'Too much for too little' seems to be the common cry of many North European property buyers when they discuss real estate agents in Spain. Stories of huge commissions and dubious professional conduct abound, with the real estate industry in Spain seemingly having little in common with that in Holland, Germany and the UK.
Certainly, it is no secret that real estate agency in Northern Europe is undergoing seismic changes. Battered by a subsiding property market, the industry has been revolutionised by the internet which has newly empowered both sellers and buyers. For agents, one of the implications has been a radical drop in sales commissions, thus making a once profitable business increasingly marginal. This is excellent news for buyers and sellers - but does not reflect the current situation in Spain.
In fact, most North European buyers would be horrified to learn that sales commissions in Spain rarely drop below 3% and can be as high as 18%! However, to do justice to all parties, circumstances in Spain are very different from Northern Europe - particularly with regard to foreign buyers.
Firstly, unlike Northern Europe, Spanish agents tend to have to spend very considerable time with foreign buyers. Indeed, the complications of buying abroad and the very extensive pre and after sales care that a buyer expects (and invariably needs) have direct implications upon the commissions charged by agents. Within reason, this enormously time consuming work alone justifies higher fees than would be considered normal in Northern Europe.
Secondly, it is unusual in Spain for an agent to obtain sole agency to a property. Most sellers place their property with as many agents as they can, without signing any binding, written agreement that safeguards the interests of an agent for even a short time period. Consequently, agents are invariably left to market and sell properties on a multiple agency basis with perhaps a dozen, or more, direct local competitors. This makes the marketing of a property a hazardous, treacherous and potentially pointlessly expensive process for an agent - made all the more risky when the seller himself often also privately tries to sell his house at the same time!
Worryingly, for the foreign buyer, can be the appearance of the same property on various web sites for different prices and with pictures that clearly disguise or obscure the outside of the property. In fact, the pictures are invariably a way of an agent (without a sole agency agreement) protecting his interest in the property from both other agents and buyers - who may try to go directly to the seller. As to the differing prices, these are often due to two main factors.
Firstly, agents charge differing commissions which can be reflected in the sale price. However, more commonly, a seller all too often forgets to tell all his (often many) agents when he changes his sale price. Accordingly, some agents can be left truly thinking that the price of a property they have for sale is correct when it is sometimes wildly (and embarassingly) out of date.
Of course, agents should regularly check with sellers that the details and pricing they have is correct. But this is easier said then done. In Spain, real estate agents, particularly those specialising in foreign buyers, can cover and list properties over a very wide area. Indeed, a Spanish agent's territory may cover hundreds of kilometres and their listings amount to several hundred properties. To consistently supervise these properties regularly is often simply beyond the means of most estate agencies.
Some types of properties can earn agents, in North European terms, exceptional fees. These are generally, but by no means always, new development properties, particularly those aimed strictly at overseas buyers. These are frequently places which are built on very cheap land, creating an 'artificial' environment far from existing towns and villages. A developer may, for example, construct a golf course and swimming pool complex in this sort of area and surround it with apartments.
By their very nature the properties within these developments can be difficult and expensive to sell (and sometimes very hard for a new owner to resell). Estate agents sometimes use 'pressure salesmanship' to earn commissions that can reach as high as 18% of the gross sale price - which is a lot of money for a property to appreciate before you have any hope of a return on your investment. To some extent excessive commissions, if you can find out beforehand, can be an indication of the profit margins that developers are making and, arguably, the possible over pricing of the properties concerned.
In Spain, most agents work honestly and provide a superb, gold standard, personalised service to foreign buyers that would amaze their North European counterparts. It is not unusual, for example, for an agent to provide an after-care service, following the sale of a house, for many months afterward. Translations are often freely performed, paperwork and administration handled and even builders and doctors dealt with. A good agent, who supports a buyer properly, can be a critical lifeline and one that makes any transition to Spain workable and ultimately successful.
On the whole, it is far too simplistic to accept that estate agents in Spain obtain 'too much for too little'. Most provide value for money and earn their commissions fairly. Of course, as in all professions, there are exceptions to every rule - but top quality, personalised service never comes cheaply and it cannot be replaced by the esoteric information of the internet when you are 'on the ground'. And, when you are moving to another country, few things are more critically vital than having experienced professionals calmly sorting out the (sometimes!) bewildering complications of your relocation.
Having said that, time and patience is required to find sound agents who will properly help you, whilst not taking exorbitant commissions and thereby inflating the cost of a property. So, understand how the Spanish property market and the professionals within it work - well before coming over to Spain. Otherwise, it may well be you who is paying too much for too little.
Nick Snelling is the author of three books on Spain including 'How to Move Safely to Spain' [movetospain-safely.com]. He is also the author of the authoritative Blog on moving to Spain and life in Spain: culturespain.com culturespain.com.
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