View Full Version : Should estate agents be regulated in Tenerife?
Would members have more confidence in estate agents if they knew that the maximum commision was capped at 1% (for example)? Do you think it would be preferable for sellers and buyers to meet at the notary where all charges and commisions are explained and have to be agreed before buying? I know estate agents here who charge 5% for there services and sometimes up to 10%. Does everyone think this is a good thing or would we be better off with a flat fee similar to the Ģ199 that Tesco charge? Now I'm all for every one earning a crust but I know of an estate agent that managed to pull 10% from a 900,000 sale. Neither buyer or seller was aware of this. Now to my poor deluded mind this does not inspire too much confidence that any potential offer is being directly communicated to the seller.
What do you think? :bricks:
Regulation would not be a bad thing at all - I doubt Many agents will agree though
I think 1% is a little stingy though. To be honest i think 5% is fair as I've seen first hand how many times a property can be sold before it goes. Plus there's a lot of other paperwork to be done here that most buyers won't undertake themselves so of this is done correctly 5% is a fair commission
Do you think it would be preferable for sellers and buyers to meet at the notary where all charges and commissions are explained and have to be agreed before buying?
This already happens with our buyers and sellers. Commission is agreed with the seller long before going to notary and a contract should be in place between the seller and the agent to that effect. I often get this at the point of actually taking the property on so there are no disagreements once an offer is made which could derail the whole sales process.
Buyers are made fully aware of all charges at the point of making an offer as they are sent an illustration of the full costs, taxes, notary fees, average charge of a lawyer, mortgage costs if applicable.
I have seen problems occur where the agency is given power of attorney by the buyer and the seller. In these cases, they could pretty much take what they want. Get a lawyer/gestor to go through the paperwork for you and you shouldn't really have a problem. If you are leaving power of attorney (as buyer or seller) leave it with someone other than the agency!
At 1% I wouldn't bother doing it. I make 1% on mortgages and it is only viable because of high volumes of business. On sales I cant see it working and the few agents I know who were trying to make lower commission their USPīs have either downsized as they can no longer afford an office or gone out of business all together. There is a lot more involved in selling a house here to someone coming over on holiday than there is selling a house around the corner from where someone already lives in the UK. You then have after sales service where some clients rely very heavily on you for advice on all sorts and assistance with settling in over here. This includes moving over, transporting goods, schools, healthcare, finding tradesmen, shopping for furniture, wills, non-resident tax returns, getting a good gestor etc. Sales can go on for months and months. Plus you may be splitting with another agency or paying sales staff. I doubt many agencies would survive on 1% commission.
Tenerife Villas
15-10-2011, 18:43
I do not believe agents need regulating. it is a different ball game here to the uk and I know that you can find good reputable agents that have proven track records when it comes to getting good sales for their clients in fact the two agents who post on these forums are quite right that commissions reflect the costs of offices, staff.
I have a friend who has an agency in San blas who I know still looks after his buyers long after the deal is done always going the extra mile for them and most become friends for life.
Sent from my iPhone using Tapatalk
Roadkingrider
15-10-2011, 19:50
Why would estate agents in Tenerife agree to ANY regulation when, for example, one very well-known one (initials TPS) is allowed to get away with boasting about guarantees - to win gullible new customers' faith - that I have been told by a leading solicitor, are totally worthless. It's a disgrace, and of course, the Tenerife authorities just turn a blind eye.
Yes, estate agents should be regulated ... Catalonia brought in regulations in 2010, which requires an agent to have an insurance bond etc. (source (http://www.legaltoday.com/practica-juridica/publico/inmobiliario_y_construccion/el-nuevo-registro-de-agentes-inmobiliarios-de-cataluna-que-debe-saber-el-consumidor))
And 5% is far too high IMHO ... one of the reasons it is so high, is because so often it has to be shared out between other agents :( One new entrant to the field, an Engel & Volkers franchise, is even asking for 6% and payment of half the commission on signing of contracts !
There are a few good agents to be found, but many are really lacking ... the infamous "how much do you want back" in answer to the question, what should I sell my property for, is one of the most unprofessional aspects :(
Jimandsi
15-10-2011, 21:24
If I were an Estate Agent in Tenerife, then I would definitely want to be regulated to hopefully bring a bit of credence and respectability to my chosen profession.
Estate Agents, to a lot of people, are no different to timeshare touts or dating agencies and I would want to raise myself well above that perceived image.
