Pick a number, any number....

Headless

This is a good point and one that needs to be highlighted. I am surprised no one has responded to you on this.

This is a common problem in Spain, particularly inland with village houses and fincas. Because of the way the market operates, hardly any agents, particularly the UK agents, have an official marketing agreement with the vendors of the properties they are listing. Many agents work through 'corredors' or 'runners' who find the properties for them. Most of the time the vendors don't have a clue which agents are marketing or listing their property. The result is a multiple pricing structure where the owner sets the price he wants (although even this can vary widely), the corredor then adds on his bit and the agents then adds on the commission they wish to make. It is not unusual for the final selling price to be anything from 20,000 to 30,000 euros higher than the price set by the vendor. It is not unusual for agents to make as much as 20,000 euros per sale, even on relatively inexpensive property. My advice - beware! Even if the price appears cheap to you, you are probably paying too much. Search the internet thoroughly and you will usually find the same property cheaper somewhere else. And don't be afraid to ask the agent what commission he is charging the vendor!

Interestingly, Idealista.com have this to say in their latest newsletter:

over the last few years the option of buying directly from private individuals has been an interesting alternative, especially in times when the possibility of negotiating the price has reappeared. Currently however, buying a home directly from its owner may mean paying too much, in amounts that can reach double digits. Buying through a private individual may not turn out to be cheaper now because many sellers continue hoping to sell at prices that no longer correspond to market reality and aspire to making sales at prices that their neighbors got in better times. Over the last few months the deepest discounts have been obtained through real estate agencies, which in 2008 have become educators for homeowners. They teach homeowners the reality of the market and help to convince owners to lower their property prices

The jury's still out on that one!

Wishful thinking I'd say. I am sure that there are a few agents around who try to be professional and will advise owners on prices but Spanish owners can be difficult to deal with and have their own ideas (or dreams!). At the end of the day, given that it tends to be a 'free for all' between agents and the concept of a sole agency just doesn't exist in Spain, they will take on almost any property at any price as they take the view the more they list the more likely they are to get an enquiry and eventually a sale. Problems arise when a vendor does genuinely reduce his price but does not or is not able to advise all the agents listing the property of the reduction, so the property ends up being advertised at varying prices all over the place. Many agents claim to be selective and some even claim to check the paperwork, title etc is correct before they take the property on but in reality....I wonder....

Until something is done to change this situation, and that probably requires legislation or some sort of regulation, then the agents are free to get away with this and it will remain 'buyer beware'

Though it is a shock to see the actual price difference....in the end I can only but smile. What is the worth of anything? Just what some mug is willing to pony up. Provided that all parties are happy, buyer, seller and agent, then all is good.

That is very true, we all pay what we think something is worth to us. But I wonder how many buyers would still be happy if they found out they had paid substantially more than they needed to and most of that ended up in the agents pocket - probably in cash!!

This has to be one of the many reasons why it's always been really difficult to properly price a property in Spain.  A 50,000 Euro difference is quite large really so that agent is probably not one you would want to deal with again.

I would have thought the current market would have made agents more eager to drop prices to try and make some sales.  I suppose there are some that will still try it on when they can.

Justin

Hi Roybud - just to let you know that the agency I work for only does "sole agency" and we have many offices throughout Spain (and the world)!  We also ask for all the documentation up front to ensure there are no legal problems with a sale - I thought this was general practice in Spain and it was the subject of some other posts a wee while ago - but maybe I'm wrong there. 

It can be very difficult to convince an owner that an exclusive contract with an agent is a better deal for them and very often I talk to people who have had their property on the market for years with so many agencies that they have totally lost track of what is going on.  Even when there have been no viewings they are reluctant to abandon the scattergun approach.  With the number of agencies which have gone bust this year alone they might actually not have their property with anyone at all!

Re your other point about prices - it is really in everybody's interests to get the price right and we do try to get our owners to be realistic but again, as you say yourself, this is really difficult.  When people have mortgages based on prices of a couple of years ago and are in negative equity, they often can't afford to sell at today's bargain basement prices unless they can find the cash to pay the difference.  Even those without big mortgages often want to get at least what they paid for the property and they put the property on the market with a high price and cross their fingers.

Wonder what 2009 will bring?????

"Many agents claim to be selective and some even claim to check the paperwork, title etc is correct before they take the property on but in reality....I wonder.... Until something is done to change this situation, and that probably requires legislation or some sort of regulation, then the agents are free to get away with this and it will remain 'buyer beware"

Well, in Andalucia at least, real Decreto 218 addresses this issue now, and from what I have seen locally, is being taken very seriously by agents. Perhaps the authorities are making stringent checks, because most if not all of the agents here now display in their windows a notice of conformity. Basicaly, this means that every property they list for sale or rent has a full information pack corresponding to it, most importantly including a recent (less than 3 months) nota simple, which shows the details of the owner, and any charges against the property.

