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Sur on line makes grim reading,
they prdict that up to 75% of EA’s may close because they are making no money (news to some, i’m sure)they also state that there has been an 11% fall in sales across the board, this has been heightened by the vast amounts of unsold new properties ( down 16%)
they also say that Spain built 700,000 flats/apatments last year when there was only demand for 400,000
when are the prices gonna start tumbling?
when are people gonna realise that if they hold out for their inflated prices, they are gonna be sitting on a property for upto 3-4 yearswith interest rates looking set to climb even higher, this must be a very worrying time for a lot of people
Chilly 🙁
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i know,
didn’t wanna get into all the little details of the article, don’t know how to post a link to it either but i think they said 7% for this year and 4% for next year.I know you’re in the industry, maybe you can enlighten the class as to how that works (cos i’m baffled, if demand is down and interest rates are up doesn’t that equal prices down?)
Good luck Jim
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Wish I could enlighten you and others, I have been unable to find official figures that would give indications of what real property price inflation/deflation is. Kyero.com publish figures on a monthly basis but this is the price of properties listed for sale not the acheived sales price, obviously extreme regional variations, undeclared money and other factors I think make it very difficult. You can only really talk how you find it on the street. Previous poster just answered the questions 20% below asking price
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The report Sur mentions is here:
http://www.rracuna.com/Rracuna/Documentos/20070612_anuario.pdfIt’s in Spanish, but the charts may be of interest ❗
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We’ve just got back from Spain. Speaking to several agents(Yes we still want to buy a property! 😯 ) we were told prices on the CDS are down, sales are down and you can put in offers of 10-30% below the asking price. People really wanting to sell will not want you to walk away….except the Spanish sellers . They may drop 2-3000euros! We were not looking in the Marbella area but further east , not right on the coast. Black money is still being asked for!!! (under declaration)
I don’t think I will ever catch up on all the posts since we’ve been away. 😆
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Bear in mind that many properties that have been on sale for a long time may have already reduced by 10% or more. Think the market is at the cross roads at the moment, could move on slowly but perhaps crash. Agents closing down could exacerbate the downward spiral, most of the Brits have been working in the sector and they could have problems paying their mortgages and may have to return to the UK to find work.
Welcome back Claire 🙂 thought you were quiet! There’s a recent discussion on black money (again)
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Hi Katy et al,
Yes many prices have been reduced already, but we were told that even so we could still put in lower offers. Some friends of ours that we met up with in Spain have just sold their town house in the “old town” of Frigiliana and has decided to sell their home in England too. That sold in 24 hours to a cash buyer! They are desperate to buy something as they have to move out of their town house 25th July. So they put an offer in on a property in the “campo” (legal) of 30% less than the asking price and it was accepted!! They also put an offer in on a fabulous old property, in fantastic condition, and an offer of approx 20% below the asking price was accepted but the owner wanted part payment in a brown envelope! We told them it was best not to even think about it! The owner is English, moving back to the UK. There are a lot of empty new builds too.We went to visit Green Hills and although this time we could not get in we were able to see the gardens/pools. It has matured well and looks very nice at the front of the development. There were just 4 people around one pool and 6 cars in total parked around the development. The back of the development is not so well cared for. Sparsely planted and two dead palm trees. It is not very well tended at all. Only a few apartments are lived in. A great shame as the area is wonderful. We also looked at Santa Maria Village. Now that was ghostly.
Apart from the jelly fish in the sea, we really had a wonderful holiday in Spain. We by chance went into Marbella the day of the fiesta. We had the best meal in the old square. Sitting here on a rainy day in England…I know where I would rather be!!
Suzanne, as promised we signed nothing!! 😉
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@Claire wrote:
we were told prices on the CDS are down, sales are down and you can put in offers of 10-30% below the asking price. People really wanting to sell will not want you to walk away….except the Spanish sellers . They may drop 2-3000euros!
That’s interesting. I would interpret it as the foreigners knowing that the party is over whereas the Spanish do not. They still think that there is some greater fool out there, that is what kept prices increasing in the past few years. The Spanish will find out soon, I expect, because there will be so many distressed foreigners selling that the Spanish holding out will be irrelevant.
What astounds me is that I think that 30% reductions are only the start. People will start walking away in significant numbers soon and then we’ll have a fire sale.