Once regulated, then I would be happy to charge a flat 2.5% fee which I think is fair for the small amount of work involved (if done properly).
jogger321
15-10-2011, 23:48
I do not believe agents need regulating. it is a different ball game here to the uk and I know that you can find good reputable agents that have proven track records when it comes to getting good sales for their clients in fact the two agents who post on these forums are quite right that commissions reflect the costs of offices, staff.
I have a friend who has an agency in San blas who I know still looks after his buyers long after the deal is done always going the extra mile for them and most become friends for life.
Sent from my iPhone using Tapatalk
And what about the agents in Tenerife of which there are still numerous despite the recession that do none of the above? Should it still be "gullable buyer beware"?
And 5% is far too high IMHO ... one of the reasons it is so high, is because so often it has to be shared out between other agents
But this networking can get a sale so why be unhappy with it? If you know of a more effective way of selling property than:
Being number 1 in Google for all major search terms relating to Tenerife property
Having a massive database of potential buyers who have asked you to send them property
Having a massive list of estate agents to network with who may also have a client interested in a property on your books
Then by all means use it. If not, then estate agents are very clear on what they charge for their services. If you dont want to pay them and are not happy with the fees, then dont ask them to market your property. Itīs a simple as that.
If I were an Estate Agent in Tenerife...
But your not and you donīt really know what youīre on about and you dont really know anything about the industry here. But thanks for chiming in anyways.
Angusjim
16-10-2011, 07:53
Regulating the UK banks did not work too well but it did give plenty of jobs for the
" boys":crazy::(
Added after 16 minutes:
Another thought about regulating don't they regulate the tourist industry in Tenerife !! and they are currently making a great job of that lol :laugh::c2:
Regulation can never be a bad thing, if any form of regulation was brought in i doubt it would involve a cap of commission. So long as they are upfront about what commission they charge surely it is up to the individual estate agent. Same already goes in bars , pubs, clubs, hotels, apartments - so long as you display the prices you charge you can charge what you want
Angusjim
16-10-2011, 09:57
Regulation can never be a bad thing, if any form of regulation was brought in i doubt it would involve a cap of commission. So long as they are upfront about what commission they charge surely it is up to the individual estate agent. Same already goes in bars , pubs, clubs, hotels, apartments - so long as you display the prices you charge you can charge what you want
It was VERY bad thing in the UK with the banks everyone thought the FSA had control of how the banks acted and knew what was going on how wrong were we !! Who regulates the regulators ?? of yea the the corrupt parasites in governments, take the guy in Tenerife who is heading up the "illegal letting" fiasco no surprise he has history with a large hotel group:(
Except the law came in before he held the position so that doesn't really add up
Angusjim
16-10-2011, 10:18
Except the law came in before he held the position so that doesn't really add up
So after 15years of not enforcing the law you don't think there anything wrong / suspicious that someone with history with the big hotels groups is suddenly leading the current witchhunt, maybe after running businesses for 35years I am just too suspicious
Or is he just doing what his predecessor should have been doing?
Angusjim
16-10-2011, 10:33
Or is he just doing what his predecessor should have been doing?
Or is being funded !! by big hotel groups and sole letting agents ??
Lol. To be fair both our arguments are credible and the letting law is a good example of the whole thing :
1. "illegal renters" are currently unregulated and do whatever they want.
2. A law is Passed outlawing the practice.
3. A former hotel group leader becomes part of the cabildo.
4. The regulators are the people who pushed for the outlawing of illegal lettings.
TenerifeTeddy
16-10-2011, 10:57
Regulation can only be a good thing. It wonīt worry the reputable agents as they will already be carrying out the correct practises anyway.
What it would do, is get rid of the rip off merchants who spend clients deposits before sales are completed, add on loads of hidden charges, or who just simply disappear leaving clients thousands of euros out of pocket.
I think an agent should be able to charge whatever commission they wish, as long as they are up front about all charges. Its up to the customer then whether they use them or not.
Angusjim
16-10-2011, 11:05
Lol. To be fair both our arguments are credible and the letting law is a good example of the whole thing :
1. "illegal renters" are currently unregulated and do whatever they want.
2. A law is Passed outlawing the practice.
3. A former hotel group leader becomes part of the cabildo.
4. The regulators are the people who pushed for the outlawing of illegal lettings.
So to sum up regulations can be a bad thing not always a good thing:tiphat:
Well no because just because the regulator is a former anti illegal lettings doesn't mean that regulation wasn't a good thing for the tourist industry - I think it was a good thing.
