Estate agent commissions in Spain – gouging?

LoadingFavourite

This topic contains 20 replies, has 6 voices, and was last updated by Profile photo of Melosine Melosine 11 years, 4 months ago.

  • Author
    Posts
  • #51085
    Profile photo of Anonymous
    Anonymous
    Participant

    Many estate agents in Spain have been gouging foreign buyers and sellers for years with their commissions. For that matter they’ve been gouging Spanish developers too, controlling as they do the client flow to developments.

    Many costa agents charge commission of 7.5% or more. The worst case I have heard of was a 35% commission. In theory the seller pays, but the money always comes from the buyer. Anyway it’s somewhat irrelevant as both buyer and seller loose out at the expense of the agent.

    If these high commissions were a fair reflection of the value added by estate agents there would be no cause for outrage. But the truth is they are not. Many agents provide a terrible service and take these commissions nonetheless.

    In my opinion commissions of more than 5% are totally unjustified and always have been. Now that we are entering a buyer’s market it’s high time that buyers turned the screws on the agent’s commission.

    My advice on this subject is as follows:

    – Avoid agencies / organisations that aren’t prepared to be completely transparent about the commissions they earn. Don’t be bashful about insisting on knowing.
    – Don’t work with any organisation that charges more than 5% max.
    – If you are buying through one agent and the instruction for sale has been given to another, it’s quite possible that the commission will be higher so that everyone can get a nice slice of the action. So if you use a network make sure they are not charging more than others for the same property. The internet makes this easier than ever to check.

    Vendors should wise up too. Stop allowing agents to charge unjustified commissions. Don’t accept anything more than 5%.

    Mark

  • #58260
    Profile photo of Anonymous
    Anonymous
    Participant

    I have been trying to find an agent who charges 5% and can’t find one. If I call them they say they can’t tell me on the phone and will explain when they visit. In two visits I have been given a price of the house which varies over one hundred thousand euros and commissions quoted were around 9% and 7.5% another said tell us how much you want. I think they just add on what they want which isn’t much good as the house will then be overpriced and I won’t sell.

  • #58264
    Profile photo of Anonymous
    Anonymous
    Participant

    These sorts of commissions are obscene. But I guess if they all charge 7.5% or more then they have vendors over a barrel.

    You’re quite right about the ‘how much do you want’ option. That’s really open to abuse.

    In a competitive market any agent that undercuts, saying charging 3%, should find buyers and sellers beating down the door. Why is no one doing this?

    It’s time to kick up a fuss, otherwise it will just carry on. Only the agents benefit. The rest pay through the nose for not very much.

  • #58325
    Profile photo of Anonymous
    Anonymous
    Participant

    I’m an agent on the Costa del Sol, and I’d consider 3% a lovely commission to earn. Why aren’t the buyers and vendors beating my door down? Allow me to explain:

    In the UK people will go to an agent who has offices usually not more than a couple of miles from the area they are looking to buy in – whereas most people looking to buy on the Costa del Sol will find an agent on the internet and have little idea of the actual area they want to buy in.

    This means most deals involve 2 agents, one who has the buyer and one who has the property for sale. Now while I may be chuffed with 3%, and even consider 1.5% a nice earner (I just cast my mind back to how much cement I used to have to knock up to earn a grand), other agents do not. There are some, mostly other small and low overhead outfits – but anyone with a nice office and a marketing campaign will not accept anything less than 2.5% on an split deal.

    This means that unless I am fortunate enough to have a property listed myself that suits, I will have to do a split deal making the minimum commission 4% or even 5%. If I use 3% as a hook in my advertising other agents will stop ringing me to offer split deals.

    I could, of course, spend tens of thousands a month on a monster marketing campaign under a big 3% banner if I want the buyers beating my door down, but then I will need to get listed several thousand properties up and down the coast to sell to them all. Tricky, as other agents won’t do split deals for less than 2.5%.

    The vendors won’t beat my door down whatever I do. Most are uninterested in anything other than how much money they will walk with if I sell their property. 95% are unwilling even to give the property a coat of paint to help it sell.

    As a small agent, there is little I can do. What’s needed is for one of the big boys – those with say over 1000 listings and more than 4 offices – to start the ball rolling. However, this is unlikely as most of those work on 7.5% commissions and do very nicely out of it, thankyou.

    Mark is quite correct when he says you should come right out with it and ask the agent how much commission he’s making. Get the bugger to put it in writing, too! I’ve been asked this, and even when it’s 4% the clients often baulk and say “How much?”. I don’t mind, they are quite welcome to go find someone who charges less – they’re usually back onto me within a couple of days.

