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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.