You can't let people just do what they want or else some people will unfortunately do just that
Angusjim
16-10-2011, 11:21
Well no because just because the regulator is a former anti illegal lettings doesn't mean that regulation wasn't a good thing for the tourist industry - I think it was a good thing.
You can't let people just do what they want or else some people will unfortunately do just that
If the regulator improves the situations they are regulating then great but the jury is still out on that but overall I have always found that when government starts to regulate things it is normally top heavy and very costly to administer with far too much paperwork with the end users having to pick up the tab.
If the regulator improves the situations they are regulating then great but the jury is still out on that but overall I have always found that when government starts to regulate things it is normally top heavy and very costly to administer with far too much paperwork with the end users having to pick up the tab.
Thatīs exactly what happened in the mortgage industry in the UK. No regulation and then ridiculously over regulated to the point where mortgage brokers were completely choked with paperwork. Big businesses (banks) managed just fine, brokers who had been in the industry 30 years with a solid client base ended up ditching mortgages and going into insurance, pensions etc where there was more money for the same amount of work.
If the paperwork wasnīt onerous then I would have no problems at all being regulated. So far as handling clients deposits etc - it shouldnīt happen. The most I would handle is a reservation fee but I prefer clients to send this to their own representative rather than me. Why trust an agency with a large deposit? Asking for trouble at the best of times, downright stupid in the middle of a crisis when agents are going bust left, right and centre.
Jimandsi
16-10-2011, 13:27
But your not and you donīt really know what youīre on about and you dont really know anything about the industry here. But thanks for chiming in anyways.
My pleasure CIM - "chiming in" is normally what forums are for.
Especially when the OP asks for people's opinions on something.
Stick with it - you should get the hang of it one day. :crylaughing: :crylaughing: :crylaughing:
Heres what you wrote:
Once regulated, then I would be happy to charge a flat 2.5% fee which I think is fair for the small amount of work involved (if done properly).
Ludicrous! You have absolutely no idea what you are driveling on about but carry on - itīs hilarious! :laugh:
Jimandsi
16-10-2011, 13:34
Only if you promise not to chuck your toys out of the pram and report me to your lawyer (like you do). :crylaughing: :crylaughing: :crylaughing:
Haha - my lawyers are watching so just you be careful or I might have to sue you for damages and place an embargo on your make believe bar - Walter Mittys its called isnt it?1617
Heres what you wrote:
Ludicrous! You have absolutely no idea what you are driveling on about but carry on - itīs hilarious! :laugh:
Jimandsi may not know the business in Tenerife, but I certainly do ... and many sales are very straightforward ... if a lawyer is employed, it is usually his office that does all the changeovers of electricity etc.
To be fair maybe 5% is a lot for
Someone like Doreen or myself who have signed over a lot of properties and understand the whole process but not for people making first time or second time buys
Jimandsi may not know the business in Tenerife, but I certainly do ... and many sales are very straightforward ... if a lawyer is employed, it is usually his office that does all the changeovers of electricity etc.
Some sales are very straightforward and some are very complicated, difficult and can drag on for months. So far as what an agent charges, if the fees are too high, then go elsewhere. If I walk into a restaurant, look at the menu and think everything is overpriced and is not good value for money, then I'll simply eat somewhere else.
There is also the ongoing costs of web design, marketing and SEO, these can run into thousands of euros per month. It all adds up and much of it is not visible to those who are not actually running an agency.
Some sales are very straightforward and some are very complicated, difficult and can drag on for months. So far as what an agent charges, if the fees are too high, then go elsewhere. If I walk into a restaurant, look at the menu and think everything is overpriced and is not good value for money, then I'll simply eat somewhere else.
There is also the ongoing costs of web design, marketing and SEO, these can run into thousands of euros per month. It all adds up and much of it is not visible to those who are not actually running an agency.
... and if there is cartel pricing :)
Jimandsi
16-10-2011, 17:11
... and if there is cartel pricing :)
Tread very carefully .....
Haha - my lawyers are watching so just you be careful or I might have to sue you for damages
Tread very carefully .....
More attempts at "winding up" from Walter Mitty hahaha - youīll have to try harder than that Walt...
Ok, if 5% is adequate wages for a sale of an apartment for 150,000€ which is 750€. How would an agent justify 50,000€ for the sale of a one million Euro property? Is it not the same paperwork for both? Would anyone be happy paying this in commission?
I'd check your maths there...
