By Pedro Rodriguez
The Algarve property market is extremely competitive. More so for the Algarve Real Estate Agents themselves than for the buyers. The competition amongst the Algarve Property Agents is fierce. One look at the many Algarve Real Estate Agents offices in all the cities, towns and villages will confirm that. There truly is a Real Estate shop on every corner of the Algarve.
Looking from the outside in, this seems to be a tell tale sign that the industry is healthy, and thriving. Otherwise why should there be so many Agents?
Let me answer my own question first. The amount of Agents trying to sell Algarve properties does not mean that all of them are making money. A bold statement, but absolutely true. The property market in the Algarve is doing ok and in some parts of the Algarve even exceptional well. Yes, there are many foreign buyers who are looking to purchase Algarve Property. But if one compares the numbers of buyers and the existing Agents you will see that this cannot make healthy figures.
There are some excellent Real Estate Agents to be found. In particular the larger and long established organizations. Many of them Portuguese owned. They have developed into market leaders over the years, have diversified and have become developers as well.
Others are promoting large and new developments on an exclusive basis, financed quite often by foreign capital with close connections to English and Irish Real Estate chains and financial institutions. They in turn generate the overseas marketing and are directing the prospective buyers to their "own" projects so to speak.
Even though the demand for Algarve properties is on the increase, so is the number of newly builds and re sales. The steady rise in new developments does make re sales in some areas of the country more difficult to sell.
With the Algarve becoming a target for foreign investors and property buyers the amount of foreign owned Real Estate Agents in the Algarve also increased. Real Estate has always been synonymous with money and this in turn attracts a lot of people thinking that it might not be too difficult to start a Real Estate business and jump on the bandwagon.
Some of the Agents have had none or little experience in what ever shape or form in Real Estate prior to coming to Portugal. This statement which will annoy many I know, but I doubt if I would find anyone who could disagree with on that point. If there is I am happy to hear from you.
The basic principle behind the reason for establishing a foreign owned Real Estate business is quite easy to understand. There is a consensus that foreigners do like to buy from or through their "own". Given the amount of people from overseas buying property in Portugal the seemingly obvious is to start a Real Estate Agency in the Algarve and cash in and ride the wave.
That in a nutshell is the main reason why there are that many foreign owned Real Estate Agents in Portugal. And of course the chance to make a lot of money in the process is another good, understandable and absolute legitimate reason for this trend.
I have nothing against anyone making money but I have to ask the question if the amount of commission the agents charge today are really appropriate and also deserved.
3% and 5% are the norm. The agents argue that they do need that sort of margin since they do have a high cost of advertising and marketing. Well that may be the case, but why should the buyer pay for that? Make no mistake it is you the buyer who is footing the bill. It is my believe, that such levels of commission are necessary for many because of the lack of sales they do. So in order to survive they have to charge what they charge. Why are they not closing more sales? Because there are too many Real Estates competing for the same market
As long as one finds a license holder with a current, and up to date Real Estate license under the IMOPPI rules it is not too difficult to set up a Real Estate Agency. The laws governing the Industry have become thank god more stringent and that is god news for everyone in the business. I know that some people do not agree with me on this point, and some of the regulations concerning the administration may be open to debate but overall I don't think anyone can deny the benefits of the new laws.
For readers who are not familiar with the Real Estate business in Portugal I would like to explain a few facts:
Unlike the UK or other European countries there are only very few Agents who are operating on a exclusive basis. The ones who do are in the main American Franchises who have a unique way of marketing property in the Algarve, and require the vendor to sign a contract for a length of between 6 and 12 month on a strict exclusive basis.
One can see the advantages such contracts bring for these companies, but for the seller this is in the main very bad news indeed. The rest of the Real Estate Agents in the Algarve work on an open contract mostly for a duration of again 6 or 12 month, which allows the vendor to offer his or her property to other agents as well. Quite often the same property is on the market with two or three Agents or more.
I believe that the times are changing and I call in question the need of having any Real Estate Agents at all. There are alternatives to buying and much cheaper one's as well. I can see the day when more and more people will buy owner from owner and let their solicitor deal with the rest. The sourcing of properties which matches your requirements can be achieved quite easily by yourself.
About the Author: Pedro Rodriguez was born in Valencia and has spent his early professional with Woodstock Homes PLC. For the past 18 years he worked in commercial and residential Real Estate. He is now involved in the publicity and advertising of properties which are for sale direct from the owners. Our site can offer you some further information and insight on buying or selling a property or business in Portugal. http://www.sellandbuydirect.com
Source: www.isnare.com