    Some clients complain that the commission should be 1.5%, like in the UK. There are, however, much more work and many more pitfalls involved in your average deal here compared to back home. Here we have agents, buyers and vendors working in different languages. We have mostly split deals as I mentioned above. We have the Spanish bureaucracy and taxman to deal with. Also, advertising and marketing here is outrageously expensive and almost useless.

    In summary, look for those charging 3 to 5%. There are some, and it’s usually a fair price for the work invested by the agent in the deal.

  • #58331
    Profile photo of Anonymous
    Anonymous
    Participant

    Thanks for your input on this question Bert. It’s always good to hear contrasting viewpoints.

    I know about the split commissions and about the bloody-minded attitude of vendors. None of this helps. Nevertheless it’s still unacceptable to charge 7.5%+. I’m not having a go at you because I know that you don’t do this.

    I don’t have time right now to think about the best way to put this practise under pressure. However I’ll be giving it a lot of thought in future with a view to supporting agents that charge <5% whilst offering a professional service.

    In the meantime we agree that buyers should always bring up the question of the agent’s commission.

    Mark

  • #58338
    Profile photo of Anonymous
    Anonymous
    Participant

    bert

    you sound honest. where do you work. would you be willing to give me the names of honest estate agents who work in the cadiz provnice. you could send it to me at my private email which is yis008@ilbc.net.mm

    i have been looking now for about 4 months but have no leads and wil be leaving soon to look aorund in that area for a home.

  • #58340
    Profile photo of Anonymous
    Anonymous
    Participant

    Mark: I have and still continue to charge up to 7.5% in some cases, but only those where the property is signed up to a network that charges that – in which case my hands are tied. Such networks would be the place to begin your quest to drive the commissions down – as I’ve said they are the ones with enough power to change the market.

  • #58341
    Profile photo of Anonymous
    Anonymous
    Participant

    Monicals: Sorry, but I’m not here in a commercial capacity. I honestly can’t recommend an agent in Cadiz province – all I can say is if you are thinking of using one give me their name and I will tell you if their reputation is so appaling that it has spread as far as Malaga province!

    It will be almost impossible to guage if an agent is trustworthy via his website or email, and difficult to judge by phone. Really you have to meet them. Best advice is to arrange to meet several – try to line up one large, one small and one Spanish but English speaking at least.

    Make sure you see their office, and get them to write down their commission. In fact, get them to right down absolutely bloody everything. Find your own lawyer. Read and digest everything on this forum and website. The moment you feel bullied or pressured, either walk away or plant him one on the nose.

    That should see you going in well prepared to avoid disaster.

  • #58478
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi there

    my tuppence worth on this subject. Many agents in the North Costa Blanca do deals with English agents. I know of one agency who do the marketing in the UK and charge an astronomical 15% on top of the local agents commission – so the buyer could be charged 25% or more. And generally once they buy they are left high and dry – the agent doesnt care.

    I have spoken to a friend of mine who recently started her own agency here in Oliva. She charges 6% because as she says she has to pay the UK agents upto 4%. My point is this – how can a UK agent who would normally charge 1 – 1.5% think they can get away with charging 4% or more because it is in Spain.

    Way back when – four or more years ago when buying a property here cost you less than the average car in UK I could understand these sort of commissions – after all a €30,000 house with 1% commission doesnt justify the agents existence. But now when average house prices are 4 times this and more I cannot see any justification for this.

    My advice to my firend was to inform the buyers of the commission structure – ie her commission and how much the agents are charging. In this way the client themselves can take the UK agent to boot over their high charges.

    When I was working as a buyers agent I did exactly this – then the client had the choice of buying the proeprty or not – or more importantly they knew how much commission was being charged and could lever the agents to reduce their commissions,

    In one particular case the UK agent was there when I informed the potential buyer what his charging structure was (in this case 10%) and it was quite fun to see him squirm.

    Never did business with him again but the client wanted me to act on his behalf. Not the best way to build up a business I know but unfortunately I still remember the principles I initially started with – to look out for the buyer because no-one else did.

    In this way there is complete transparency and the end decision is the clients – but they make it with full information.

    I also know of agents who say they charge 3% commission or 4% and in actual fact they charge both buyer and seller – so they end up charging 8%. This in my opinion is dishonest and the unsuspecting client thinks this is normal.

    In one instance I know of an agent who told a client they charged 3% and then the client came back asking why there was over €100,000 on the price of their house (which amounted to about 20%) – the agents clearly assume the sellers do not use the internet.

