Should I Pay a Finder's Fee to Source a Spanish Property?
Wednesday, January 16, 2013 @ 1:04 AM
Should I pay a Finder's Fee (FF) to source a Spanish property investment? Well, that is a good question now, given that the Spanish property market is supposed to be a buyer's market instead of a seller's market, as it is now in London, for example.
To find the right property is a very hard job that requires skills, contacts and lots of time. Any professional agent and/or property finder should get pay for that. If anyone is telling you "it is for free" he is taking a referral commission and hiding it to you... specially in Spain.
I am going to try to explain in the best way possible why I believe a FF should be utilized as a clever option in the current market situation studying case by case. Not always is going to work better than the classic agents’ commission but in this post there are some thoughts. Probably the "margin for negotiation" is the key.
1) You might ask yourself: Why pay a FF to source a property in a distressed market with thousands of affordable and even cheap options? Well, the answer is that a proper sourcing option will save you all the time it takes to go through those hundreds of options and will prevent you from getting a sub-prime option in terms of location, quality and exit strategy. To pay a FF to a property source who receives dozens and dozens of properties in his inbox every week is a time and money saving option.
2) A FF will provide a service that works in your own interest rather than in the seller's or agent interest or in a commission-type way.
3) The FF will save you not just the time but the phone bills from dozens of phone calls trying to get your messages across to a Spaniard in case you want to do it by yourself.
4) BETTER MARGIN FOR NEGOTIATION. When paying a FF to get properties directly from sellers, this option will give you larger room for price negotiating. It is a proven fact that distressed sellers with a good property are not always ready to give away a percentage to an agent for commission but are happy to negotiate the price with a motivated buyer. This is why, in the current market, a Property Finder Fee agreement becomes a double win for the buyer-investor who will get the property for a much lower price.
In other words, a Finder's Fee will narrow the search of a property customized to your needs, will save you time and money, and will potentially give you a better buying price.
In any case, the buyer endS up paying either the agent’s commission or the FF, the most important is to find case by case what will work better for you.
Other articles of interest:
Investors are chasing the property market in Spain
Why Spain still the best country to invest?
Will prices rise again? Current values