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I know someone who is running an estate agency in Spain……I’ll be deliberately vague about the details.
They say the business is “ticking over”…..this means that revenue covers costs (rent, bills etc)….but they essentially draw no income from this business. This is not a start-up and is reasonably established. However this is not such a problem to them as they are in the Autumn years hence have other income and little personal outgoings. It gives them “something to do” and keeps them from going rusty.
But if there are agencies such as this (and i’m sure they are not the only ones) how can competing “normal” businesses operate? By “normal” I mean businesses that need to draw a margin with employees who require income* to put food on the table and pay the rent/mortgage? If I was running a business I guess I’d be pretty hacked off if my competitors where willing to run on a zero margin basis.
*changed from “wages” because as Katy pointed out many work on commission only basis.
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@Claire wrote:
Speaking to several agents we were told prices on the CDS are down, sales are down and you can put in offers of 10-30% below the asking price.
Guess these were British agents? Problem is that it is the British agents who have fuelled a lot of the problems in the market. It is they that have listed properties at crazy prices just to get the listing and then added a criminal 9% in commission because they are part of the IN network! Of course you can put in an offer of 10-30% down when the price is artificially inflated anyway!
@Claire wrote:
Spanish sellers…..may drop 2-3000euros!
Maybe that is because Spanish sellers and their Spanish agents have the properties more realistically priced in the first place?
The fact that 75% of REA’s are set to close is the best news in the market for a long while!! There are far too many, most have no listings of their own and rely on multi level marketing (sorry, mult listings networks) to have “stock”. For every sale there is usually two agents involved who want a share of the commission, and then the network also wants a share so that’s three commissions to be paid. That 9% charged by the IN network agents could be 3% including IVA if there was only the one agent involved! MLM or Pyramid selling is actually illegal in the EEC anyway!!
Agents on the CDS are over represented and most jumped on the bandwagon with no knowledge or experience. In fact most opened their “property shops” having been on the CDS for a few months living in rented accommodation. Let’s see 80% of them close as a minimum (and mostly they should be the British and other Northern European agents) and get some sanity back in the market!
At the end of the day, there are not enough sellers or buyers that Benalmadena or Fuengirola need 200 agents each! Half a dozen in each town would be more than enough. 90% of the agents belong to one of the three MLM networks so there are actually really only three agents anyway!!
Just about every problem in the property market on the CDS has been fuelled by greed……
The greed of the politicians in accepting bribes
The greed of Estate agents who have set up with no knowledge or experience to make a “quick buck” as the timeshare market is now regulated but REA’s are not!
The greed of sellers who believe that their properties are worth a lot more than they are because the agent told them so!
The greed of buyers who believe that those false inflated prices can be increased year on year in a sustained manner
The greed of buyers who believe they can buy off plan to make profits on the sale of one or two units to pay for their third one
The greed of the solicitors who don’t do the job properly
and I could go on!!!
I have been on this coast for 12 years, make a good living working remotely in IT (all my clients are in the UK or USA), have moved four times (ie bought and sold four times) have never had a problem with the sales in terms of solicitors or legality of property / planning etc.
So many of the problems in Spanish property that are echoed on this forum are those caused by the effect that the sunshine and sangria have on people’s brains. They seem to leave them behind in the UK when they board their EasyJet flight. The property register here is as good as the UK and the laws of property and contracts are as well defined – if not more so. How many people would buy in the UK without a solicitor of their own etc? Yet they come here and do so? How many people would buy in the UK based on the advise of the man in the pub? Yet they do here? How many people would buy in the UK through an agent that has no qualifications / knowledge or insurance? They do here? In the UK they would ensure they have local searches for a property – but here?
IF YOU WOULD NOT DO IT IN THE UK, WHY DO IT HERE WHEN YOU DO NOT HAVE ANY KNOWLEDGE OF THE MARKET, THE LAWS, THE LANGUAGE?
And the answer to that one is usually something like ….. “because this nice British Estate Agent said it would be OK and I could make a fortune!”
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paulandlyn wrote:IF YOU WOULD NOT DO IT IN THE UK, WHY DO IT HERE WHEN YOU DO NOT HAVE ANY KNOWLEDGE OF THE MARKET, THE LAWS, THE LANGUAGE?
