There has been much talk of late about online services allowing homeowners to place their properties for sale at a fixed cost and thereby avoid estate agent’s commissions.
In fact, one recent report even stated that there is a growing trend in the Algarve of vendors moving away from the services provided by agents, and flocking to such fixed fee solutions.
We at Fine & Country Carvoeiro, like many agents who provide a truly professional service, have experienced quite the opposite. Our portfolio of properties continues grow and we have many happy vendors who have seen their properties sell with us quickly, efficiently and without the hassle of having to deal directly with the buyers.
Let’s first address the issue of dealing direct and cutting out the middleman, or as many would call us, the nasty money-grabbing estate agent!
When a buyer starts to search for a property, in most cases online, he is looking not only for a property but for impartial and professional advice, from someone who knows the market. The whole concept of dealing directly with the vendor is alien to the vast majority of buyers. Why, after all, would someone selling his own property offer impartial advice to a potential buyer?
Then of course there is the vitally important aspect of legal matters. A government licensed and bonded estate agent is legally bound to examine the paperwork of a property and only place it on the market when all is in order. A real estate portal, or one of the many gateways to the numerous portals also used by agents, has no such redress and may advertise the property based on nothing more than the claims made by the vendor regarding the property, and more importantly, it’s legality.
As agents we know how to weed out time-wasters, both vendors, who for example have no hope of ever concluding a sale on an illegal property or buyers who, for example, have totally unrealistic expectations about how cheaply they can acquire a property.
Pennsylvania residents know that, if you want to sell your house fast in York County and for a fair price, you should put your trust in experienced agents. Our knowledge of the local market is invaluable when it comes to pricing a property, negotiating offers, and dealing with all the intricate details involved in a real estate transaction.
These are just two examples of the many possible scenarios whereby the buyer dealing directly with the vendor, and vice versa, are potentially wasting each other’s time.
So let’s assume for now that whilst there is a small percentage of the market, in terms of property buyers and vendors who are willing to deal direct and cut out the estate agent, most people prefer to use a professional service.
This of course raises the question of commission. How can a Portuguese agent justify charging 5% when a UK agent charges 2% or less? The answer is that many of them can not. Estate agencies here in the Algarve come in many different guises but broadly fall into two broad categories;
1) The typical Algarve agent
The typical agent offers little more than their office window, a website, and listings on a few property portals.
2) The premium service agent
The premium service agent offers a great deal more. They may or may not have an international and widely recognised brand behind then (inspiring confidence from buyers), but they will have invested in high-quality premises in a prime location and they invest heavily in marketing.
It’s clear to see that the costs of operating an agency offering the premium service are a great deal higher that those of the typical agent. However both have a valid reason for charging more than traditional residential agents in the UK. The fact is that an agent on the high-street in the UK has a far higher turn-over of clients, and spends only a fraction of the time with each buyer that us agents in a second home destination like the Algarve do. In Florida for example, the typical commission is 6% and across the border in Spain, the rate varies between 5% and 7.5%.
Unlike a residential buyer in the UK who is simply moving home and has to buy, we are dealing with customers who are typically not so familiar with the area in which they are buying and more often than not, do not know exactly what they are looking for or even if they are quite ready to buy.
It is not unusual for an agent in the Algarve to view 20 or even as many 50 properties with a potential buyer. Of course, the good agent will spend time listening to the buyers and asking the right questions; Are you buying for holiday use, with or without rental income? Are you planning on moving here full time? Do you need to be nearby international schools? Are you looking for a modern or traditional style property? Do you wish to be within walking distance of a town or village, or do you wish to be in a remote country location? The list of questions goes on and on enabling the good agent to whittle down the list of properties on which the buyer may have initially enquired. This avoids wasting not only the agent’s time but also that of the buyer and the vendor.
I myself, in my earlier career in the UK, was once a sales agent working for Strutt & Parker. I remember well how buyers would come to us knowing exactly what they wanted and where they wanted it to be located, right down to the precise road in many cases. A buyer would typically view just a few properties and agents in the UK today tell me that the situation has changed little, made easier if anything by the advent of the internet since my time!
So if you are selling your house and really want to increase your chances of a faster sale and of achieving a better price, my advice is to use the services of a professional and reputable agent. Quiz them on what they do in terms of marketing, and try to get an idea of how successful they have been in selling properties similar to yours.
Most importantly, have a good look at their portfolio and try to establish if it is genuine. There are many less scrupulous agents in these parts who label properties as sold on their website when another agents has sold them, or simply leave sold properties on their books for months or even years after they have sold in order to appear as if they have a broader choice of properties than they actually do. This is something in my opinion that urgently needs regulating.
But there are many real professionals out there, so make your choice carefully. You may choose to list with more than one agent and in many cases this is advisable, in order to broaden your reach. But avoid listing with multiple agents as this will result in the premium agents being less likely to give your property the full exposure it deserves.
Richard Lamberth is a director and partner of Fine & Country Carvoeiro, master licensees of Fine & Country in the Algarve.