YOUNG GOLFER
16-10-2011, 19:55
Ok, if 5% is adequate wages for a sale of an apartment for 150,000€ which is 750€. How would an agent justify 50,000€ for the sale of a one million Euro property? Is it not the same paperwork for both? Would anyone be happy paying this in commission?
5% of 150.000 is 7'500€ Greg.
Ok, if 5% is adequate wages for a sale of an apartment for 150,000€ which is 750€. How would an agent justify 50,000€ for the sale of a one million Euro property? Is it not the same paperwork for both? Would anyone be happy paying this in commission?
Far fewer clients to reach out to - much lower success rate therefore a lot more work involved generating clients, viewings etc on more expensive properties. You might get lucky, stick a villa on your site and get a direct buyer but it is unlikely.
Many of the people investing in such properties can be selling for huge profits. It is a business and as such those you employ to sell for you can charge accordingly. If you know an agent can sell your 1 million plus property and you will be sitting on a 350,000€ profit for example, are you going to refrain from using the agent and try to somehow find a buyer yourself? The choice at the end of the day is yours.
In all business, profits are scale-able. What is the mark up/profit on a loaf of bread, a microwave, an air conditioner, a small car, a 4x4, a boat, an aeroplane?
On investments, commissions are comparable. Currency exchange companies can make between 1% and 2% with very little work involved and this can be for millions of pounds/euros. I think you need to look at this in relation to other product and services.
Specifically with estate agency, if you can do it yourself cheaper (whether its a studio or a multi-million pound villa) then do it.
5% of 150.000 is 7'500€ Greg.
oops, sorry, got my decimal in the wrong place! The question still stands though, if 7500€ is an acceptable fee to do the paperwork and do a few walk arounds why should it double, treble or more for a property of higher value?
oops, sorry, got my decimal in the wrong place! The question still stands though, if 7500€ is an acceptable fee to do the paperwork and do a few walk arounds why should it double, treble or more for a property of higher value?
Read this post:
http://www.tenerifeforum.org/tenerife-forum/showthread.php?10272-Should-estate-agents-be-regulated-in-Tenerife&p=107352&viewfull=1#post107352
read it thanks. I'm still not seeing the pocketing of 50 grand acceptable for finding a client. I'd be amazed if you could forward me the contact details of anyone who knows that an estate agent has made that kind of money from their property and is happy about it. Personally I would be happy to pay 5 grand to an agent to sell my property or find me the property I am looking for. Maybe CIM or YG would detail their hourly rate for viewings, checking paperwork, time in the notary etc for comparison against other trades?
Then find your own and save 50 grand - its as simple as that!
You dont have to use estate agents. Its an option when you want to sell.
YOUNG GOLFER
16-10-2011, 21:29
read it thanks. I'm still not seeing the pocketing of 50 grand acceptable for finding a client. I'd be amazed if you could forward me the contact details of anyone who knows that an estate agent has made that kind of money from their property and is happy about it. Personally I would be happy to pay 5 grand to an agent to sell my property or find me the property I am looking for. Maybe CIM or YG would detail their hourly rate for viewings, checking paperwork, time in the notary etc for comparison against other trades?
Hi Greg first of all do you know someone who has made 50.000€ from a sale?..........because i don't.
When you say you would happy to give 5.000 is that for a 1 million villa or for a studio priced at 45.000€?(11%)
As for my fee for Veiwings that's free.
As for paperwork depends what you mean by paper work?
And going to the Notary well then that's where i go to get paid not for my time there but for the sale of the property and all the work i have done before which is all included in my commision which is agreed when listing the property.
Yep, I do know of an agent that has made 50 grand on a sale, I also know one that had exclusivity on a 900,000€ property and sold it for a million, pocketing a cool 100 grand.
The 5000, does it matter? If you have a one bed for sale or a villa, are your hourly rates different? Do the owners of a nicer property have to pay more? For what?
As for paperwork I mean the supplying of a Nota Simple, checking for outstanding bills for utilities, taxes, turning up at the notary etc. Would you be happy at the notary explaining your hourly rate? And for both owners to be present at the signing? it's my experience that estate agents will go to the end of the earth rather than have both parties present at the signing.
Hey YG I don't know you maybe this doesn't apply to you, it's just personal experience.
Hi Greg first of all do you know someone who has made 50.000€ from a sale?..........because i don't.
Yep - several :(
YOUNG GOLFER
16-10-2011, 22:10
Your right it does not apply to me Greg.....i am happy with the way i work and i have never kept clients apart from each other....mind you i went to a Notary when another agent had POA from the seller and was very surprised he made 2% of the sale price to do..... so almost 4000€ not bad a signiture.
