According to data from the NAR (National Association of Realtors), 35% of home sales in the US are closed without any meaningful discount extracted from the vendor. The same cannot be said of Spain, where an estimated 90% of vendors give ground on price before the sale is closed.
Research of the Spanish market by an outfit called the Spanish International Realty Alliance (SIRA) in collaboration with the NAR, finds that a large majority of vendors in Spain admit to having negotiated a significant discount with the buyers. Talking of inflated asking prices, “It’s almost standard practise,” explains Francisco Fernández, a director of SIRA, quoted in the Spanish press. “Vendors take it for granted that they will get a counter offer and start off with an asking price that leaves them room for manoeuvre, in some cases as much as 20% higher.”
If hitting the market with an inflated asking price is common practise in Spain, it comes at a cost to both buyers and sellers, argue the SIRA. “Many house hunters have a budget limit that includes both the property and all the additional costs of the operation.” explains Fernández. “For them, an inflated asking price gets a property excluded from the list of homes to visit on the basis of price.” The result is that inflated asking prices prevent potential deals being done, which is bad for both sides.
Fernández uses the findings to argue for a greater role for estate agents on the sales process. “From our point of view, the greatest transparency in the market is achieved when, as happens in a high percentage in the US market, both buyer and seller accept the target price proposed by their real estate agent, who is the one who definitely knows the sales prices of similar properties.”
But many estate agents don’t want more transparency, as the lack of transparency gives them greater control over price expectations on both sides, and allows get away with higher commissions. The real problem, as I’ve said many times, is the lack of reliable, independent pricing information available to both buyers and vendors in Spain, where actual sales prices are not published online as they are for free in other countries like the USA. When both buyers and vendors know the actual sales prices of similar properties, price expectations are much more aligned, and there is no reason to inflate asking prices.