Exorbitant Real Estate Commission Rates in Portugal – Are you getting value for your money? By Ann Laws

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Jan 6, 2023 | A contentious subject, not just with property vendors but within the industry itself. Is there justification to charge 5% plus IVA at 23%? Some agencies will even demand rates up to 10% and, surprisingly, there are people who pay this. If money is of no consequence, then, I can understand them being lured by a glitzy office, the aspiration of listing with a luxury brand,and the promise of extravagant marketing. Now, liken it to those who buy a pot of expensive skin care cream hoping that the contents will bring eternal youth. My research revealed that one can pay as much as $950 for a 50ml pot of glistening goo, wrapped in attractive but costly packaging, promising instant signs of anti-ageing aided by ingredients such as snail slime and dragon’s blood.

I will continue a little longer with my real estate agency/skin care cream analogy because one can draw similar conclusions. An eminent Australian dermatologist, Dr Rosemary Nixon, tested a range of skincare products ranging from the most expensive to the cheaper brands and concluded that, “high-end brands tend to woo us because they have spent more money on fancy packaging”. She urged that one should always read and compare a product’s ingredient list and concluded that “according to the experts, the bargain option is just as effective as well as being kinder to the bank balance”. Should this analogy be considered when selecting a real estate agent?

Knowing that there exists a market for those happy to splash their cash, I revert to mostpeople who have worked hard for their money and want to spend it wisely. Discerning people who would not spend $950, or a fraction of it, on a pot of skin care cream will want to apply the same process to the selection of a real estate agent.

At Laws Property Portugal (ALP), we can sell a property for 2.5% plus IVA, and we will not short-change our clients on quality or content of service. We provide all the elements that other agents do who charge 5% and above. We will assist vendors throughout the sale process and be on-hand to provide guidance and advice. In fact, we strive to go the extra mile! Still photography, a virtual video tour and drone images (where appropriate) come at no cost to the client. We market via our website (www.lawspropertyportugal.com), which has an ever-growing international reach and is supported by a team of experienced SEO (Search Engine Optimisation) experts with proven track records. Our website is our shop window on the world, and with on-going investment we are increasing traffic to the site. In addition, we list with several portals including Idealista, Rightmove Overseas, Properties in Portugal and Greenacres. We also have agents in France, Dubai, and the United Kingdom. I believe that our ingredient list does not fall short of those charging significantly higher commissions.Akin to skin care products, which would you choose?

Real estate agents, at the high end of the commission scale, will defend their exorbitant charge by claiming they have a bigger and better client data base, they have been longer established, that they have people ready and waiting to buy, and that a higher commission gives them room to increase their market by sharing with other agents. In other words,sharing with other agents, shows that they are happy to earn less from the sale price of your home, but the vendor is not the one who benefits financially. In truth, buyers will find properties listed by agents working independently. Most buyers research the market, view several property websites, and track the portals. If a real estate agent offering, the vendor a lower commission, has a listing that no other agent has, the diligent buyer will find it. A lower sale commission also gives the vendor more flexibility in price negotiation. ALP’s remit is to offer vendors a better deal leaving more money in their pockets. Worthy of note, real estate agents in the United Kingdom charge in the region of 1% and make a healthy living.

The real estate industry in Portugal should prepare for change and adapt to consumer rumblings. This is evident by the growing number of websites and on-line platforms offering a real estate marketing service at a fixed price or on a ‘sell it yourself’ basis. Look at the travel agency industry. Gone are the days whereby most people book travel or holidays via an agent on the high street. Unless real estate agents offer vendors a more reasonably priced service, I predict a demise in the industry.

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