Commissions – Spanish Property Agents
When selling a property in Spain few vendors will give exclusive rights to one Spanish property agent, which can often result in the same property being offered by different property agents at varying prices, so you may find two agents lining up the same property to show you. It is therefore advisable to check the price with both beforehand as commission rates can fluctuate between 5% and 15%, sometimes up to 25%! Generally speaking, a smaller property agent can afford to offer lower commissions as his outgoings are not so high. However, everyone has the capacity to be greedy and these high commissions on property is pricing Spain out of the world property market.
18 months ago, we made the decision to drastically reduce our commissions on the principle that cheaper prices would result in more sales. An advert offering ‘cheapest commissions on the Costa Blanca’ resulted in nothing more than two abusive phone calls from other local Spanish Agents. Obviously they didn’t want the Brits sabotaging their lucrative ‘empires’ (although my business partner at the time was actually Spanish). Many of these agents were making fortunes in the ‘boom’ period and are unable (or unwilling) to accept that it is past, and that Spanish property with inflated commissions hiking up the price are now beyond the means of many buyers. The other two flaws in this plan, were that not all property can be sold with low commissions. Builders offer a set figure to agents, often up to 15%, whilst other agents will not work with anyone who doesn’t have 5% to share. See (Estate Agents in Spain >>
The buyer therefore has to ask himself - is Spanish property worth the asking price? In many cases the answer will be no. The property could actually be worth up to 25% (depending on commissions added) less than the asking price, meaning that if you buy a property from an agent with high commissions, when you come to sell it could be worth only what you paid for it, maybe even less.
Commission Free property in Spain
Many sellers are opting to sell privately to avoid Spanish property agents commissions. However, this method will not work simply by sticking it on a website and waiting for the enquiries to arrive in your inbox. Selling a commission free property involves some marketing research, legal assistance and a lot of common sense. If you have a villa in Denia for instance, search the 3 big engines – Yahoo, MSN and Google for ‘villas for sale in Denia’ (simply villas in Denia will bring up rentals as well). Choose the top 2 or 3 results to add your property details and be prepared to wait. That’s the easy part - you will need to engage the services of a competent lawyer to manage the legal side, and if you are based in the UK and trying to sell your property commission free here in Spain, you will need somebody to take viewings, introduce them to a solicitor, help them open bank accounts if necessary etc. In other words, act in the same way as a Spanish property agent. Without the presence of such a person, you are unlikely to succeed selling privately. However, cheaper for the buyer this may be – but most foreigners buying in Spain would still prefer to buy through an agent!
Local newspapers, and holiday magazines both here and in the UK are swamped with property adverts so it may be wise to splash out for an eye catching half page ad to avoid yours getting lost in the myriad of others. Make sure you have a ‘se vende’ sign in a prominent place at the property with a local contact number. Many buyers visit the area in which they are interested and walk around looking for property rather than approach property agents.
For the buyer, commission free property for sale is a godsend. Judging by the enquiries we are receiving, the average buyer these days has a maximum budget of £100,000 - £150,000. (145.000 – 217.000 Euros). A 10%, or even 5% commission added to the ‘real price’ of the property makes quite a difference to them - remember they also have to have at least 10% to pay the IVA, legal fees & other expenses.
Spanish property agent Citrus Iberia is running a new trial scheme which will enable vendors to sell their Spanish property virtually commission free, and purchasers to by a property in Spain as near as possible to the true value, similar to the purchasing approach in the UK, with the sellers bearing the majority of costs. For a fee of 2.000 Euros, the property is marketed in the same way as with any ‘normal sale’, with the benefits of using an agent. However, the commission on the sale price will be fixed at 1% for all property. With this approach, the seller’s property price is below that of other vendors and likely to sell quicker, and the buyer gets a property that is actually worth what he is paying.
The Economist reports that house prices in the last 20 years have risen faster in Spain than anywhere else in the world. Had you bought a Spanish a couple of years ago, you would have seen an average of a 30 per cent rise in the value. Although price increases have slowed down, they will continue to rise steadily ensuring that Spanish property is still an excellent investment – but only if it can be bought at the right price.
See other relevant articles
Buying Property in Spain >>
Selling Property in Spain >>
