Sometimes the customs and habits of the Spanish property market are surprising when compared not only with other countries but also within Spain itself.
Obviously, real estate agents have to make a profit from the purchase in order to get paid for their services. In most of Spain, the agents tend to charge a commission to the seller, which varies according to the price of the property and the agent himself… as the main reasons.
In Madrid, an agent can charge the seller between 3% and 5% depending on the property price, as is the case in some parts of the Costa del Sol where even some developers are ready to give away directly a 5% as long as they sell units quickly. In Cantabria always seems to be a 3%
But in Valencia city the usual process is to charge the seller and the buyer… Yes! Charging directly to the buyer! To you!!! This generates debate even among agents and professionals in Valencia. Some agents from other parts of Spain find just ridiculous to charge both: seller and buyer. In our case, please read the 10 COMMANDMENTS OF THE SPANISH BRICK about which property finder policy works for your interest as a buyer and investor
There is a variety of opinions. “In Madrid they charge all the commission to the seller but here in Valencia we are doing things differently and we share the charges between the seller and the buyer” says Nicolás from Casamagna Real Estate.
Four different scenarios and reactions
As an overseas client (buyer or investor) there are four scenarios to keep into account and the subsequent immediate reaction:
- When the agent tells the buyer that they will be charged and the buyers think: Are you going to charge me? I don’t want to go along with that!
- When the agent does not say anything at the beginning and after all the viewings the client places an offer and at the time of paying a deposit (with the “contrato de arras”) there is a charge of 3% to be paid. So the buyer first gets shock and after hesitates because he has already made up his mind with a property and now has to evaluate the unexpected charge.
- Accept that as a part of the game in Valencia.
- Try to shop arounf to find an agent who you do not have to pay directly any commission, which will narrow your options dramatically since a conventional agent is interested in selling properties from their own portfolio.
A real case that show how charges come from the buyer’s pocket
WE HAVE FOUND AN EXTREME REAL CASE (AND CONTROVERSIAL) to show to what extend all the fees could be paid with the buyer’s monies.
THIS WAS THE CASE: A good property passed from parents to 3 new owners as an inheritance. They wanted to sell straight away. Legally, the new owners’ name was not changed in the title deed during the viewings. Then, just a few days before the “exchange,” the name is legally (and finally) changed on the title deed, while at the same time, was paid with the deposit that the buyer paid with the reservation. EVERYTHING COMES FROM THE BUYER’S POCKET (even the notary fee for the new title deed from parents to new “bridge” owners)… especially now that in Spain sellers are wearing thin.
Confronted points of view
FROM OUR POINT OF VIEW, even if the seller earns less (due to the prices crash) that he was expecting when considering to put the property in the market, the buyer (the “cash provider”) pay all the fees. The buyer always pays everything because the buyer is the one who comes with the money. The buyer also pays the whole agent fee even if the buyer charges the seller.
Do you think that the seller is paying money from his pocket even now? The seller probably will end up in negative equity because he is selling cheaper that when he bought… but in the transaction itself he is not really paying the agent fee at all because the payment is done with the money of the property purchase.
BUT NOT EVERYBODY SHARES OUR POINT OF VIEW. For Trini Martínez, freelancer property finder in Valencia working for The Spanish Brick, says, “in the “good” times, when prices were rising and there was a lot of cash, prices were made up in order to make the buyer pay everything at 100%. Now, the seller really needs to sell and he is sacrificing price (revenue) in order to get the buyer with him and get the transaction completed. From my point of view, the seller has now liabilities and expenses in the selling process”.
As a buyer, sometimes it is difficult to know what goes on
In reality, many times overseas buyers do not really know what is going on, especially because the truth about how much of the commission is coming from the seller is covered up from the agent and the extent to which the numbers have been made up could be also easily hidden.
A clever option is probably to pay to a professional who works for you rather than to pay a fee to someone who is also getting paid by the other side of the game.
In the end, a good deal is a good deal regardless of how much the commission to be paid is, as long as the deal is finally yours. That is why the best thing to do is accept what happens and try to make the agent and property finders work just for you.
THE SPANISHBRICK WORK with investors who pay a fee directly to us and we negotiated everything for them and, believe us, they know everything, how much they pay, they understand where the money goes in detail, the property status, etc.. Additionally, we believe that the best deals are always for the investors who want to work close to us rather than flying around many agents at the same time.
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