Spanish Property Doctor – Sunday Times – October 16th 2005
Beware of senor 7.5% sales commission.
The cost of selling a home in Spain could be unexpectedly high – buyers can unwittingly contribute to estate agents commissions. So check you are not signing up for hefty fees.
Michael has his two bed apartment in Duquesa, near Marbella on the market for €170.000.If and when he makes the sale, he will have to pay €12.000 plus Vat at 16% (about €14.000 in total) in commission to his estate agent, leaving him with just €156.000 from the proceeds. These commissions are eye-watering” Michael says, but it’s a struggle to find any big agents here who charge less than 7.5%, plus Vat, so if you want to sell, you have to put with them.”
“Buyers beware” Although Spanish estate agents work on behalf of-and are paid by-vendors, don’t look at this issue as a problem just for vendors. After all, the commission is paid out of the money handed over by the buyer. Excessive commissions have helped to drive up the price that buyers have to pay.
Commissions also become murky and especially prone to excess when more than one agent is involved in the sale; additional hungry mouths are fed by increasing, rather than splitting, the cake.
“Investment alert” Excessive commissions substantially reduce the investment return of Spanish properties. With an agent’s commission of 7.5% and capital-gains tax at 35%, a non-resident buying a resale property of €170.000 (no mortgage) would need capital appreciation of 6% every year just to break even if selling after three years. Annual capital growth of 10% would leave such an investor with an after-tax profit of only €15.000, a feeble 8% net return after three years-and less than what the agent would earn from the sale.
“Smart tactics” Vendors should refuse to deal with any agent or network that charges more than 5%.There are well-run, professional, mid-sized and small agencies that charge 5% or less. Buyers should insist that the estate agents they deal with are transparent about the commissions they earn. Far too many British and Irish buyers make no effort to find out how much of their cash is going on commissions. Of course agents can lie or refuse to answer, but the mere act of asking puts the question under the spotlight .Avoid dealing with agents who are at all cagey about what they earn.
Direct Auctions selling commission 2.5% plus Vat
