The Kickback Economy: What Every Expat in Panama Needs to Know About Referrals
REAL TALK PANAMA | EXPAT LIFE
Let me tell you something that took me a while to fully appreciate about Panama: referrals are rarely free.
Not in a cynical, “the world is corrupt” kind of way. More in a “this is baked into the culture, and you need to understand how it works” kind of way. Once I wrapped my head around it, a lot of things started making a whole lot more sense.
It’s Called a Kickback Economy, and It’s Real
In Panama, there is a deeply embedded practice of referral fees — locally referred to as comisiones — that operates across virtually every sector of the economy. Real estate, legal services, insurance, construction, tourism, healthcare, and yes, even small personal services. If someone sends business your way, they expect something in return. That’s not corruption — that’s just how commerce flows here.
This isn’t unique to Panama.
Commission-based referral structures exist in sales cultures all over the world. But what makes Panama different is how normalized and openly expected it is, even in informal, everyday contexts. It’s woven into how people think about business relationships, not just formal sales channels.
The Moment That Made Me Rethink Everything
I’ll give you a real example from my own experience with my Panama Real Estate Analytics company.
Someone reached out to me saying they had a client interested in my services. Great news, right? Except before they even mentioned who the client was, before they made a single introduction, they wanted to sit down and negotiate the referral fee structure. How much would they get if the client purchased? What were the terms? Could we get that documented?
My first reaction was somewhere between baffled and offended. I hadn’t asked for any referrals. There was no agreement in place. And here we were, negotiating a commission for a client I’d never heard of, for a sale that hadn’t happened, for a referral that technically hadn’t been made yet.
I’m a simple guy when it comes to this. My personal approach is: if I refer you to someone, it’s because they’re good and I want you to be taken care of. My reward is knowing you got a good experience. I’ve never asked for anything in return, and frankly, I never will. That’s just who I am.
But I’ve had to accept that not everyone operates that way — and in Panama, operating my way actually makes me the odd one out.
Why This Matters to You as an Expat
Here’s the part you need to pay close attention to.
When someone refers you to a service here — a lawyer, a contractor, a real estate agent, a moving company, a property manager — there is a very real possibility that the referral isn’t based purely on the quality of the service. It may be based, at least in part, on the size of the commission that service provider is willing to pay.
What that means practically is this: the cheapest option, the best option, and the referred option are not always the same option. The person steering you may have your interests in mind — or they may have their pocket in mind. Often, it’s some mix of both.
Service providers who participate in referral networks sometimes charge higher fees to cover the commissions they pay out. So you, the client, end up effectively subsidizing a referral arrangement you didn’t know existed.
The Real Estate Angle
This dynamic is particularly pronounced in real estate, and there’s a specific practice worth knowing about.
In Panama, some real estate agents will register you as their client the moment you make contact with them — even during an initial inquiry. In some arrangements, this registration means that if you purchase any property through any agency, that agent may be entitled to a referral fee simply because they logged your information first.
This isn’t universal, and it varies significantly by agency and agreement, but it’s common enough that you should ask questions early. Understand who you’re working with, what representation looks like in Panama’s market, and whether any registration or exclusivity language is being applied to your relationship before you agree to anything.
How to Navigate It Without Becoming Cynical
I want to be clear: I’m not telling you that everyone who refers you to something is operating in bad faith. Many people genuinely make referrals because they’ve had a good experience and want to share it. But you should always take the extra step of verifying independently.
A few things that have served me well:
Ask what someone paid, not just who they used. If a friend recommends a contractor, ask what the job costs. That helps you with baseline pricing.
Shop the referral. You wouldn’t buy a car from the first lot you visited. Use the referral as a starting point, not an ending point. Get at least one or two competing quotes.
Research the service independently. Google, Facebook expat groups, and local forums are your friends. Read the actual reviews. Find people who have used the service without a referral in the chain.
The Bigger Picture
None of this is meant to make you distrust everyone in Panama. The referral economy here is just that — an economy. People are earning where they can, and in a country where wages are lower and margins are tight across many industries, a referral commission can represent meaningful income.
Understanding that context helps you approach it without resentment. This is the system. It operates this way. And once you know the rules, you can make better decisions within them.
Panama is an extraordinary place to live. The people are warm, the pace is manageable, and the quality of life can be genuinely excellent when you’re prepared. But being prepared means understanding the cultural and economic landscape, not just the weather and the cost of mangoes.
Take referrals gratefully. Take them with a grain of salt. And always, always do your homework.
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xo We left the USA for Panama🇺🇸🇵🇦 and Real Talk Panama | Expat Life