    In another instance the buyers were interested in a house for sale by an agent. When we looked around we saw the same house with another agent for nearly €60,000 less. We made an apporach to the owner and managed to secure it for them at more than €80,000 less than the original agent had it on the market for.

    Perhaps one method of highlighting the problem is to create a website which names and shames agents who are known to over charge – merely advertising their average commissions would be enough, or highlighting specific property which are on the market cheaper with other agents, and conversely highlight agents who genuinely charge a reasonable commission.

    I still dont understand how an agent cannot make money charging 2% or 3% – at todays high property prices you dont have to sell many €200,000 houses to make a decent living. But then why would the agents do this – there is nothing to stop them, the can make an even better living and no one is informing the world of their practices. And people coming over here are usually poorly informed so walk in hook line and sinker

    Perhaps it is time for the tide to change.

    Regards

    Vince

  • #58481
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi there

    my tuppence worth on this subject. Many agents in the North Costa Blanca do deals with English agents. I know of one agency who do the marketing in the UK and charge an astronomical 15% on top of the local agents commission – so the buyer could be charged 25% or more. And generally once they buy they are left high and dry – the agent doesnt care.

    I have spoken to a friend of mine who recently started her own agency here in Oliva. She charges 6% because as she says she has to pay the UK agents upto 4%. My point is this – how can a UK agent who would normally charge 1 – 1.5% think they can get away with charging 4% or more because it is in Spain.

    Way back when – four or more years ago when buying a property here cost you less than the average car in UK I could understand these sort of commissions – after all a €30,000 house with 1% commission doesnt justify the agents existence. But now when average house prices are 4 times this and more I cannot see any justification for this.

    My advice to my firend was to inform the buyers of the commission structure – ie her commission and how much the agents are charging. In this way the client themselves can take the UK agent to boot over their high charges.

    When I was working as a buyers agent I did exactly this – then the client had the choice of buying the proeprty or not – or more importantly they knew how much commission was being charged and could lever the agents to reduce their commissions,

    In one particular case the UK agent was there when I informed the potential buyer what his charging structure was (in this case 10%) and it was quite fun to see him squirm.

    Never did business with him again but the client wanted me to act on his behalf. Not the best way to build up a business I know but unfortunately I still remember the principles I initially started with – to look out for the buyer because no-one else did.

    In this way there is complete transparency and the end decision is the clients – but they make it with full information.

    I also know of agents who say they charge 3% commission or 4% and in actual fact they charge both buyer and seller – so they end up charging 8%. This in my opinion is dishonest and the unsuspecting client thinks this is normal.

    In one instance I know of an agent who told a client they charged 3% and then the client came back asking why there was over €100,000 on the price of their house (which amounted to about 20%) – the agents clearly assume the sellers do not use the internet.

    In another instance the buyers were interested in a house for sale by an agent. When we looked around we saw the same house with another agent for nearly €60,000 less. We made an apporach to the owner and managed to secure it for them at more than €80,000 less than the original agent had it on the market for.

    Perhaps one method of highlighting the problem is to create a website which names and shames agents who are known to over charge – merely advertising their average commissions would be enough, or highlighting specific property which are on the market cheaper with other agents, and conversely highlight agents who genuinely charge a reasonable commission.

    I still dont understand how an agent cannot make money charging 2% or 3% – at todays high property prices you dont have to sell many €200,000 houses to make a decent living. But then why would the agents do this – there is nothing to stop them, the can make an even better living and no one is informing the world of their practices. And people coming over here are usually poorly informed so walk in hook line and sinker

    Perhaps it is time for the tide to change.

    Regards

    Vince

  • #58485
    Profile photo of Anonymous
    Anonymous
    Participant

    Instead of naming and shaming bad agents why not set up a good agents charter. Have a website where prospective purchasers can clearly see the names and contact details of reputable and client focused agents. I think a maximum of 5% commision is more than enough. Even if you worked on a split commision basis with a uk agent you would still receive 2.5%. On a 200,000 Euro property that still works out at 5000 euros.

    The other way to approach it would be to offer a tiered commision structure this would still enable agents to make a decent commision on cheaper properties.

    I think purchasers also need to sharpen themselves up and do there homework, you wouldn’t think of buying/selling a property in the UK without finding out what the estate agents commision would be so why do so many do it in Spain!

    Ronnie

  • #58486
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Ronnie

    A good agents charter is ok – but like the builders guild or other such organisations in the UK only a handful of people would look at whats good – and the bad ones would still get away with it. I think a mix of the two would be better, but it would need to be policed because it opens itself up for abuse (as in the spamming wars – there are good blocklists and bad – some are mere vendettas others are legitimate and give people an option for recourse if it is incorrect).

