Buying direct from the owner is one way many purchasers choose to buy property in Tenerife. There are a number of advantages:
- You speak directly to the owner, not through an intermediary
- You can arrange your own visits to suit your schedule – not the estate agents
- The price is usually lower – in some cases considerably
Seems like a no-brainer then? well actually its not! We generally don’t rate estate agents highly on our site, we don’t like the way they work, the way they can smile, lie and nod there head for hours on end unflinching, the way the would shoot their own grandmothers if a sale depended on it. You get the point but, even though many of them have no interest in whether or not you are buying the right property for you, they are often full of useful bits of information. Information about different areas, different new-builds, they generally do know where you can get good rental income and where is best avoided and overall can definitely (when they are not selling) provide information which can be very helpful when it comes to deciding where and what to buy.
The problem is getting this information from them without having to sit through 10 cups of scalding hot tea (its scalding hot so it takes you longer to drink! – More time to sell to you…) endure all of their “leading questions”:
- So you want to buy a property? Yes
- So you like Tenerife? Yes
- So you are looking for a 1 bed apartment? Yes
- At an excellent price? Yes…. yawn…
- And you can pay a reservation fee today? Ye…? What??!!
They think if the get a long line of Yes´s, you are more likely to say yes when it comes to the closing questions… more about that in another post. Anyway, most of these techniques have not been learned in their current profession but in their previous one – Yes, most estate agents in Tenerife come from a Timeshare background which is why they cannot switch off the “hardsell” and which is why it is so difficult to get good, quality advice from them without having to sign your life away first. They simply will not offer this advice until you have handed over:
- Your home number
- Your works number
- Your mobile number
- Your email address
- Your other email address
- Your wife’s email address
- Your brothers, girlfriends sisters, friends, fathers email address (just in case the other numbers don’t work)
It is a difficult situation for you as you really need some good unbiased advice from people who should know. Two easy pieces of information you can get straight away and which they won´t lie about are:
- Where do you live? Is that a good area? Why?
- What do you think of XYZ estate agents? We met them yesterday and liked them. Is there anything we should be wary of?
They will generally describe the area they live in honestly, they should be able to list off plenty of reasons why it is a good area because they will have really considered all of these reasons themselves. Generally, it is easier to tell the truth about something than lie and if they like the area they live in, they will have plenty to tell you about it. This isn’t foolproof, they may be trying to sell up and move to a better are for example but it is a good indication and if they have the same requirements as you (perhaps you and the agent both have kids of a similar age therefore local schools are important for example) then it is a good way of getting some genuine information.
The second question can bring fantastic results – sometimes an agent will simply tell you “we don’t want to criticise other companies” a rather passive-aggressive response designed to simply sow the seed of doubt in your mind. They will then tell you how great they are and why you should only be working with them…. But, some agents will “go off on one”. Lots of the agents know one another and generally the real reputations amongst the estate agent community are no secret. Agents who live here know all about the other agents, how they work, how busy they are, where they have worked in the past, shady deals they have been involved in, scams they have pulled etc.
If it means the difference between a sale and no sale, many of them will spill the beans. They may exaggerate bad behavior of other agents but in most cases they simply won´t have to. They do not have to lie to come up with plenty of reasons to put you off. See what they say, what the reputation of certain agents are – especially the big agents – think the top ten results on Google for “Tenerife Property” and similar terms. Then, go and visit another agent and ask them the same question. it can be very eye-opening to hear what they have to say about one another!
In our view and whilst only a generalisation – the bigger the agent – the bigger the lies. This is based on our own experiences working with them and also on the economics of running this type of business. The average sale price of a property in Tenerife is about 150,000€. That means a commission of 7,500€ per sale. The biggest agents here have many offices dotted around the south. more offices means higher overheads, more staff means higher salary costs. The pressure is really on to generate and close sales – lots of sales to pay the bills. If there aren´t lots of sales (like now – depressed market) the agent has two choices.
- Reduce overheads massively, close offices, lay off staff (very expensive to cancel staff contracts in Spain), or
- Make more money per client
But, how can they make more money per client if commission is fixed at 5%? Well, the answer is they “unfix” the commission and charge whatever they can get away with. We were recently asked by a property buyer what they could do about their agent. They had paid a deposit on a property for 165,000€ and had eventually managed to contact the seller of the property to chat about furnishings etc. It came to light that the agent had negotiated the seller down to 135,000€ on price telling them the buyer would not budge and advising them to accept the offer if they wanted any chance of selling. Since they now knew the agent was trying to walk away with 30,000€ on a sale of 165,000€ (over 18% commission!!!) they both wanted to reduce the commission to 5% (8,250€) the agent told them they had both agreed to their respective prices and it was only fair that they should make 30,000€ as they had negotiated the deal, at one point the seller was told it was “none of your business what we are getting”.
This wasn’t a small agency or a “one man band” but one of the large, all singing, all dancing agents offering “20 years experience” “family company” “testimonials from happy buyers” and all the rest of the cliches that mean absolutely nothing!
So, buying through an agent can be dangerous and can mean paying far more than you need to. But, they do have that vital information and thousands of property listing between them all.
If you can get an agent to GUARANTEE:
- Transparency from start to finish.
- Transparency on commission (maximum 5%)
- All money handled through a lawyer – nothing handed over to the agent.
- You can use your own completely independent lawyer (ask the agent who they recommend, then find a different one)
- If buying with a mortgage – they do not get involved – use a Spanish Mortgage broker in Tenerife
- A clause added to the contract protecting your deposit if you are turned down for the mortgage
If you can get all this guaranteed by an agent and successfully get to completion without the agent breaking any of those rules, then the 5% commission is definitely worth it.
The only problem now is getting through the sale without the agent going back on what they agreed to – however, we can ensure this wont happen and save you some money at the same time. if you would like our help, feel free to contact us and good luck with your purchase!
Please leave your comments on any aspect of this article, the service we provide and the benefits we offer. If you have purchased property in Tenerife before, we would like to know about your experiences. Were you given all the information? Did you agent tell you how much commission you were paying them? Were they transparent? Would you do things differently if you were to do it all again? We value your opinions and appreciate your feedback!