- This topic has 33 replies, 18 voices, and was last updated 17 years, 10 months ago by
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As a starter for the above, how about Estate Agents in Spain declaring their commission visibly in the price of each property for sale, make them legally bound to do so?
For instance, off-plan or re-sale example price say of 400,000 euros, if the commission is 20% it should be stated that the property is (only worth) 320.000 euros plus commission of 80.000 euros to that particular greedy agent, and maybe state what the individual sales person receives too out of that.
I’m talking here of agents like Awful Estates and the other often mentioned bigger agents who have been known to charge even as much as 30% commission.
Then buyers could make offers if they still wanted to. by lopping the price off the agents commission, not the vendor’s price.
This would then show how overpriced the properties were. and the agents could squirm.
😉 They wouldn’t dare!!!
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Good work hillybilly.
Do you agree it would ‘shake things up’, weed out the ‘greedy’ agents, if, this was clearly shown in the selling price for buyers to see.
What do the lawyers think, any chance of making this law?
In th UK, everyone knows that the agent gets approx. 1.5% to 2% of the selling price, whereas it’s so vague/hidden in Spain.
Also proves that if you buy from one of the sharks in Spain, your property is not worth what you have paid for it, (for many years), no chance of getting your money back for ages if you needed to sell, and then of course the new selling agent would load the price again with his commission.
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shakeel, I know they wouldn’t willingly declare the correct amount, this is only a suggestion on my part. What I’d like to see, is, the Spanish Gov’t making it Law to show commissions in prices.
Just trying to get the ball rolling for HONESTY, TRANSPARENCY and INTEGRITY which is part of the terms of the Mickey Mouse ‘AIPP’ that Awful and others profess to belong to.
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If, as a prospective purchaser, you ask the agent what commission they charge, some are not above a bare-faced lie.
If you do buy through an agent you should ask for a headed receipt on completion for their commission (and let it be known from the outset that you will require this documentary evidence) so that, when you come to sell, you can justifiably offset that element against any CGT you may have to pay. I DIDN’T do this the first time I bought, but certainly would if ever (which I don’t intend to!) bought again using an agent. -
Paul, I understand where you are coming from. We have to start some where. The reason that I take the line in all these issues is that.
We have to reaslize that you can pass what ever laws you like. Its the enforcement that needs to be pulled up first.
As an accountant I undestand the way to work around the system/loop holes etc. Some times the loop holes are left there to the benefit for a certain segment of society etc.
So, in future if the Agents does not declare or under declare he/she gets fined 15€ per day !!!!!!!!!!!!!!!
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Well from the agents point of view this type of deal is coming to an end. Notaries and Lawers are supposed to show the whole transaction on completion and where the money is going. I know from our books hardley any deal is cash now, so where it is invoiced, there will be an invoice submitted usually to the sellers lawyer a day or so before completion to enable all the cheques to be drawn up.
Prior to completion the figures have to be agreed by both sets of lawyers in any case and you as buyer/seller should be told of this breakdown.
The difficulty comes where people do have cash as the agents then manage to get a wad of it in an envelope first!
Buyers should go to the agents who do openly state their commission – people ask us all the time and its stated freely on our website.
I worked in the UK industry many years ago and the fee then was higher – it was competition that bought it down, the free market and owners not willing to pay much! Having said that agents in the will limit very much what they do and further advetising is paid for be the owner – so not a true 1.5%!!
With regards to property worth, this is something I have a very strong opinion on. Many agents and owners dont have a clue. In the previous rising market, one could state a price and that was what they wanted. Now, sellers have to understand how it works.
In Spain, there is not a comparison valuation as in the UK, it is price poer square metre and has differeing values depending on the interior measurements, utilized space, covered terracing, terracing, garage, land etc. Also condition on the proeprty, quality of the build. We work out values using the banks principles, based on previous actual valuations and then work out where the price should be depending on market situation and area.
That way you know what it is worth with regards to a bank valuation, the only one that matters!!
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I am not an agent, nor am I in favour of rogue agents, but if agents should be forced to declare their fees, should supermarkets be made to show what profit is on an item? Should insurance brokers be forced to declare their percentage of the premium they get?
It is the punter, who is prepared to listen to agent speak and pay the inflated prices that are to blame. The agents know that people are “looking for their dream” and to hell with the cost, how they will pay, or what the property is truly worth.
Stop paying the inflated prices, stop listening to agent speak, just for 12 months and see how many agents survive.
The chances of that are the same as getting agents to declare their fees.It is said “In th UK, everyone knows that the agent gets approx. 1.5% to 2% of the selling price,” OK, if you say so, just believe it, by I am aware that with incentives, bonuses, profit share, etc., there are those who it equates to around 15%
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Surely its different in the UK as the selling price of the house is shown as just that – the selling price. It is up to the purchaser to make an offer for the house and the seller agrees/disagrees with the price offered. The agent is merely the go between who received commission from the seller at between 1 and 2 per cent for having advertised the house on his website, mailing list and office window. Or have things changed in the last 4 1/2 years?