    As for checking the agents commission – I would disagree on this point. When buying in the UK you dont really care what the agents commission is because the house is valued at £x and the seller pays the commission. Therefore if a house sells at £100,000 it is probably valued at £100,000 and the buyer doesnt see any difference if the seller pays 1% 3% or 5%

    However in Spain the seller basically decides the value (very few agents will give an honest answer when asked to put a value on a house), therefore the agent puts his commission on top – so the market value may be £100,000 and the seller gets this, but the buyer has paid perhaps £110,000.

    Therein lies the difference. So in the Spanish case yes you would be much better finding out the agents commissions – but asking the questions isnt enough because I know of agents who will tell you it is only 3% when in fact they are charging you 10% (or more – I have seen 50% charged inone case). In short they lie to you – yes harsh words but it does happen.

    And the way they do contracts over here is very sneaky too. Up here they create a contract between agent and sell and another one between agent and buyer – and never the twain shall meet. So how do you find out – usually you ask the seller- but if the seller isn’t present when you go or you dont speak the same language – then how do you find out.

    The answer is to have someone who does speak Spanish acting on your behalf. But the agents will still try and make sure the owner isnt there – in which case you have to be diligent – go on your own and knock on the door – the owners for sure wont mind. But the agents will of course.

    Or the other alternative is to try and find the same house with other agents – because it is highly unusual that a house is exclusively with one agent. therefore do some homework and look on the internet and for sure you will find the same property for sale and likely to be cheaper.

    So in summary I still think naming and shaming works best – why should bad agents get away with it – and from the one site I know that does it I know that when an agent is on there they try like anyting (threatening court action, cease and desist orders, even physical violence) to get their names back off. They even go so far as to change the name of their business and start anew.

    Regards

    Vince

  • #58496
    Profile photo of Anonymous
    Anonymous
    Participant

    @vbtudor wrote:

    Hi Ronnie

    A good agents charter is ok – but like the builders guild or other such organisations in the UK only a handful of people would look at whats good – and the bad ones would still get away with it. I think a mix of the two would be better, but it would need to be policed because it opens itself up for abuse (as in the spamming wars – there are good blocklists and bad – some are mere vendettas others are legitimate and give people an option for recourse if it is incorrect).

    As for checking the agents commission – I would disagree on this point. When buying in the UK you dont really care what the agents commission is because the house is valued at £x and the seller pays the commission. Therefore if a house sells at £100,000 it is probably valued at £100,000 and the buyer doesnt see any difference if the seller pays 1% 3% or 5%

    However in Spain the seller basically decides the value (very few agents will give an honest answer when asked to put a value on a house), therefore the agent puts his commission on top – so the market value may be £100,000 and the seller gets this, but the buyer has paid perhaps £110,000.

    Therein lies the difference. So in the Spanish case yes you would be much better finding out the agents commissions – but asking the questions isnt enough because I know of agents who will tell you it is only 3% when in fact they are charging you 10% (or more – I have seen 50% charged inone case). In short they lie to you – yes harsh words but it does happen.

    And the way they do contracts over here is very sneaky too. Up here they create a contract between agent and sell and another one between agent and buyer – and never the twain shall meet. So how do you find out – usually you ask the seller- but if the seller isn’t present when you go or you dont speak the same language – then how do you find out.

    The answer is to have someone who does speak Spanish acting on your behalf. But the agents will still try and make sure the owner isnt there – in which case you have to be diligent – go on your own and knock on the door – the owners for sure wont mind. But the agents will of course.

    Or the other alternative is to try and find the same house with other agents – because it is highly unusual that a house is exclusively with one agent. therefore do some homework and look on the internet and for sure you will find the same property for sale and likely to be cheaper.

    So in summary I still think naming and shaming works best – why should bad agents get away with it – and from the one site I know that does it I know that when an agent is on there they try like anyting (threatening court action, cease and desist orders, even physical violence) to get their names back off. They even go so far as to change the name of their business and start anew.

    Regards

    Vince

    Yes I agree lets name and shame them. These despicable people deserve it.

  • #58503
    Profile photo of Anonymous
    Anonymous
    Participant

    @vbtudor wrote:

    But the agents will still try and make sure the owner isnt there – in which case you have to be diligent – go on your own and knock on the door – the owners for sure wont mind. But the agents will of course.

    With good reason – the agent has paid money to bring the buyer and seller together and should not expect for them both to turn round and bite him.

    I know many agents here who refuse to list or show property if anyone lives there – the situation above is by no means unusual.