I have never sold a million plus property but i am guessing the owner of such a property would not pay 5% around 2% yes but if he or she did then is that not down to them.
Not sure about the people you know making 50k or 100k but i would give this advice .... seek a good Lawyer to make sure everything is above board.
All our commissions are agreed with the owners. We get a cheque at notary which the owner is well aware of as they have agreed to the amount. Most of my buyers and sellers will have met each other before going to the notary - why would I keep them apart??
There is no secrecy about this. Not sure why an agent made 100,000€ on a sale of 900,000€ - why not ask the seller? If they did not agree then they should take it up with the agent really.
Hourly rate has nothing to do with commission, we dont work on an hourly rate - nor can we.v You are paying for the enormous reach estate agents have when it comes to finding buyers.
Commission is a percentage in this industry and many others, the world over, thats just how it is. When selling 7 figure property, it is far more difficult to find a buyer with a million euros than one with 50,000€ so agents earn more. But they only earn if they are successful and get you the seller, what you have asked for.
Some people seem to think this is an easy business - its not. Lots and lots of estate agents have gone out of business. Many continue to struggle and lots of them will also disappear. So to think that commissions are too high and it is easy peasy with a postcard in a window, wander around on a couple of viewings and bingo youīve made 50 grand - that is just not reality. If it were, agents would only bother selling villas.
Yep - several :(
Which tells me people are willing to pay this. If they are willing to pay it then agents are going to take it. They aren't going to negotiate their commission down!
Your right it does not apply to me Greg.....i am happy with the way i work and i have never kept clients apart from each other....mind you i went to a Notary when another agent had POA from the seller and was very surprised he made 2% of the sale price to do..... so almost 4000€ not bad a signiture.
I have never sold a million plus property but i am guessing the owner of such a property would not pay 5% around 2% yes but if he or she did then is that not down to them.
Not sure about the people you know making 50k or 100k but i would give this advice .... seek a good Lawyer to make sure everything is above board.
I'm sorry to say, agents now have an upper hand - it's a buyers' market and (many) agents will push the property that has the highest commission - when there are few buyers around, do you refuse an offer hoping another agent might have a buyer and will not take as much. I've tried to negotiate down to 3% on expensive properties with no luck of late :(
You can't begrudge agents charging a commission rather than a flat fee. In my line of business we pay a commission to third parties when they bring in business - its not a flat fee it's a percentage of the
Booking fee- the bigger the booking the bigger the commission. Same work involved
How much would it cost to maintain an office,staff,web sites,advertising etc.? Is this why so many agents have either closed down or moved their operation to their homes?
How much would it cost to maintain an office,staff,web sites,advertising etc.? Is this why so many agents have either closed down or moved their operation to their homes?
They havent moved with the times. Too many of them sat on their arses in their offices waiting on the business to come to them. There was a time when anyone could rock up in Tenerife, put an estate agent hat on and start flogging houses for a hell of a lot more than 5%.
The market has thinned out a lot since then, most of those agents have disappeared and there are obviously far fewer buyers around. Basically, you have to work a lot harder and a lot smarter for your money.
Damn right they should be regulated, along with anyone who gives 'financial advice'
I know the ads on the Forum are different every time you refresh the page so I thought I'd post the one that was on Balcony's reply above. _ http://www.elviriapropertydeals.com/?gclid=CObKh9iz86sCFXNItAodC38qDA
Angusjim
19-10-2011, 13:28
Damn right they should be regulated, along with anyone who gives 'financial advice'
Your spot on Balcony it worked a treat in the UK the FSA have done sterling work over the past 10 years just ask Sir Freddie Goodwin he loved them:laugh:
jogger321
19-10-2011, 13:52
I know the ads on the Forum are different every time you refresh the page so I thought I'd post the one that was on Balcony's reply above. _ http://www.elviriapropertydeals.com/?gclid=CObKh9iz86sCFXNItAodC38qDA
This deal is useless as I need 200% finance with no money down as I need to buy a new car, holidays, boat etc as part of this deal :)
This deal is useless as I need 200% finance with no money down as I need to buy a new car, holidays, boat etc as part of this deal :)
There were deals like this around until about 2007. One I was offered for clients in Costa del Sol was on some (very nice) penthouse apartments in Marbella priced at 600,000€. 100% finance, Furniture pack, all costs and taxes paid, 30,000€ cashback... Mental!
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