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It is interesting to see the reaction to a post regarding agent’s commssion.
As has been pointed out – many companies would never be required to show their “margin” on an asking price…. I would like to see what the producer gets on a packet of fruit or vegetables compared with the price that the supermarket asks – I doubt I will ever see that mark-up.
If the vendor wants to pay the commission then you should assume that they are happy paying that figure…. equally if the buyer wants to pay the price to secure the property then you should assume that they are happy paying that price.
If the purchaser thinks the asking price is too high then they should make an offer accordingly. If the vendor wants to accept that offer then that is, equally, up to them.
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Problem is many agents work on the same onld thesis of
Agent ‘scuse me mr Owner, and how much do you want for the property’Owner says ‘well next door is selling for 350,000 euros, mine is a bit nicer – after all I have marble floors and chrome taps, so I want 370,000 euros’
Agent says ‘ well our commission is 7.5% – is this included?’
Owner ‘ Gosh thats a lot – you know its only 1.5 – 2% in the UK/Ireland’
Agent ‘dont worry , we will just add it on top and increase it a little to allow for negotiating’
Owner ‘ yes thats fine, where do I sign’
And so the already daft price (cos next door isnt selling – its up for sale at but not actually SOLD!) is increased by 20 to 25%!!!
And thats how it goes folks. So now you know how and why prices are all over the place with no rhyme or reason.
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Absolutely Goodstich, but if the commission at whatever rate was included in the valuation as they do in UK and Ireland, then the seller would be effectively paying it and it would not bump the price up for the buyer as he is buying at market rate.
I guess buyers can find out by asking the agents what their commissions are
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@Inez wrote:
Problem is many agents work on the same onld thesis of
Agent ‘scuse me mr Owner, and how much do you want for the property’Owner says ‘well next door is selling for 350,000 euros, mine is a bit nicer – after all I have marble floors and chrome taps, so I want 370,000 euros’
Agent says ‘ well our commission is 7.5% – is this included?’
Owner ‘ Gosh thats a lot – you know its only 1.5 – 2% in the UK/Ireland’
Agent ‘dont worry , we will just add it on top and increase it a little to allow for negotiating’
Owner ‘ yes thats fine, where do I sign’
And so the already daft price (cos next door isnt selling – its up for sale at but not actually SOLD!) is increased by 20 to 25%!!!
And thats how it goes folks. So now you know how and why prices are all over the place with no rhyme or reason.
This is indeed how it works.
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I was recently asked to list a 3 bed detached villa on a nearby urbanization, having carried out an inspection, checking paperwork etc. I calculated the value of the property at “x”. The vendor was unhappy and thought my valuation was low. I checked similar properties in the vicinity and was happy that the valuation was correct. The problem was two fold a) My valuation was only fractionally over what they had paid three years ago, my response was (trying to be be diplomatic) perhaps that had paid too much in the first instance, and that they had to factor in current market conditions.
b) Another agent had valued the property 35% higher (coincidentaly the agent they initially purchased through). 😉Needless to say I didnt get the instruction, and the vendor will probably not sell their house at the higher price. However what is equally disturbing is that perhaps said agent will find a punter at the very infllated price even with their 10% commission.
As Inez says no rhyme nor reason.
Jim
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Hi Jim,
I have had that loads of times. When we first started we were laughed at! ‘fall in prices – you must be mad or have no idea’ was the general response.
Anyway now these guys after 12 to 18 months of trying to sell with the other so-much-better-informed-agents, are now beating a path to us, cap in hand.
Unfortunately for them the price has fallen even further.
Its not my fault or the fault of the property, its just where it is in the cycle at the moment.
Best to stay true to it as then when it eventually does come right, the buyers and sellers will know who to go to!
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Claire, I agree with you partly, i.e. that the commission is included in the price. However the Agent does not say how much do you want and than add the commission.
Baring exceptional/unique properties the prices are within £5k, The agents knows the prices in the area from various sources. e.g land registry.
There is one large Agency chain in UK, and also in USA and are trying to break into Spain, who blatantly over value the properties, they dont get shifted and later reduce the price but not the commission rate remains which in the first place was higher than other agents.
They properties regulary gets down value by surveyour or they add a caveat. This means that if the buyer is borrowing 95%, the deal falls through.
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As Goodstich44 says, I and some others would just like to see H, T, & I regarding pricing of property in Spain. My suggestion was to see commission legally shown in the price of any property on the market through an agent from the start, and as that can be so high even 20,30,40% of the price it would clearly demonstrate by how much the property is overpriced, and how greedy that agent is.
I don’t think commissions of tens of thousands of euros can be likened to mark up on food, because we are not bombarded with scams on amounts we have to pay for food daily to live, but property seems a licence to print money in Spain and Emerging markets by these dishonest regularly mentioned agents.
