Estate agents commissions – how we are paid
Estate agents in Tenerife are by and large paid commission by the property seller. So when a sale is signed a notary, the seller will pay the agency by cheque or by bank transfer the amount agreed prior to marketing the property. This generally a percentage of the final sales price and e standard estate agents commission in Tenerife is 5%. There are several agencies that operate as franchises and they generally ask for 6% as they need to pay a portion of what they earn to their franchise. There is no additional benefit to owners in working with a franchise agency therefore they should not agree to pay in excess of 5%. The main thrust of asking for more is that they offer to advertise their property on their international network although 99% of their other offices (completely unrelated offices in the USA for example) will have zero interest in the property as they are incredibly unlikely to have clients specifically asking about Tenerife! If the agency insists on more than 5% – walk away.
Some small agencies offer lower fees (often 3% or 4%) but this is usually because they do not sell property as their primary business. They may well be a rental agency “having a go” at a few sales and using the hook of a lower commission to try and get some owners to work with them. In my experience they have neither the marketing power or client base to effectively sell properties and a low commission agent is very often an ineffective agent.
Often agents will collaborate with other agencies. So they may have the property and another agent may have a potential buyer. In this case they will work together and in the event of a sale, the commission amount will be shared between each agency. Approximately 30% of my own sales come from collaborations with agents here in Tenerife and internationally (I work with agencies in the UK, Belgium and Russia for example.) Many agencies however will not collaborate or make the process of collaboration onerous and problematic. These are well known agencies that many agents avoid working with. As a seller you really want to avoid these agencies that do not collaborate effectively if you want to maximise your chances of selling.
We do not negotiate on commission. I am very open with sellers and provide a huge amount of professional marketing for free – if I can´t sell the property, I do not earn anything – in fact I lose money! Commissions / charges / fees, whatever you want to call them are agreed prior to this work commencing and in the event of a successful sale I do expect them to be paid in full.