Gringo Syndrome

Dear International Living Reader,

The easiest way to get ripped off buying real estate in a foreign country is to speak English. Give yourself away as a gringo, and the chances that you'll get a "local deal" evaporate.

You'll be lucky to walk away with all your fingers, toes, and jewelry.

I'm not being cynical. Just realistic. In every market, especially the emerging markets we deal in, there are two markets: the local one...and the one reserved for foreign buyers. It's possible for a foreigner to operate at the local level and to benefit from local pricing if he's well established, if he has local friends, contacts, partners...

However, present yourself, without local introduction, to a real estate agent or a property owner sun-burned and speaking American English, and you might as well wear a sign saying, "Please, take advantage of me."

In Panama last week, my husband Lief Simon and I met with our preferred real estate agent in Panama City, the one we recommend to readers, the one we believe we can trust (after having met many we didn't). It was this agent, Fernan Luiz, who reminded me of what we call the "Gringo Syndrome."

"The real estate agents and developers in Panama City place scouts in all the gringo hang-outs," he told us, "including the big international hotels like the InterContinental and the Bristol. Sit yourself down at the bar in the Bristol hotel one night and begin talking to the guy next to you about your interest in finding a condo in Panama City or a beach lot on the Pacific...and chances are, before you've finished your drink, another guy, a stranger, friendly and helpful, will join the conversation. He'll know all about the best buys. Then, as you're leaving, he'll hand you his business card. You're hooked."

Fernan Luiz's story didn't sound far-fetched to me...because I've experienced what he described, not in Panama City, but in Granada, Nicaragua, where, late one afternoon, I sat down at the bar of one of the restaurants on the main square to have a drink and wait for my husband. A friend passed by, stopped to talk, and asked me how Lief and I were progressing in our search for a house in Granada. We finished our conversation, and my friend waved good-bye. Then a guy who'd been sitting at the opposite end of the bar moved down to sit alongside me and introduced himself. "Couldn't help but overhear your conversation," he told me. "So you're interested in a house here in Granada?"

I didn't say much, but the guy chatted on for 10 minutes, assuring me he knew the market well and the best deals, including one primo house not yet officially for sale...but he could get me in to see it.

"You know, we do a lot of work with International Living," he added finally. "Maybe you've heard of International Living? They're very keen on Nicaragua, Granada in particular. We've been working with them for years."

I'd never met this guy before. Can't today remember his name. But the conversation has stuck with me. Because, had I been someone else, I could easily have been persuaded that my new friend was knowledgeable and trustworthy. Heck, he came with an implied endorsement from International Living. Couldn't be a bad sort, could he? He gave me his card as he left, wrote his cell phone number on the back, and urged me to call him anytime to arrange to see that house he'd told me about. Had the circumstances been different, I probably would have called him...would have seen the encounter as fortuitous and the guy as well-meaning.

The best defense against the Gringo Syndrome is, first, to know it exists. So you can be on guard against it.

I'm not saying you shouldn't speak about your interest in investing in a piece of real estate in the local bars and hang-outs. In fact, I encourage you to do just that. You'll find out about opportunities this way that you might miss otherwise. But use your head. If a stranger came up to you in a bar in your home town and offered to sell you a beachfront lot...would you act without independent research and due diligence? No. You're smarter than that. Somehow, though, relocate the bar somewhere tropical...and what we call "Margarita Madness" can set in. The sun is shining, the palms are swaying, the sand is soft, and the rum and tequila are flowing. Somehow, in this setting, sensible people can do silly things.

The second important defense against the Gringo Syndrome is to be connected locally. Your skin may still be sunburned and your accent may still be American...but if you are introduced around by a local...represented in negotiations by someone who not only speaks the local lingo but knows the local ways as well...you can penetrate the gringo market...and get a real deal. Our Local Office staff in Panama City can help. Write to them at Panama@InternationalLiving.com.

Your slightly sunburned, definitely American-accented editor,
Kathleen Peddicord

P.S. Fernan Luiz told Lief and me about one of his sales in progress right now: 40 acres in the highlands of Panama for $80,000. Prime property, he told us. Definitely not a gringo deal.

P.P.S. I'm back from Panama, but Lief is staying on for our annual Offshore Opportunities Conference in Panama City later this week. This event, which we co-sponsor with our sister organization the Sovereign Society, is sold-out. Two-hundred-and-fifty readers in attendance, plus 30 speakers over four days. Keep reading throughout the week for highlights and some play-by-play.