“Kathleen, I just returned from a fabulous three-week trip to Panama, all on the Pacific coast. The reason for the trip was to check out land prices around the Pedasí area based on some of your articles. What I found was that there are local prices and ‘gringo’ prices. We talked to several couples who have bought property in the Pedasí and the Santiago areas and their stories of real estate agents selling property to Americans at double the cost of the asking price. Is this a trend In Panama?
“I wish I could return in April for your Panama conference, but, for now, our plans are to return to Panama next February, hopefully to buy a piece of property.”
–Donna K., United States
You’re describing two things, both common in developing-world property markets. The first is gringo pricing, as you suggest. Yes, when a seller is presented with a nonlocal potential buyer, his price goes up. All gringos are rich, aren’t they? Anyway, that’s the thinking in much of the world. The way to move through gringo pricing and access local pricing is to engage a local scout to communicate and negotiate with sellers on your behalf. The key is finding a local scout you can trust.
The second thing you’re describing is called net pricing. This is also common in undeveloped, unregulated markets. The way around this is to speak directly with sellers, rather than going through intermediaries or agents. Hard to do if you don’t speak the local language.
Also note that you should be negotiating price, hard, especially when the starting point for the conversation is a list price quoted by a real estate agent.
I cover these topics in detail in my “How To Buy Real Estate Overseas” book, and we’ll address them in person during our upcoming Global Property Summit, taking place March 18–20 at the Marriott Hotel in Panama City, with the help of real estate investment pros from around the world.
