Torcal Estates Fincas and Country property - Málaga, Spain

Fincas and Country property - Málaga Property

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News - July 2008

Fees, commissions and fat cats.

Hands up who wants to pay a fee to an estate agent? No, I guessed as much.

The property market in Spain is in the doldrums, buyers have disappeared and those that are still looking want a bargain.

Prices have fallen and will continue to fall for the next couple of years – why on earth should I pay an estate agent a fee of 5% or more when I am getting less for my house than a year ago?

Hmmm…it’s a question that a lot of people are asking. Lets get one thing straight – we at Torcal Estates charge 5% of the eventual sales price (plus IVA) on any property that we sell when it is available with more than one agent.

If, however you instruct Torcal Estates as sole agents (no others instructed) then this fee reduces to 3.5%.

So, at the end of the day – you do have choices and not all agents charge the same. But what else should you look at as well as the fees?

What’s reasonable?

On a personal level, I feel that any agent that charges over 5% (and some we have heard of can go up to 10%) is doing well out of you. There is a chance he is extremely good and can justify a high fee or he has to pay others (linked agents) out of his fee and therefore has to increase it.

Many estate agents in the UK will charge just 1% or 2% (perhaps as much as 3% in London and for multi agency) so why do agents in Spain (and many other European countries) charge 5%?

For a start, there is not the same level of activity that would be expected in a UK high street estate agency – in recent years, many agents will have been selling 20 to 30 properties a month whereas agent in Spain would be luck to sell this many in a year (even during the boom times).

As well as the differences in volume, there is also a question of costs and service. Many agents in the UK do not provide half the level of service that Spanish agents will offer a purchaser – accompanied viewings, pick up and tours, a high level of after sales care (NIE etc) and this all leads to costs being borne by the agent.

Now, don’t get me wrong, I am not defending agents as a whole – most of them are the lying crooks that we all have come to expect and detest but there are hopefully some out there who, by charging a sensible fee, will survive the current downturn and be here when you need them in the future.

For all those who feel that agents should be qualified, I agree. For all those who feel that the industry should be regulated, I agree. Many of the problems in Spain however, have not been solely down to estate agents – if the lawyers weren’t corrupt, then the estate agents would not have been able to get away with murder (and they’re mostly too stupid!).

Reducing a fee at the critical moment

I have heard of many vendors suggesting that the offer that they have just received would be acceptable if they could re-negotiate the agent’s fees to a reduced level. How crazy an idea is that? You are just about to place the negotiations of one of your most valuable assets in the hands of an agent and you want to chip his commission?!

Your agent needs to be motivated, your agent will want to earn commission on the sale of your property and any reduction in that fee will undoubtedly knock his enthusiasm for getting you the best price.

How to choose the right agent?

For a start you want someone who has been recommended – there’s no point risking your property with someone you’ve got no history of.

When considering your estate agent you also want to make sure they tell you exactly what they are going to charge you (including any taxes) and you want them to be proud of what they do. Ask them what fees they charge before they come and see your property – they should have no problem telling you and if they decide not to tell you, then you should start to worry.

It is always sensible to get fees confirmed in writing so that you know exactly where you stand. We don’t understand why, but many agents that we know simply will not confirm anything in writing and this is worrying – either their letters are poorly written or they are scared to confirm things in writing!

So, how else do you tell which agent to use? For a start, go and have a look at their offices – would they appeal to you if you were a buyer? If not, there’s a good chance that other buyers will feel the same way. Also, many agents have closed their offices recently and some have withdrawn all of their properties from their windows – again, that’s a good reason for not choosing that agent!

In the end, you have to be confident that your agent is professional, can help you with things like paperwork and the legal process involved with selling and generally one that you feel comfortable talking to – there’s no point in having an agent that you don’t trust!

Summary

The fact is that not all estate agents are the same – too many have a bad reputation and sadly for many that is well deserved.

But, you shouldn’t tar everyone with the same brush – any agent who survives the current economic climate deserves your support – they will be there when you need them most.

And, whilst you may feel that paying anything to an agent is a waste, don’t forget that the more money you agree to pay your agent, the more motivated he will be!

A paid estate agent is a happy one.



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