Abusive agent commissions ... 40% !!!

 Does anybody know if there are legal limits to the commissions that agents can charge on top of developer off-plan prices when selling to buyers? I have found out that a certain agent added €32,000 commission to properties priced by the developer at €83,000, giving a total price of €115,000. This is approx 40%!!

There must be laws against this sort of abuse to protect off-plan buyers?

Anybody know what consumer law says in Spain on the matter? Any success stories in getting compensation for such price inflation either through the courts or directly with the agent? Or getting the developer to reduce the agreed purchase price on completion?

Thanks

Ed.

No limits legally stablished by the Agency Act.

Dear edoo7,    I agree 100% with your view on agents fees in Spain.  I have a home in Marbella but live most of the year in my birthplace Guernsey. The highest commission charged by agents on the Island is 2%, the most common is one & a half %. Sole agency fees 1%. This week I recieved a letter from an agency close by, saying that they have people anxious to buy 1 & 2 bedroom apartments where I live, and their commision is .85%. Figures just published in our local paper state that property prices rose by the smallest amount in years at 7% in 2008. There is absolutely no justification for agents fees in Spain to be so extortionate and frankly the sooner they go bust the better. I love my home in Spain and the spanish people and have no wish to sell but if I did, I definetly wouln't use an agent. Why don't they openly display their rates in their offices and on their websites in a straightforward and unambiguous manner. Who knows, they might actually start selling properties once more. if you want to check out what I'm saying is true, log on the website of the Guernsey Press where  there are links to local estate agents.

The sort of greed shown by these operators in Spain has surely reaped it's own reward.  Have a nice weekend in Spain to all, can't wait for my next visit unfortunately not till March.

PS    I have absolutely no connections with estate agents or property sales in either Spain or the Channel Islands.

Sarnis

Yes, I agree those commissions are a extortion.

More legal regulation needs to come to this point.

Many disasters within the real estate world in Spain come from lack of proffessional requirements for property agents and lack of official fees for their activities, lack of transparency too.

Interesting postings, surely

a) true value will come to light when a valuation is carried out-should they value at 115,000e and the purchaser is happy?

b) of else it will come ot light when the deposit monies are calculated etc

I am sure there are many who have bought and sold an item albeit not a house for x amount becuae the purchaser needed or wanted it.

I dont agree with overpricing of the amount of commissions mentioned however also there it incredibly that one would pay $80m for a painting surely it cant be worth that much!

However as ever all is dictated by supply and demand

Hi, I have been talking about agents excessive commission on this forum before. I have been calling for the whole business to be made more transparent and regulated so that buyers and sellers are not ripped off. Many agents claim to be the 'shinning knight' for the buyer, holding their hand all the way through the process of buying, what they don't tell you is how much commission they are loading on top and how much more you are paying for the property than you have to. I have just come across an instance where one agent (a UK based agent selling the Granada region) sold a house for 130k euros when I know it could have been bought through a local Spanish agent for 123k euros. I know this is not a huge difference in the scheme of things but 7,000 is a sizable sum and I bet given the choice, the buyer would have chosen to pay the lower price!! This is just the tip of the iceberg as in many cases the commissions added are huge sums. This practice really does need to be exposed because buyers are being fooled into paying more than they need to and the difference goes straight into the agents back pocket because most of the time it is in cash!!

5%  is the usual and,in my opinion,fair amount for agents to take on a sale. However,I have heard many times of agents selling houses and adding huge sums onto the sale price without even telling the owner of the property. We looked at an apartment for sale and the agent said it was 245k. It turned out one of our friends knew the owner and she only wanted 155k!!! Now THAT is absolutely terrible! She was desperate to sell as she couldn't afford the mortgage payments and this agent was basically blocking a sale but putting so much on top for himself!

When she found out she went with another agent and the apartment sold in 2 weeks!!

In boom time %,s were 10% , 5% for resales hence the fact that no one wanted to be bothered with resales!

Like everything the cost one will  pay should depend on the service provided however still not excessive there are also cases where a standard 1% eg wont work -ie on a 50,000e purchase the saddest fact is the lack of transparency, in the UK on the IFA sid eon the business it has ot be transparent due to regulation, on our UK property side we choose to use the same rules-nobody has questioned our fee for UK deals I bleive simply because it is clearly stated.

Hi,

the consumer laws protect real estate purchasers by means of the right to get reliable and detailed informatin IN ADVANCE, this means, when the property is being marketed. The problem is there is a basic national law and then each of the 17 different Communities have got competences to issue regulation in this area. This gives rise to certain disparities. Protection is not uniform.

In Andalucia there is a regulation which OBLIGES agents to declare their commission straigh forward in the purchase offers. Lack of compliance with this obligations results in considerably high fines.

Dear  Fairway colleague:

I can find  the legal requirement for specification of mediation services prices when renting in Andalucia in the 2005 Decree but cannot find it for sales... Have I missed anything?

This is in my opinion, one of the main wild fields related to the estate market in Spain. New Laws are needed...now is the moment after all the abuses and when the market is stocked.

Welcome in to EOS!

Maria

Hi Maria,

thanks for the comment.

Please note that art. 2h) of the 5 Decree of the Andalucian Government provides that in the Decree, the expression "taxes and expenses" includes not only the notary and registry costs, but also the commissions charged by the intermediaries.

If you check further, the article regarding sales of second hand houses says clearly that the taxes and expenses have to be reflected in the informative document. Therefore, each time that there is a sale operation of a second hand house, the chapter Taxes & fees or expenses HAS TO include the details of the commissions charged by the intermediaries, AT LEAST IN ANDALUCIA. It is the agent's obligation and the consumer's corresponding right to respectively provide and receive such information.

Arguably, there is a different redaction of the sales with developers or with buildings under construction - as it does not say taxes and expenses, but "taxes and fees that the purchaser should pay" - , but I personally do not see any obstacle in the consumer's requesting this specific information even in such cases. Anyway, I will forward a formal query to the consumers' department of the Andalucian Government in order to check this specific point and how it should be construed.   

If this property is a new build then it is not the agent that charged the 40%.

The builder set the retail price which is inclusive of the agents commission. This is the process on the Costa Blanca South.

Which ever way you dress it up the fees are astronomical, however the valuations never show it up!