And the answer to that one is usually something like ….. “because this nice British Estate Agent said it would be OK and I could make a fortune!”
Congratulations!! This is the best post about the property abroad sickness that I have ever read!
Too bad this gem cannot appear in newspapers, it would help many people avoid the problems they are getting into.
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@paulandlyn wrote:
How many people would buy in the UK based on the advise of the man in the pub? Yet they do here?
It isn’t quite that simple. People listen to the man in the pub who tells them what they want to hear. Trust me, I tried to raise a conversation with “investors” on many an ocassion and if they had listened to this man in the pub they would have been better off today.
@paulandlyn wrote:
And the answer to that one is usually something like ….. “because this nice British Estate Agent said it would be OK and I could make a fortune!”
I quite admire the English estate agent that I knew. I wouldn’t want to be him but I’d rather be him than the sheep he fleeced.
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@paulandlyn wrote:
Guess these were British agents? Problem is that it is the British agents who have fuelled a lot of the problems in the market. It is they that have listed properties at crazy prices just to get the listing and then added a criminal 9% in commission because they are part of the IN network! Of course you can put in an offer of 10-30% down when the price is artificially inflated anyway!
Actually for a property up too 300.000€ the commission is 7.5%. With IVA that would come to about 9.5%.
As the price gets higher, the commission decreases. They use a sliding scale.
The logic for the higher commission being that your not only selling through that one agency but amongst all the member offices.@paulandlyn wrote:
Maybe that is because Spanish sellers and their Spanish agents have the properties more realistically priced in the first place?
😆 . This is the one area where the spanish and the ‘foreigners’ work along the same lines.
Property owners fall into 2 catergories
Ones that want to sell their property
Ones that want to put their property on sale@paulandlyn wrote:
The fact that 75% of REA’s are set to close is the best news in the market for a long while!! There are far too many, most have no listings of their own and rely on multi level marketing (sorry, mult listings networks) to have “stock”. For every sale there is usually two agents involved who want a share of the commission, and then the network also wants a share so that’s three commissions to be paid. That 9% charged by the IN network agents could be 3% including IVA if there was only the one agent involved! MLM or Pyramid selling is actually illegal in the EEC anyway!!
An MLS system works on the following logic:
A seller – a listing – an agreement to share – a buyer – a sale.But I agree with the agencies with no properties.
the 3 commissions don’t work like that.
55% goes to the buying agency
40% goes to the selling agency
5% goes to the In networkThis only applies to the IN network. I have no idea about other MLS systems.
I’d also point out that most buyers have the option of not putting their property on these systems and dealing solely with that agency. They can then do the footwork and go and have it listed with as many agencies as they want.
These agents would still inform other agents of the property on sales via telephone calls and emails. The benefit of the multi-listing system is that the other agencies have got it amongst their portfolio. -
@Fuengi wrote:
Actually for a property up too 300.000€ the commission is 7.5%. With IVA that would come to about 9.5%.
7.5% plus IVA @16% actually equals 8.7% but I rounded it to 9%. However, whichever way you look at it, 8.7%, 9% or 9.5% is criminal, unjustifiable and totally un-earnt. Most agents in Spain take on or link via MLS systems to as many properties as possible, take a listing, take a dozen photos, put them on a website and hope buyers see the property and make an enquiry. They might print off a window card to display as well. On the whole, agents in Spain do not market any property in any other way.
@Fuengi wrote:
The logic for the higher commission being that your not only selling through that one agency but amongst all the member offices.
That is not logic, just the way the system works. The actual logic is that one agent takes a listing and another agent makes a sale. They each do half a job each and as such are entitled to expect half a commission (at a reasonable rate) and not to receive an inflated commission each for doing just a half job each.
@Fuengi wrote:
This is the one area where the spanish and the ‘foreigners’ work along the same lines.
Property owners fall into 2 catergories
Ones that want to sell their property
Ones that want to put their property on sale.Agree with modification – Estate agents fall into 2 catagories – ones that wish to sell a property and ones that wish to list a property!
@Fuengi wrote:
the 3 commissions don’t work like that.
