Complete Guide to Buying Real Estate in Panama (Step by Step)

Panama is one of the best places to invest in real estate in Latin America. There are many factors that benefit the buyer in Panama, including a dollarized economy, a high growth country and political stability.

In addition, Panama enjoys a geographical location with an easily accessible international airport and direct flights to various parts of the world.

Panama offers a wide variety of real estate options according to the buyer’s preferences. In Panama City there are excellent options with different areas, terraces with beautiful views (ocean or city views) and properties with central locations that allow easy access to various areas.

On the other hand, if the buyer prefers a property in the interior, Panama has excellent beach communities that offer the market excellent houses and apartments facing the sea, with endless amenities, as is the case of Buenaventura, Coronado, Playa Caracol, among others.

If you consider Panama as a potential for your next real estate investment, you should know that the process of buying property for foreigners does not differ when compared to a local buyer, the steps are very similar to buying property in other countries (even United States) but with some minor differences.

Next, we present the complete guide, step by step to follow during the process of buying an apartment or a house in Panama:

1. Choosing the ideal property

The first step to buy a property in Panama is to evaluate well what specifically is what you want. During the decision process, it must be defined what would be an ideal apartment or house based on the buyer’s preferences: if a terrace is desired, ocean view, 2, 3 or 4 bedrooms, number of parking spaces, location, etc.

Having clear preferences, clear communication with the real estate agent is important to see the greatest number of possible options with the desired features, and thus be able to decide on the best option.

2. Formalize the offer

Before sending a purchase offer to the seller, it is ideal that with the support of the real estate agent, a general evaluation of the prices in the market for apartments or similar houses is made. Having this information, you can then formalize the purchase intention to the seller, it is always advisable to start at a price below the current owner plans to sell it.

Once an agreement has been reached with the seller, it is time to request a proforma with the negotiated value.

3. Request a Proforma

A proforma is a document that summarizes all the details of the purchase and sale of the property in Panama, among them are the agreed price, property legal information, property description, property payment terms.

The proforma is an important document, especially when requesting a mortgage from banks. Another important document is the appraisal of the property, which determines the valuation of the house or apartment based on different methodologies. This document is made by a certified valuation company.

4. Verification of Title

With the property number provided by the seller, it can be confirmed that the property is indeed in the name of the owner, the title document (or deed) is in the Public Registry. This verification can be done with the Finca Number of the property with the help of a lawyer or online through the page https://www.rp.gob.pa/

5. Financing

Another important part of the purchase of the apartment is how you plan to buy if it will be paid in full during the purchase process or if you seek a mortgage loan through a bank. It is important to specify this early in the purchase process since the proforma and the purchase contract must include the method of payment for the property in writing.

6. Buy-Sell Contract

The promise of buy-sale contract (Contrato de Promesa de Compraventa in Spanish) is a contract that is drawn up with all the details of the sale of the property, and generally includes all the legal information of the property (Name of the building, Unit No., Finca No., etc.), the agreed price, form of payment and any other clauses relevant to the property transaction.

This document also establishes some important clauses, such as the downpayment amount by the buyer, and the seller’s commitment to pay the sales taxes and deliver the property with all public services up to date, generally conditioned on receiving the rest of the payment (whether it is an apartment, house or land).

7. Payment of taxes

The mandatory taxes to be paid during the sale of the property are 2 types: Real Estate Transfer Tax, which represents 2% of the value of the property, and the Capital Gain Tax, which represents 3% of the value of sale (or 10% of the gains of the property, whichever is less).

Payment of these taxes is made by the owner of the property, generally upon receipt of the initial payment and when both parties have signed the promise of sale contract.

8. Finalizing the process

Once the tax payments, HOA payments and public services are made, the property is registered in the public registry through the deed (escritura) and the rest of the property payment according to the terms agreed in the contract of sale.

If the property is purchased through a mortgage, the bank will request a life policy from the buyer with the sum of the amount financed, in many cases, the same bank offers this insurance. The bank is also in charge of issuing the seller a promise to pay letter of the property once the tax and public service payment certificates have been delivered.

As you can see, the process of buying a property is not very different from that of other countries like the United States, but the time of the entire buying and selling process can vary from 30 to 60 days depending on many factors, such as the method of purchase, if it is purchased through a company, or with which local bank the mortgage loan is processed.