There are a lot of so called new agents’ advertising in the Press and on TV, all jumping on the overseas property bandwagon, ex timeshare and others who’ve worked for Spain’s property rogues, (you can tell them a mile away) just wideboys trying to rip off many more naive purchasers. ‘Make hay while the sun shines and stitch up your fellow countrymen/women’.
As for belonging to AIPP, Bentley, Mercedes, Jaguar awards for Best Agent, Developer, Development, none of these are worth a light, you can ‘buy’ these awards.
These Agents would resist this Transparency like the Plague methinks.
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click on http://www.aipp.org.uk/ and read Paul Owen’s interview (Chief Exec), amongst otherthings he says he was ‘at the sharp end of sales’ background (bet he was), talks about ‘strict code of conduct’, that;s why he’s accepted Ocean Estates as amember then?, plus H,T, and Integrity, also that AIPP is funded by ‘membership subscriptions’, that some members had ‘paid in advance, pending validificating their membership’
The Board made up of mainly Estate Agents some with ‘history’.
The whole thing makes me feel nauseous.
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@Inez wrote:
Problem is many agents work on the same onld thesis of
Agent ‘scuse me mr Owner, and how much do you want for the property’Owner says ‘well next door is selling for 350,000 euros, mine is a bit nicer – after all I have marble floors and chrome taps, so I want 370,000 euros’
Agent says ‘ well our commission is 7.5% – is this included?’
Let’s be clear. I am an estate agent in Spain.
I never ask a seller how much they want for a property without first telling the seller how much I think it is worth.
I advise any seller to immediately terminate a conversation with an agent if the agent is unable, or unwilling, to value the property himself.
Failure by an agent to volunteer a valuation means he is either:
a) inexperienced in the area/type of property
b) a shark-like opportunist
c) an amateurIt’s simple really – to bad agents JUST SAY NO!
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Valuation is the key ingredient to a property agent. Let´s face it, virtually all vendors think their property is worth 40% more than the market price. Dumb agents not only go along with this but put 5-10% on top. That´s what has killed the market since 2004.
When you hear the agent bashers banging on about high priced property they should consider the greedy vendor is partly to blame. And guess what, on another forum I came across someone who last year asked me to sell her property for a crazy price, I refused and she still has it for sale with 3 agents in my area 50% ott. On the forum she is bashing the business of an agent I know well for wanting 5% commission when she herself is asking 125000€ too much herself. Gawd help us all.
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Hi Everyone,
I used to work as a Chartered Surveyor in the UK. I have also bought and sold houses in France and Spain. For me the issue of commission is clear cut. A professional will have no difficulty in declaring his/her commission.I seriously thought about opening an agency here but decided after much thought that it was too much hassle. Where I live the locals live in cloud cuckoo land vis a vis values, the market is infested with illegal go betweens and there isn’t enough turnover to support the effort. It seems that every ex pat is a property expert (not just here but in any overseas market).Sadly, the great majority of people operating in the so called emerging markets know absolutely nothing about real estate and I cringe every time I see one of the TV ads from “so and so Estates/International” masquerading as property professionals. Estate agency, properly conducted, is great job but the overseas market is being polluted by the cowboys who are only interested in earning completely unjustified commissions/mark-ups for doing zilch. Regulation would help but the best regulation will come from an educated buying public. If an agent won’t disclose their fees do not deal with them. Dreams cost nothing. Nightmares cost a lot. That’s where this site is of such value.
Saludos,
james
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I recently sold my property and during the process of selling one agent received an offer but would not tell me how much. He would only give me the figure that I would receive after their commission was deducted (which was a reduction of 20% from the asking price). The agent insisted their commission was 5% and that they had rounded their commission down to give me an even number.
I refused to go ahead unless the agent revealed the offer, after much dicussion we lost the buyer. -
gnik, your experinces say it all. The motto ‘Honesty, Transparency and Integrity’ is that promoted by AIPP a newish Association who claim that buyers can trust one of their members. Don’t believe a word of it.
Under the Posting ‘Dodgy AIPP’ I’ve suggested a rival Association AIPS
(Association of International Property Swindlers), which purchasers add names to as a reference point when buying abroad.
People can rate their agents on http://www.eyeonspain.com/reviews although I suspect staff will also post pretending to be customers.
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Ah, lovely vendors again! Went out this week with Aiskoa, my Spanish salesperson to visit 4 potential listings.
We came back with ONE!
I valued one apartment at 260.000€ and the vendor wanted 480.000€ NET ! Swallow hard and leave backwards avoiding small yapping Yorkshire Terriers, clouds of black tobacco cigarette smoke and aggressive vendor. 😳
Another villa had half the property not on the escritura and was about 800,000€ over-priced. 🙄
We’d driven over 2 hours to go and collect keys for another property and when we got to the piso/flat/apartment (ha!)….THE BL%%%DY KEYS DIDN’T WORK 🙁 .
So, we came back with one pretty villa with all the paperwork in place and at a fair price. All in a day’s work folks. Have a good weekend!
Sarah
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