For sale by owner v Real Estate Agent
by Pedro Rodriguez
In some countries “for sale by owner" is quite common. In others the idea of selling a property in this way is perceived to be difficult, tedious and the general attitude is that selling a property should best be done through an agent.
I don’t advocate that selling your home yourself is the only way to find a buyer for your property. On the other hand, I know from many years of personal experience in this market that listing your property with an agent does not mean you will sell your property any quicker, easier or at a better price.
This article is not about trying to prevent you from using an estate agent, or the attempt of portraying agents as unnecessary. There are many good and professional agents around doing an excellent job for their clients.
I just happen to believe, that everyone can sell his or her home just as well as an agent can. But let’s get away for the moment from the merits of either method.
Let us look of how “for sale by owner" actually works in Portugal since this is the market I know well enough to comment on.
Portugal’s property market has essentially two sides. On one hand you have the Portuguese market, on the other the foreign property buyers market.
The Portuguese owners are accustomed to selling their property themselves. One look in Portuguese newspapers will confirm that. One can find a substantial amount of properties being advertised using adverts which read “private sale no agents please" or words to that effect.
A large percentage of Portuguese property owners will try and sell their home themselves since they are reluctant to pay the agent a commission of on average 3%.
A Portuguese property owner quite often will tell the agent the price he wants for his property, and the agent has to increase the price by his commission. Quite a few owners are not prepared to pay the commission from the money they receive. If the agent wants to sell the property he has to increase the price by his commission. So at the end of the day this property is now at the market at 3% more than it needs to be.
Other owners tell the agent the price they want and have already included the commission of 3 %. Which ever way you look at it, there is 3% in the price.
Few sellers will give an exclusive contract to an agent in Portugal. They list their property with multiple agents. It is also not unheard of that the same property is on the market with different agents at different prices.
Very few Portuguese sellers will make use of a solicitor. Their attitude is very simple and clear on this point “It is my property, I have the title deeds in my name, I have receipts showing that I paid all the taxes and bills relating to the property I want to sell, so why pay a solicitor? If the buyer wants to use a solicitor to check all the papers, that’s fine by me"
So here we go, very different attitudes and I am sure quite strange to a foreigner, but absolutely true. The Portuguese owner needs little or no help from an agent other than the introduction of a buyer and more often than not he thinks he can find one himself just as easily by advertising privately. The seller knows that the agent himself will use the same papers to advertise in as he does. So what is the difference?
Many Portuguese estate agents do not have effective websites and little access to foreign markets and are using local advertising only.
The foreign buyers market works a little different, not much but a little. The most significant difference relates to the buying behavior of the Portuguese people and that of foreigners wishing to buy a property abroad. Foreigners who already live in Portugal and have purchased a property once before know their way around and deal with the system accordingly.
Foreigners who wish to buy in Portugal for the first time will often select one or two Agents from the internet, trying to get a feel for the market. They will fly to Portugal a few times or have a holiday to look at properties, meet the agents with whom they have corresponded on the internet and at the end will buy from one or the other agent.
In a nutshell this is what happens 8 out of 10 times. Quite naturally, the overseas buyers are relying more on an agent. Language problems, not understanding the system, not knowing anybody, feeling strange in a foreign country are just some of the reasons.
I don’t believe that foreigners wanting to buy in Portugal are not interested in saving money on the purchase of their home. No matter what nationality Money is important. Very often it is the lack of information on how to best buy a property in a foreign country which accounts for the low percentage of foreigners actually buying direct from the owners. But with a little imagination and effort anyone seriously wishing to buy a property in Portugal could do it and save themselves a lot of money.
Foreign owned real estate agents work normally on 5% not just on 3% commission. This is a big chunk of the overall price. Money better off in your pocket.
Just consider for a moment how easy it is to find a property on the open market and how easy it is to find an English speaking solicitor and how easy it is to go and view properties yourself.
Does that sound too much of a problem? Just sit back and think how much you can gain in monetary terms buy doing a little legwork yourself.
Not every property seller is Portuguese and a lot of Portuguese speak English. And if you really need an interpreter go and see your solicitor. He will help you. He will talk to the seller He will make the viewing appointments for you.
What you need are a few reliable reference points, such as your solicitor and you are in a position to organize the purchase of your new home yourself. I like to leave you with a final thought. Let us assume you are buying a property for say 300,000 Euros.
The agent’s fee is likely to be in the region of 18,000 Euros including 21% IVA (VAT). If you like to receive some more information on how to find a property yourself, visit our website. www.sellandbuydirect.com