What is the Process to Sell Property in Panamá?
We have previously reviewed the Buying Process. Here’s the process from the Seller’s point of view.
The real estate sales process in Panamá typically involves the following steps – not much different than in many other countries:
(Click each step to expand/collapse text)
The first step in selling your property is to select the real estate agency that will promote the property for sale and help you with the transfer process. You will also have choices about the kind of marketing/ listing agreement to use.
While the professionalism and methods of real estate people can vary, truly professional real estate companies invest in marketing, receive referrals for many potential buyers and can be of great assistance to you as a seller. The kind of exposure to a wide range of prospective buyers a quality agency provides often leads to offers and sales. A good agency will also be crucial in navigating the offer and contract process as well as the bureaucracy and issues that emerge as you attempt to complete the transaction.
Listing agreements generally come in two different options in Panamá – the “Exclusive” agreement or the “Non-exclusive” or “Open” agreement.
Exclusive Agreement
The exclusive agreement is similar to a listing agency agreement in other countries. Under the exclusive, in exchange for significantly expanded promotion of the property and additional attention, the real estate company will receive a commission regardless of who finds the ultimate buyer of the property even if it is another agency.
Exclusive agreements with Boquete Panamá Real Estate mean that some other agents who wish to promote the property will contact Boquete Panamá Real Estate directly to make those arrangements and cooperate with us to complete the transaction. In this case, there is a shared commission agreement between the agencies.
So why go with an exclusive? Because it works.
Typically, the agency that has an exclusive listing agreement will devote more time and resources to a particular property when they know they will receive a commission if the property sells. That often results in the focused attention and promotion necessary to get property sold.
Boquete Panamá Real Estate has its own version of the exclusive called the Intensive Marketing Program. By the usual definition an exclusive agreement means that only one agency may show the property being offered for sale. Our Intensive version of the exclusive encourages the participation of other agencies. Many other agencies do choose to show and sell Boquete Panamá Real Estate’s intensive marketing program properties.
In the case of Boquete Panamá Real Estate, the track record has shown that Intensives sell much faster on average than non-exclusives. That’s because our exclusive listings are promoted most actively on the website, shown first and more often to prospective buyers when the property meets client stated needs, are the only ones shown on the walls and windows of our office, receive targeted email marketing efforts and are the focus of more proactive team efforts to match buyers to those properties. There is more promotion and an obligation on the part of Boquete Panamá Real Estate to be more intent on getting the property sold when there is an Intensive marketing agreement. That translates to results for sellers. Many of the properties shown on the Boquete Panamá Real Estate website are under the exclusive program and the majority of properties sold by the Boquete Panamá Real Estate team have been Intensive marketing program participants.
When is an exclusive not a good idea?
It is not always appropriate to go exclusive. If you are not able to identify one real estate company that has a solid track record of success in your area or no one agency has adequate staffing and resources to promote your property well, then perhaps it is best not to sign an exclusive listing agreement.
Perhaps you are simply unsure about an exclusive and feel more comfortable starting with a nonexclusive.
The Non-exclusive Agreement
Under a nonexclusive agreement, sellers have no obligation to pay a commission to the listing company if another real estate company or the seller finds the buyer.
Boquete Panamá Real Estate offers a nonexclusive agreement option. While the company has had greater success for sellers under the exclusive or Intensive program, it is the company’s policy to welcome and promote nonexclusive properties. Many of the properties shown on the Boquete Panamá Real Estate site are non-exclusives. Many of the properties sold by Boquete Panamá Real Estate are nonexclusive.
For those not ready to go exclusive, there is really no good reason not to choose the nonexclusive option. It will give you the opportunity to present your property to a wide market and receive offers brought by the agency. When you have more offers, you have more options and you decide whether the deal is right for you.
About Going Without an Agency
There are some sellers who decide to market their properties without the help of an agency. In our experience, these people are often not successful or sell for less than they could have. Marketing without using a company that has an ongoing stream of potential buyers puts sellers at a disadvantage. Their property is exposed to much fewer potential buyers. The limited exposure can lead to selling properties below their true value, a challenging contract and closing process if a buyer is found at all, and often having the property on the market much longer than desired resulting in a lower sale price.
Our honest experience is that many sellers come back to us at a later date wishing they had not lost the precious time in self-promotion or we hear of sellers having very difficult closings or even painful disputes in cases where those issues could have been avoided if Boquete Panamá Real Estate had been there to help.
The bottom line is that it serves sellers best interest both financially and logistically to utilize a quality real estate company in marketing their property. In most cases, the team at Boquete Panamá Real Estate saves our clients equal to or greater than the amount of the commission.
Once you’ve identified your real estate agency and signed the listing agreement, then it is time to set the market price for the property.
Boquete Panamá Real Estate is pleased to assist you in choosing a market price that will provide a sale within a reasonable timeframe while maximizing your return. The company will provide you with suggestions of different price points based on your goals. When you select the price, it’s a good idea to leave a bit of room for negotiation and pick a price appropriate to your particular market.
Studies have shown properties that are priced for current market conditions from the beginning tend to have better final price outcomes than properties that are priced with unrealistically high expectations. Those properties sometimes see a long time on the market which can result in price reductions that could have been avoided.