    Of course, this is for the most part the fault of the agents for charging outrageous commissions in the first place, meaning we’re now in a hole where the buyer doesn’t trust the agent and the agent doesn’t trust the vendor. All manner of contracts and viewing registrations are of course signed, but at the end of the day it’s only very rarely practical for the agent to try suing the vendor for his commission.

    I’m not sure what the best way out of this is – in our company we tell the buyer and vendor up front what our commission structure is in an effort to make them stay loyal. In most cases it’s 3% so we can afford to be honest about it. People still go behind our backs, though. 🙁

  • #58529
    Profile photo of Anonymous
    Anonymous
    Participant

    Is there actually anything in law about the maximum commission that estate agents in Spain should charge?
    There is a professional organisation called API (Agente de la Propiedad Inmobiliaria) which seems to be the most respected estate agency organisation in Spain – they insist that their members carry PI insurance and they say that the fees that their agents charge are “regulated” but I cannot find out in what way or to what limit.
    Of course, barfly estate agents will always operate above any law but I would still be very interested to know the answer for future reference. Thanks.

  • #58530
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi there Mrs C

    the rules regarding estate agents in Spain were relaxed about 5 years ago. It is not a requirement to be API approved. Yes they are more regulated than none API members but many who claim to be API members are in fact using old or even bogus API certification numbers. But whatever it is not the law that estate agents need to be API approved nor is it Law that there is a charge cap.

    Unfortunately you will find that most Foreign estate agents have no API accreditation at all. This doesnt necessarily make them bad – but you need to be wary. However a lot of them are only interested in taking your money and once they have your commission their after sales service ceases to exist.

    The commissions charged can vary greatly from a mere 1% (I know of only one agent who charges this little) to a whopping 100% (in one case locally) – more typically it is around 10%. Spanish agents tend to be API approved (though even this situation is changing) and charge around 3%.

    Hope this answers your query

    regards

    Vince Barnes

  • #58534
    Profile photo of Anonymous
    Anonymous
    Participant

    Thank you for your reply. I know that only a relatively small proportion of estate agents belong to API, but I was thinking that the next time I have cause to use an estate agent in Spain I would look for an API member (checking the validity of their membership of course! Got caught out like that once with a UK letting agent, fraudulently purporting to be a member of a professional body! Never again).
    I have proof that many agents add on 30-50% commission which to my mind is totally unacceptable, verging on the immoral. 3% I can live with!

  • #58562
    Profile photo of Melosine
    Melosine
    Participant

    When buying land only is the commission charged still the same level ?
    If so we were VERY fortunate.
    After reading this subject we ,the buyers,were charged less than 3% (abt 2.80 if my maths are correct). The vendor who we met wasn’t charged at all.
    This by a recognised estate agent in Aguilas who spent a lot of time hunting legal parcela’s for us.
    Perhaps Murcia have yet to catch on 😆

  • #58563
    Profile photo of Anonymous
    Anonymous
    Participant

    Hei Melosine

    Generally agents dont distinguish between land or houses they charge the same commission. Also not all agents are the same – even in this area I know of a few agents who only charge 3% and they are Englsish agents(the one caveat in one instance is that they charge a minimum of €6,000 so on anything less than €200,000 this works out at more)

    So it is possible to find decent honest agents that arent Spanish – but generally they tend to be the exception rather than the nrom. It is always worthwhile asking the agents how much they charge before purchasing. If possible get them to put it in writing – you then have a possible come back later if you find they have charged more.

    Good luck in your house building quest – I am assuming that is why you bought a plot of land

    Regards

    Vince

  • #58565
    Profile photo of Anonymous
    Anonymous
    Participant

    Thankyou Vince.
    On that score we appear to be fortunate as well. Have located fantasic multi national building firm and in 3 months the skeleton and outer build complete are complete. After their holiday in August..which the builders justly deserve..shoud be 6 months then we are in.
    Not everything in Spain is bad .

    We are proof that if you do your homework ,check out possible builders work and if possible meet their other clients and workmen, PLUS the vibes are right you won’t go far wrong.
    We have so far been two years planning this move. Finding the parcela right for us was our biggest and most time consuming problem.

    Relocating anywhere is expensive and fraught with problems and too many ,in our humble opinion, who desire to move abroad to the sun think only of the summer holidays not the reality of life.

    And we have come in ON budget 😮

    We are not going to say it is forever. Maybe in a few years we will return to UK but initially we are doing it without regret and with our heads screwed FIRMLY on.

  • #58567
    Profile photo of Melosine
    Melosine
    Participant

    Not sure why but I came us as *guest* when I was logged in a Melosine
    Vivien

You must be logged in to reply to this topic.