July 9, 2008 at 5:33 pm #54165
I know this has been covered before and almost everyone, apart from agents, is in agreement that in Spain the agents ask for too much in commission compared to the UK.
A friend has been trying to get a valuation of her property as she would like to move nearer to the coast.
She approached a well known international agent that has an office in Marbella and sent some photos of her house. They have sent her a contract. She showed me this and I noticed that as well as charging 5% commission plus IVA on any sale, they also say that the client is responsible for any specific advertising and publicity costs and expenses directly attributable to the marketing of the property, plus of course IVA.
The amount is not specified, but I would have thought that these costs would come out of the amount required in commission. Is this something new?
July 10, 2008 at 7:37 am #85119
sounds very dodgy to me. advertising/marketing costs should come out of their very high commision. How else would they earn it? What else do they do?
To leave costs as open ended also, with no fixed maximum sounds like a licence for daylight robbery!
July 10, 2008 at 8:28 am #85125
I know in some north european countries this is standard practice. But all marketing costs are only paid on completion and the commission is about 2%
July 10, 2008 at 8:45 am #85126
Sorry, I didn’t make clear that the “expenses” were to be agreed between both parties, but I have no idea what amount this might be as my friend has put everything on hold for the moment as the house is rented out as holiday lets until the end of September.
She approached two agents, letting them know a week when there were no clients in the house, but the first agent couldn’t make it at the last minute, and the second has sent the contract, without even seeing the house, just photos.
How can anyone be sure what sort of price they should put on their property?
July 10, 2008 at 9:13 am #85127
Having sold property abroad and in the UK (in the past) there are significant differences which may explain the higher commissions charged by overseas agents.
1) Under the Estate Agents act 1979, an agent can claim his commission even if he did not directly introduce a client.
2) Most contracts in the UK are exclusive (for a period of time), therefore an agent can invest upfront marketing costs safe in knowledge that he is the only one selling the property.
3) Unlike many overseas agents, UK agents will rely on their own “walk ins” and “hot box” of clients. Many overseas agents rely on sub agents which they subsequently share their commissions.
4) Unlike many overseas sales people, many UK sales people are paid a decent basic plus commissions. Many overseas sales people are only paid on results.
5) Vendors are also in competition for buyers from developers who pay higher than 5% commissions. I am aware of some developers who have offered up to 18%!
6) Selling an off-plan concept rather than a resale is a lot easier and cost effective for many agents. Unfortunately their business plans do not allow for many overseas agents to wait for the completions of resales. Also, many resales often fall at the last hurdle, either due to gazumping (them were the days) or a legal issue. Making selling a resale less attractive to the agent.
7) Finally, there is simply a lack of investment in training staff to be valuers. In the UK, the task of selling and valuing is often separate. With valuers undertaking nationally recognised qualifications. This means that a vendor in the UK is more likely to receive a correct valuation range than in countries like Spain. It is often the case of vendor’s net asking price plus commission. How many vendors have been shown genuine comparables in order to correctly judge what the value of their home actually is?
In conclusion: An overseas agent will receive more commission, quicker and easier if they sell off plan than if they sell resales. Therefore what is the incentive to sell a resale at 1 – 2%, which he may have to split with a sub agent who gave him the client?
July 10, 2008 at 11:21 am #85133
maybe a bit of topic
I was recently in the UK and curious to see what was on offer. I went into an agency or 2 and was quite let down.
of the 3 estate agents 1, did’nt even go with me to the property, made an appointment but that was all.
the other 2 agencies accompanied me, but being a tourist i was looking at different areas as you can imaging. Both agencies had a pathetically small catchment area.
Here in spain, if you find a good agency, they will cover an area as large as london to find you your property. Maybe that might also explain why commissions can be higher here
July 10, 2008 at 11:36 am #85134
……..or is it just unregulated greed?
July 10, 2008 at 11:41 am #85135
I think you have hit the nail on the head. You see, UK agents generally will only work on an exclusive basis. So their office / s catchments area are limited to how many properties you can physically get access to. In Spain, I have rarely come across a vendor who was willing to sign an exclusive deal. So a vendor can sign as many agreements with whoever they wish. Also, there is much more cooperation between Spanish agents. If I have a buyer I would not hesitate to contact an agent in the area of interest to do a split deal. In the UK, this is simply not entertained in most cases.
With regards to the service received, I am afraid a lot of these agents weren’t around in the early nineties; all they have ever known is an upward market!
July 10, 2008 at 2:34 pm #85150
In Lanzarote there’s something like 120 estate agents. The “official” population is 120,000 (meaning that it’s probably about 50,000 higher).
So, one person in 1,000 is an estate agent! No exclusive deals. One guy I came across who was trying to sell his apartment (and was an estate agent himself) had it with about half of them! Maybe that’s the way to do it, eh?
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