Regardless, the price decision is up to you. You choose the price and we’ll go to work for you.
After setting the price, then the marketing effort swings into action. The property is put on the Internet, a sign is placed if desired and a variety of promotional efforts go into action.
That’s a good time to evaluate your property and look at it from the standpoint of a potential buyer. Consider what you would think of the property if seeing it for the first time and consider whether the property calls for some painting, gardening, cleaning or lighting improvements. If necessary, stash away some personal items, remove any clutter and do minor repairs that will ensure the property shines making it more appealing to potential buyers.
About Lots or Land for sale in Panamá:
Lots that are overgrown with plants are more difficult to sell… it’s hard for buyers to know what they are looking at. So it’s a good time to do a clearing of the lot. But don’t remove trees. Usually trees are a plus for buyers so we recommend that you don’t remove trees unless they are endangering your home (removal may also require a permit from ANAM, the environmental agency).
Once the property listing is signed, showings can come quickly. The prospective buyer is brought to the property and the property is presented to the client.
If you are aware that a buyer will be stopping by, take a look around and see if the property or home could use a little last minute attention. It’s a good moment to do the dishes, make the beds and bake some cookies or brownies. Usually it’s best to step out when a property is presented to give space to the buyers and to allow the salesperson to get their honest impression. Most buyers won’t provide their true thoughts to the sales person in the presence of an owner. However, it’s your home or property so you are welcome to participate in the showing if that is your choice.
Receiving an offer is an exciting time.
Boquete Panamá Real Estate will ask buyers to sign an offer sheet with the basic terms of the offer which usually includes the price, the payment schedule, which party will pay for closing and other expenses, how the funds will be held or paid prior to the closing, and any contingencies.
Sometimes the offer is fine as it is, but often there is some negotiation between the parties; primarily over price and sometimes over other terms of the offer such as the number of days to closing.
Once the parties have agreed to the general terms, then there is a contract drafted for review by the parties. The contract should be specific about the detailed rights and obligations associated with the sale. This is called a promise to purchase agreement which is a legally binding contract subject to the specific terms cited in the document. Usually, there is an attorney or attorneys who review the contract and help to advise the parties regarding the transaction.
After the fine print of the contract is agreed upon, then it is signed by buyers and sellers and an initial payment or deposit is made. In the past, this deposit was sometimes held by the seller, in part to pay expenses associated with the property and the transfer process. However, it has become common to have a trusted third party agreed upon by all parties to the agreement hold the deposit and sometimes the balance as well. This is similar to an escrow in other countries.
Part of the deposit is often used as detailed in the agreement to pay expenses due by the seller prior to completion of the transfer with the balance released at the closing. Usually, the deposit is nonrefundable as long as the seller complies with the agreement and subject to any agreed upon contingencies specified in the agreement.
After signing and deposit, there is typically a due diligence period for the buyers as well as time for the seller to assemble documentation required as part of the sale.
Due Diligence
Due diligence will include an attorney checking the property (and corporation or foundation that owns the property if applicable) for any liens or liabilities. It is rare for an undisclosed liability to surface after the signing of a promise to purchase agreement.
Sometimes the buyers choose to do an inspection in the initial days after signing to ensure the safety and function of the structure. In most cases, the inspection is to check for major issues or dangers to the property, not for minor repairs that do not endanger the property.
Many buyers also feel more comfortable when there is a resurvey or confirmation of the property size and boundaries. To be fair to sellers, Boquete Panamá Real Estate usually recommends an allotment for a margin of error in the contract given that surveys can differ slightly between surveyors depending on their methods and equipment available at the time of the survey.
Getting Ready for the Transfer – Seller Documentation
Boquete Panamá Real Estate has found that most sellers believe their paperwork is in order and ready for a quick transfer, but upon closer review there are items missing, necessary documents unsigned, documentation errors from the time the seller purchased the property or other issues that must be addressed before a property (or corporation) can be successfully transferred.
Addressing these issues can cause stress and delays. Boquete Panamá Real Estate works actively with sellers and their attorneys to smooth the way for the transaction, facilitates obtaining the necessary clearance certificates as well as problem-solves the inevitable but often unexpected issues sellers run into every day.
It’s a great time…the funds are ready, due diligence is complete and all the documentation is assembled. It’s time to close the transaction.
The purchase agreement should be specific and include the timelines for the closing and the method of transfer. Factors that help determine closing time are the status of the paperwork of the sellers, how quickly the buyers can have the funds in place, and how the property is being transferred. The typical closing time from when the agreement is signed is 30-60 days, but in unsual cases, some transactions take longer and others have happened just a few days or a week after signing.
If the transaction involves the purchase of the corporation that owns a property, there is usually a specific day when the transfer is considered complete and the buyer takes occupancy.
If it is a property transfer without the transfer of a corporation the closing date will depend on how quickly the Panamánian public registry processes the transfer paperwork. It usually takes two to three weeks for the transfer to be completed at the registry. Either party may pay a legal government rush fee for a quick transfer that often occurs in just a day or two.
When the transfer is complete, it’s time to celebrate!