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The case of the €5k commission for the agent and the “skint” seller

 

Now we are going to think seriously about prices, buyers and investors when a bargain comes across.  Investors with a minimum of experience are looking for bargains and understand where the market is now, the main actors and what can be achieved.  It is all about numbers of course.

Buying a property bargain in Spain occasionally involves putting yourself in the shoes of an investor, in order to assess the potential of a property from different perspectives. All about numbers and final cost + potential return.

A couple of months ago I was in Valencia with an investor and we visited a property that was a great deal: €30k, 5th floor in a building with a lift, 3 bedrooms, on the exterior, with a balcony, in a well connected location with many services and good local rental market. Not a holiday apartment, but a strong investment.

It needed some minor refurbishments, estimated at €4k.  For Buy-To-Let it was great: Gross Yield of 10.5%. This deal only comes once every 4-5 months I would say.

The seller was really distressed.  She even owed the last two council tax payments -she said to us.  She kept smoking and smoking during the whole viewing. And she really needed to sell quickly. In Valencia, estate agents tend to charge both sides fees: the seller and the buyer.  This owner was so stressed and stretched so thin that the agent could only charge the buyer  the sum of €5k (instead of the classic Valencia both sides charge of €3k+€3k ) .

This was a transparent deal in terms of final price and commission structure, but with a dilemma: Should I pay a  €5k fee for a €30k property? From my point of view, the agent did not deserve the fee (we sorted out the agent in a business manner before paying the fee) but the deal yes.

So, we went ahead: Good and quick deal !!!!

Some overseas buyers usually get disappointed when they are going to be charged specially a 16% finder fee. But in this scenario, the bargain was such that my investor did not hesitate to give the OK and within two days we went to the notary with the cheque.

PS: The owner was an honest lady… there were two council tax years in arrears (with some interest for being overdue) and nothing else.

 

Other articles of interest:

Spain still a first choice to invest in property and real estate

Be clear about your goals before searching a Spanish property

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