As for the article I posted below, I think there may actually be some truth in it. Of the few remaining agents here in Torremolinos, I think they are only too aware of the current market situation, and since, as I have said, they must now obtain (often at their own expense) information from the registry on all their listings, they are unlikely to entertain vendors with delusions. Those who still insist their property is worth more than the agent knows it is possible to achieve now, will be left to advertise it privately, therefore.

Having said that, old habits die hard, and the advice "buyer beware" remains as true as ever!

http://www.eyeonspain.com/Secure/articles/article.aspx?article=/documento-informativo.aspx

http://www.eyeonspain.com/Secure/articles/article.aspx?article=/new-regulations-property.aspx

Yes, Consumers department  and Consumers associations are being very active on apllying this decree and  sanctioning.

These latest regulations all sound good news, lets hope they work. My experience was based on dealing with agents in the rural areas of Andalucia where perhaps it takes a bit more time for things to change. I am sure they will have to fall in line eventually. What the Spanish real estate market really needs is for consumers to have confidence in it. There has been so many horror stories and so much negative press around over recent years it is a wonder anyone buys in Spain at all! Hopefully these regulations will provide the basis for the confidence to return and for a much more transparent market place.

Wishing everyone a happy, healthy and successful 2009.

Yes, you are correct.

I always say that today, with the help of a good independent lawyer with real expertise in Contract and consumers Law, buying in Spain is completely safe.

The old system by which the buying package included plane tickets, hotel stay, estate agent and lawyer.... has turned to be the worst of the options. Do it yourself, search all the info available, ask for references and sign clear agreements with your lawyers.

Happy 09,

Maria

Absolutely agree, Maria.

However, it seems a shame that the onus falls on the listing agent to obtain a recent nota simple for all the properties they offer for sale. I believe the cost of obtaining this is around €12 per property - every three months. That could add up to quite a large amount. Until vendors are educated about this decree, and willingly supply the agents with the necessary paperwork, agents windows are likely to be very empty for the time being. Just when they need all the help they can get.......

Good point Roberto

It does seem unfair to put the onus and expense totally on to the agents. The owners need to be educated that they have to play their part in this and perhaps they should bear some if not all of the up front costs. This would make sure they were serious about putting their property on the market. In the UK the vendor needs to pay for a Home Information Pack at a cost of around 250 pounds before they market a property.

....which is a lot of money for an awful lot of wasted paper and waffle, from what I can make out. Fortunately, in Spain anyone can get a nota simple for their property on-line, as I said before, for about €12, and make copies of it for all the agents they wish to list their property with. The other stuff you need to provide costs nothing, and you should have to hand anyway - last rates bill, proof of payment of community fees, etc. etc.

Having spent time looking at property up here in Madrid (slightly different market) I can tell you that the Spanish are still in denial, yes everyone talks about the "crisis" but it currently it's currently not having a large effect on prices. They are softening but nothing like I thought they would, and of course according to the housing ministry prices in Madrid are up 3,5% this year.

Was talking with a friend last night about the local housing market and he said nothing over 150,000 is moving at all, and around here that's about 1% of the market. 

i AM NOT SURE THE SPANISH ARE IN DENIAL ROB.

HERE ON THE COAST PROPERTY PRICES ARE A LOT LOT HIGHER THAN IN MADRID LARGELY FUELLED BY EX PAT, NON RESIDENT BUYER MARKET. LOCALS GENERALLY SIMPLY COULD NOT AFFORD TO BUY HERE. IN AND AROUND CITIES LIKE MADRID BARCELONA ETC WHERE THERE IS REASONABLY STEADY EMPLOYMENT I THINK IT UNLIKELY THERE WILL BE WHOLESALE REDUCTIONS - THE SPANISH HAVE AN INBUILT SENSE OF INFLATION WHEN IT COMES TO PROPERTY - HENCE HOUSES AND LAND CAN STAY IN FAMILIES FOR GENERATIONS - BASED ON THE THEORY IT WAS WORTH 150K IN 2007 THEREFORE IT MUST BE WORTH 165K IN 2008 -WHETHER OFFICIAL FIGURES CONFIRM THAT OR NOT - IF THEY THINK IT IS WORTH X THEY WONT CONSIDER FOR SELLING FOR X MINUS - UNLESS OF COURSE THEY ARE IN THE POSITION WHEREBY THEY HAVE TO SELL OWING TO FINANCIAL HARDSHIP. IN A CITY ENVIRONMENT IN SPAIN WHERE MOST EMPLOYEES ARE ON CONTRACTS IT IS DIFFICULT TO LAY PEOPLE OFF - CLEARLY THERE WILL BE A LOT OF REDUNDANCIES IN CONSTRUCTION AND TOURISM BUT WILL THAT HAVE A SIGNIFICANT IMPACT ON MADRID - TIME WILL TELL I GUESS.

