for miles. After 45 minutes in the traffic jam, I did an illegal U-turn and drove home. I was definitely no longer interested in that house.
A lot of things have changed about Panama City since then – but we still have way too much traffic!
If you’ve found a house you really like, wake up extra early and try out that morning commute. Obviously – it might not be like that every morning – but it will give you a good idea. What about the evening commute? Instead of going home, drive to your “new” house.
9. How do the schools rank nearby?
Even if you don’t have small kids, how the schools rank can mean a lot. This is particularly true in the expat communities. Which international schools are in your area? Because eventually you’ll sell your house, and the next buyers may have kids. The quality of schools affects home values.
10. Noise in the neighbourhood:
The noise you hear during the day when people are at work may be different from the noise at night. Be sure to ride by the house during the day and night so you’ll know. Same for weekdays and weekends.
Check other aspects of the neighbourhood that you might not have considered (especially in the interior, when living on hillsides). For example, if you live on a hillside and down in the valley there is a Cantina, and on Saturday night they have a sarao – will you hear the party all night long at your new home? Ask the seller or the neighbours!
If you are buying in town, consider whether there is a hospital nearby? Will ambulance drive by at 2 a.m., blaring their sirens? Are you living close to an airport? What flights regularly arrive and at what times of day? Is there a guy that lives next door and runs his power tools at all times of the day and night?
Neighborhoods can be affected by any number of nuisances including
- speeding on community streets,
- traffic jams and honking horns from impatient drivers,
- bothersome odors (like when the sewage leaks into the local stream – admittedly it doesn’t happen so often any more),
- litter and garbage disposal problems,
- poor road maintenance (ask about the roads in the wet season, not just dry season),
- bright lights, and
- problem neighbors who cause disturbances.
Property purchase in Panama: Trigger questions
11. What Is the Type of Foundation?
Raised foundations allow access under the home to reach plumbing and electrical, as do homes with basements. However, it’s unlikely you will find raised foundations in Panama. The norm is slab foundations.
Also, if purchasing in Costa del Este, Juan Diaz, or even parts of El Dorado, did the builders put up a new subdivision over a wetland area that is now likely to have issues with drainage or dampness?
12. Tell me about these recent renovations
Have there been any busted water pipes or leaks? If you notice new renovations in one particular area of the house – is this saying true: “no one renovates their house to sell unless they’re trying to hide something”?
Obviously, not every renovation is sneaky, but check it out. Is there fresh paint in the kitchen or laundry, covering up water stains? Is there anything else that they’ve replaced just to sell?
Ask about the renovation and why they decided to renovate now. Sometimes a home looks brand-spanking new because it was recently renovated by investors that bought the property for a discount, fixed it up, and then re-listed it for a profit. If that’s the case, that’s okay.
13. How Old is the Roof?
Knowing the approximate age will give you a good idea of how soon you’ll face — and need to budget for — repairs or replacement. A new roof is no small matter – especially in rainy season!
14. Natural phenomena: property purchase in Panama – real issues to consider:
There are two other things to look out for in the tropics:
Where does the water go?
Check out the gutters! We live in a tropical country – it POURS with rain. Gutters are REALLY important here – they are not just for show! And check out where they empty into… what gets flooded by the gutters when it’s raining?
Also consider – if your property is lower than your neighbours – does the rain water from their property pour into yours? Where does it pour out of your property?
Any Infestations of Termites, Carpenter Ants, or Other Pests?
While it’s true that this should be disclosed by the previous owner at time of sale, it might not be fully disclosed. Even if the owner dealt with a past infestation — and can offer proof, such as a receipt for pest control — that doesn’t mean the critters have been totally eliminated. Whatever conditions made your house ripe for infestation in the first place — a slow leak under the house, soft rotting wood that attracts insects — may still be present.
Also consider that this infestations may not originate in your home. It may be a neighborhood-wide problem. Or travelling in from the nearby tropical rainforest.
15. Any Paranormal or Nefarious Activity – property purchase in Panama – final considerations
Haunted houses fall into the category of what real estate pros call “stigmatized houses” — homes that have been the site of happenings like:
- Ghost sightings and other paranormal activity
- A murder or suicide
- A death due to an accident or unusual disease
If the seller reveals the house to be stigmatized, you’ll have negotiating power. A stigmatized house generally sells for 10% to 25% below market value.
I hope you found this list helpful. For legal advice and closing, please contact us!