If you’re following our blog closely (SURE you are!), you probably saw this post about our difficulties in finding our next rental home. Just to recap, our current six-month rental is drawing to a close and we need to re-house by the end of November. After several unsuccessful months looking for another house to rent (we’ll leave the details to the other post) we finally realized we’d be better off buying a home. Now, understand, this is a sea change for us since we were always determined only to rent in Panama.
So what changed our minds? It wasn’t just the tight rental market. After six months in country we realized that Panama is our home and we’re here for the long haul. So why not make it really official and become homeowners in paraíso?
There are plenty of advantages to owning a home here vs. renting. Besides the fact that we won’t be flushing rent down the toilet anymore, we’re able to take advantage of a 16-year exemption from property taxes because the house was only built four years ago. (Brief explanation: at the time our house was built, all new construction was eligible for a 20-year exemption that can be transferred from owner to owner. However, we understand the law has just changed and the exemption is now only 10 years). And because we’re buying in one of Panama’s most popular tourist destinations, we can turn the house into a short-term or long-term rental or do a house swap when we take off on our own travels. Finally, there’s the market, which is still very much buyer-favorable here (although that seems to be changing). Lots of houses have been sitting on the market, some for years, and prices are still reasonable depending on what you’re looking for. In only a couple of weeks, we saw more houses for sale that we’d seen in the three months we had been looking at rentals.
After strongly considering three other houses, we lucked into a wonderful property in a neighborhood called Brisas de Boqueteñas, about 8 km from Boquete’s main square. They say timing is everything – and this one, for sale by owner, came on the market just in time for us to be able to close before our Nov. 30 deadline. It’s neither too big nor too small, perfectly maintained, and beautifully landscaped. And here’s the best part: it’s fully furnished, right down to the dishes, pots and pans, linens, and even gardening tools. Since we moved down here with only six suitcases and two dog crates (dogs included) to our name, this house is a perfect fit. And the sellers, a lovely couple that is moving back to Canada, could not be nicer to deal with.
So what’s it like to buy a house in Panama? So very different from the U.S. First of all, there is no multiple listing service, so it takes a lot of Web searching to get the big picture of what’s for sale in a certain price range. The realtors here (and I want to say this carefully, because it’s not meant as a criticism) tend to be very territorial. They typically show only their own listings, and It’s not customary to share listings or split commissions with other agents. We were making more progress on our own, and we actually found our house on one of the local expat blogs. Since the listing was a FSBO, we negotiated directly and informally with the owners and settled on a price, contingent on a survey and inspection.
Regarding the inspection, it’s a whole different ballgame down here. There are home inspectors, but unlike the states, mechanical inspections aren’t a mandatory part of the buying process and the inspectors are not as thorough. Lucky for us, we got some help from two great friends, one of whom is a contractor building his own home here, and the other who is retired from a 30-year career as an architect and designed his Boquete home a few years back. With their intimate knowledge of Panamanian construction, these two amigos helped us go over the house with a fine-toothed comb. Their verdict: the house is in great shape and well worth the asking price.
At that point, our attorney arranged for the survey and the lawyers on both sides took over and started drawing up a formal “promise to purchase” contract stating the legal process of conveying the property from the sellers’ corporation to our newly created foundation (a note about that below). Just last week, we all met in our lawyer’s office to sign the contract and we (gulp) made the down payment, to be held in escrow by the sellers’ attorney. Now that money has changed hands, we’re committed!
On our lawyer’s advice, we drew up the paperwork for the house and contents to be held in a “foundation,” a less expensive and less complex option than a corporation. A foundation offers the same legal protections as a corporation but can’t be used for business purposes. Just a few days ago, we got the word that our new foundation had been officially registered with the Panamanian government. All that’s left now is for the lawyers to verify that there are no liens on the property and that the title is clear.
SOOOO . . .If all goes according to plan (this being Panama and all, that’s a big IF!), we will close within the next three weeks and take possession in the final days of November. It’s the smoothest and easiest experience we’ve ever had in buying a house. This time next month, we’ll be sitting on our new terrazzo, wine glass in hand, and pinching ourselves at how well things have fallen into place for us here. It was all meant to be!