YES DEVELOPERS WILL STRUGGLE AS THEY ARE HAVING TO SERVICE DEBT ON PROPERTY THEY CANNOT SELL AS BUYERS ARE BEING MORE CAUTIOUS BUT WHETHER THERE WILL BE A CRASH I AM NOT SO SURE. THE SPANISH ARE BUYING IN NUMBERS ON THE CDS - THEY HAVE LARGELY STAYED AWAY FROM THE MARKET HERE DURING THE SILLY TIMES WHEN THE "STUPID" FOREIGNERS WERE BUYING IN MUTLIPLES OF TEN AND AGENTS OF UK ORIGIN WERE FUELLING THE MARKET WITH OVER INFLATED COMMISSIONS ETC - NOW THEY CAN SEE THEY CAN GET A BARGAIN THEY ARE BUYERS AGAIN. IT STANDS TO REASON THAT IF THEY CAN BUY SOMETHING FOR 50% OF ITS PRICE THREE YEARS AGO IT WILL SPARK INTEREST - MANY OF THEM HAVE CASH TO BUY AND SAVINGS TO DRAW ON SO MORTGAGE EITHER NOT NECESSARY OR MARGINAL 

So a new year is here and what has changed...?

I have been searching the internet and have seen the same house in the Jaen region registered with 2 diiferent agents. One is a local Spanish agent and the other is an English, UK based agent. The Spanish agent is listing the house at 123,000 euros and told me the owner will consider offers on this price. The English agent (I am tempted to name them) is listing the house at 130,000 euros. When I queried the reason for the difference the English agent assured me that 130,000 is the correct price and gave me some bullxxxx about it being excellent value and that the other agents were probably working on an old sterling price (what???!!!) and as they know the owner well they could help me with any negotiations.

This sounds like complete hogwash (I am being polite!) to me. If they know the owner so well then they would know that the correct price is 123,000 and that he is prepared to sell at below that price. Clearly there is some 'loading' of the price here by the English agent. I trust the Spanish agent 100% but have been misled by one of my fellow countrymen who has insulted my intelligence with such a crock of excuses and typical estate agent crap. This is what I mean by buyer beware. Unsuspecting buyers who don't do their homework and lots of research could end up paying 10k or more over the top for this house.

I also wonder if the owner knows the English agent is listing the house at a higher price? If he is keen to sell then they are not really helping him either. So the greed of the English agent is doing no favours for either buyer or seller. And estate agents wonder why they have a bad reputation!

Hi Smiley, I've asked alot of Spanish (since I teach English I have loads of opportunity to talk in my Native language ) how they afford homes and the fee's to buy them and many said the same. 125% mortgages and if they were lucky they bought 3 or 4 years ago. Also read an interesting article (sorry can't find link) and for many Spanish the only way to home ownership was via inheritance, that changed dramatically with the entry of large numbers of Women into the work force and the adoption of the Euro which brought on negative interest rates. Along with the expat market it lit a rocket under the housing market

Edit: I think over time prices will begin to drop for the simple reason banks aren't giving mortgages and nothing is selling. The agents I've talked to said the only units that are even being looked at are at the bottom end of the market. Given enough time (several years) people will give up and begin to accept lower prices. Due to snow (Madrid literally shut down for the day) a bunch of viewings got cancelled for us, but next week I plan to ask each agent the same question

"Manny developers are offering 30% discounts, will you do the same"

I'll let you know next week.

This just dropped in my inbox

MADRID -(Dow Jones)- Spanish home sales transactions fell at an annual rate of 28% in October, pointing to a continued correction for Spain's once-flourishing home-building industry.

Data released Wednesday by Spain's National Statistics Institute, or INE, also showed the number of new mortgages in October fell 34% on the year.

In September, home sales fell by 27% on the year, and mortgages fell by 37%.

Spanish banks have sharply reined in lending in the wake of the global financial crisis, thereby accelerating a correction that was already underway in Spain's housing market.

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At some point people will have to drop prices if they want to sell.