Estate Agency Fees in Valencia – Who pays & When?
2017 By Martin Hayes
In this article Martin Hayes of SWAN Partners Explains the workings of Estate Agency Fees in the Valencia region.
In much the same way that the food & the variety of wine often changes from region to region across Spain, so too does the applicable custom concerning the payment of estate agency fees.
Liberalisation of the Estate Agency Sector in Spain
The real estate agents sector in Spain was deregulated some seventeen years ago. In the wake of deregulation, estate agency fees and the manner in which they are paid are determined by the contract or contracts signed between the estate agent and the buyer and or seller. The terms of such contract will be shaped mostly by the common business practice in the area where the property is being sold. In some areas the agency invoice is paid in full by the seller and in other areas the agency fees are shared between the seller and the buyer.
So which system is best for the Buyer?
While this question may seem like a no a “no brainer”, it worth having a closer look. At first glance, it would appear that in areas such as the Marina Alta area of the Valencia Community, (Denia, Javea, Moraira, etc) that it’s the Seller who pays the agency fees. However, many would offer a strong and valid argument that it is actually the buyer who is really meeting the agency fees. This argument is based on the frequent practice whereby at the point at which the property is listed by the agent the seller is asked to agree a net price that he or she will accept after agency fees are paid – the property is then marketed to the public with the agency fees then built in on top of the net sales price that the seller has indicated as being acceptable to him or her. The purchaser in such a situation will be none the wiser as to the amount of agency fees that are built into the price that they have agreed to pay for the property.
What happens with Estate Agency Fees in Valencia Capital & the Surrounding Areas?
When the estate agency sector was regulated, estate agency fees were spilt between buyer & seller – Valencia city & the surrounding areas have continued with this practice.
In practical terms, this means that in Valencia and the surrounding areas, the property will be offered for sale at the price that the seller is actually selling the property for – without the agency commission being built into the price.
This way of breaking down the payment of estate agency fees or commissions offers immediate positive consequences for buyers interested in a property in Valencia. The most obvious is that it translates into greater transparency for the purchaser, as it allows him or her to have a more accurate view of the property’s net value.
On the other hand, the system in the Valencia arguably places greater pressure on the estate agency to market properties at a price that hits a greater balance in the interests of the buyer and seller alike thereby offering greater value for money to the consumer in general terms.
Finally a key point to remember is that the transfer tax payable by the purchaser is calculated over the purchase price paid on completion. Clearly such transfer tax should only be paid over the amount actually being paid to the seller for his or her property.
Okay – so when do you pay the Estate Agency their fees or Commission?
Good practice in Valencia is that the estate agency fees will only be payable when the ink is dry on the deeds to your new home on completion at the notary office.
Key Message to both Buyers and Sellers
All of the above is dependent on the contract that you have in place with the estate agency that you are dealing with – the experience that you may have from one agency to the next may differ greatly. There is no substitute for working with a professional and reputable estate agency that clearly sets out their terms of business from day one.
Please contact Martin Hayes of SWAN Partners for assistance or further information.