55% goes to the buying agency
40% goes to the selling agency
5% goes to the In networkOn this basis, on a sale of €280,000 the agent that has the buyer gets €11,550 (4.125%) for his half of the job, the agent that took a few photos and ticked a few boxes as his half of the job gets €8,400 (3%) and IN get €1,050 (.375%) – all plus IVA. The buyer is robbed of €21,000 – the additional amount added to the true value of the property by the agents and system. A UK agent selling the same value of property (and the €280,000 here in the central CDS would buy a very similar property as £195,000 would buy in the South of England) would get the equivilant of €4,200 plus VAT (1.5% as a joint agent) or €2,800 plus VAT as a sole agent. The UK agent would be qualified and regulated with insurance in place to protect his clients. The 500% increased earning levels of the unqualified / un-regulated / un-insured agent here in Spain as compared to his qualified / regulated / insured counterpart in the UK cannot be justified in any way. An agent here has much lower operating costs (and no regulation or insurance costs) and the salaries here are at least 50% down on the UK – not 500% increased. As for IN, their system could have been built / developed for no more than 10,000 US Dollars and the monthly maintainance costs would be in the hundreds with web hosting.
In real terms, MLS networks should offer participating agents double the sales but at half the commission for their half of the job and therefore these levels of commission can not be justified in any way by claiming that the MLS system costs that money to operate.
Let’s not lose sight of the fact that the average wage on the CDS is less than 16,000 Euros a year so how can one half of one flat sale justify 72% of 12 months salary?? Or if the agent lists and sells the property, €21,000 is about 16 months salary. No wonder we see all these multi-coloured signwritten new 4X4’s, BMW’s, Mercs etc sitting outside agents offices!
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@paulandlyn wrote:
7.5% plus IVA @16% actually equals 8.7% but I rounded it to 9%. However, whichever way you look at it, 8.7%, 9% or 9.5% is criminal, unjustifiable and totally un-earnt. Most agents in Spain take on or link via MLS systems to as many properties as possible, take a listing, take a dozen photos, put them on a website and hope buyers see the property and make an enquiry. They might print off a window card to display as well. On the whole, agents in Spain do not market any property in any other way.
if the property is 200.000€. On the IN network with 7.5% the selling price would be 219.058€.
@paulandlyn wrote:
Agree with modification – Estate agents fall into 2 catagories – ones that wish to sell a property and ones that wish to list a property!
That’s why clients should be discerning in regards to whom they give their property to sell.
What clientele do the agencies market too, what sort of properties do they advertise in their windows, Do they produce a magazin, where/how do they advertise, etc…@paulandlyn wrote:
On this basis, on a sale of €280,000 the agent that has the buyer gets €11,550 (4.125%) for his half of the job, the agent that took a few photos and ticked a few boxes as his half of the job gets €8,400 (3%) and IN get €1,050 (.375%) – all plus IVA. The buyer is robbed of €21,000 – the additional amount added to the true value of the property by the agents and system.
Actually its 24.360€ [EDIT: sorry, yes 21.000 without IVA]
55% = 13.398€
40% = 9.744€
5% = 1.218€@paulandlyn wrote:
As for IN, their system could have been built / developed for no more than 10,000 US Dollars and the monthly maintainance costs would be in the hundreds with web hosting.
In real terms, MLS networks should offer participating agents double the sales but at half the commission for their half of the job and therefore these levels of commission can not be justified in any way by claiming that the MLS system costs that money to operate.
Personally I think it should 5% across the board. I don’t agree with whole sliding scale situation.
@paulandlyn wrote:
Let’s not lose sight of the fact that the average wage on the CDS is less than 16,000 Euros a year so how can one half of one flat sale justify 72% of 12 months salary?? Or if the agent lists and sells the property, €21,000 is about 16 months salary. No wonder we see all these multi-coloured signwritten new 4X4’s, BMW’s, Mercs etc sitting outside agents offices!
From personal experience, I would say the average wage along the coast is closer to 12.000€.
If an agent makes 21.000€ for one sale then yes that is incredible.
But an agency making 21.000€ is a different proposition.
21.000 – 16% = 18.103€
salesman commissions = 20% (for argument sake only) = 3600€
14503€ left to cover all salaries, costs, etc…
Not much is left over. and less if it all has to be split.You know most of those flashy multi-colored cars you see in front of certain agencies, are not owned by them, but generally under some sort of lease agreement. AND interestly enough, those are the agents that concentrate on off-plans with telemarketing departments, etc…
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