In a moment of a almost certain change in the real estate cycle in Portugal and in much of the worldin the North American market, where the readjustment has already “knocked on the door”, there has been a discussion about the percentage value of commissions paid to real estate brokerage companies in order to understand if the impact they have on the transaction and financing is the most appropriate to the current situation, and mainly, to what is expected to become evident on a large scale at any time. This discussion arises in the United States due to to a bill that proposes the change of the model of the current commissioning structure.In this country, the selling customer’s agent and the buying customer’s agent have been charging a service fee for several years. negotiated and dictated by the selling customer’s agent that is paid in full by its client and that, therefore, ends up reflected in the sale price of the property. In order for the sale to be concluded, the NAR (National Association of Realtors) advised that this commission be distributed between the selling customer’s agent and the buying customer’s agent always in accordance with previously negotiated premises.
US discusses changes to the law
The proposed law defends the decoupling the trade and paying the commission percentagewhich is currently dictated by the selling customer’s agent, and who has the power to unilaterally decide the transaction percentage value, for a system where the selling customer and the buying customer could negotiate a commission amount with your agents independently for the same transaction. Something that is already practiced in several North American zones and states. This proposal claims that such a change would benefit the consumer in general, as it would have the power to distribute the negotiation more equitably and, potentially, the power to lower asking price of properties, distributing the service payment effort (commission) between the selling client and the buying client. This will supposedly make the fairer market in terms of property valuevalue of the commission percentage (tends to decrease) and the ability to negotiate the value of the service by each party involved, even if this means that the weight can continue, as always, on the seller’s side. , the proposed law was challenged by a study commissioned by HomeServices of America, a subsidiary of Berkshire Hathaway and one of the largest in the country in terms of number of shared transactions, which argues that this measure would put pressure on minority purchasing poweras the Hispanic customer, who would see the transaction costs increase on his side, as a buyer, affecting his LTV and making it difficult to access credit for the desired property (an opinion that takes into account that the value of the property remains the same) .Also read: Real Estate: If you were already a Broker in 2012, you know what to do, right?
the portuguese reality
In Portugal, and despite the fact that the law also allows charging to the buyer customer, the current practice is that who pays the commission for the service provided is the selling customer, which is normally the person who contracted the service through a Real Estate Mediation Contract or CMI. However, when there are two real estate agencies in the same transaction, in which one holds and represents the selling customer through a CMI, and the other holds (even without contract) the buyer customer, the first shares the fees paid by the owner (commission) with the second, in previously agreed parts (usually 50/50). We call this business sharing.The models of representation implicit in the Portuguese real estate law clearly suggest the division of service liability of intermediaries to their clientgiving the clear and future idea that, if a customer wants to be represented and served for the transaction of their property, whether in the purchase or sale, they will have an agent/mediator, and it will be to him who will pay the defined commission, this value being freely established between the two parties, the mediator and the client. That is, it will be market itself to be defined, not a mandatory law.I believe it is common knowledge that, in Portugal, the commission values of a real estate transaction are traditionally paid by the ownerwho hires the service, generally around 3% to 5% + VAT on the actual sale value of the property, with the clear trend is 5% + VAT.In Portugal, more and more companies are starting to appear that provide a dedicated and professional service to the buyer customer, thus giving up sharing the commission with the company with which they will mediate the business. However, in order to be able to close the sale deal (meaning reaching the amount requested by the seller and possible for the buyer), sometimes the buyer customer’s agent forgoes charging part, or even all, of his commission to the customer. buyer. In this case, it is paid by the selling customer’s agent through the share of the negotiated commission.The Buyer Customer Agent in Portugal stands out in an increasingly scarce market, and often associated with a market segment where real estate is traded for higher values.Read more: Are you afraid to buy a house?
Italy and Spain with different model
In the case of the Italian market, and in some regions of the Spanish market, operates differently. in a transaction always pay both customers, regardless of whether they are working with the same company or different companies, assuming that each party must pay for the service provided. It should be noted that, in case it is the same company, the law of these two countries allows this to happen, unlike Portugal, where it is prohibited due to conflict of interests. It remains to be said that the average commissions charged in these two countries is 3 to 4% to the seller’s agent, and 2 to 3% to the buyer’s agent.If property prices in Portugal continue to rise, and the value of commissions paid to brokers follows the trend, thinking that both customers will pay (in some cases they already do), is it possible that in an environment of crisis due to inflation and rising interest rates, the application of the commission to the buyer customer may contribute to making access to the purchase of housing more difficult?Also read: Real estate: is it time to sell?
After all, how many buyers will actually have the money to pay a commission in Portugal?
It will be feasible to ask a buyer customer that, in addition to paying all the charges of a transaction, and if it is on credit, the entire financing process, add another value to their operating costs with the payment of a commission to the mediator? Or would we be pushing the operation’s LTV too much, making it difficult to assessment of the client’s financial capacity to support the operation?As I mentioned, the North American model has evolved in recent years towards a model of representation and, due to the change of cycle, there is an economic (and political) will to return to the previous model, with the breakdown of the commission between the two companies involved hoping to do lower costs for the seller and, consequently, the sale value of the property. These measures are being discussed in order to anticipate a problem of difficulty in accessing the purchase of housing, clearly thinking about the middle and lower segments. For example, in the center of large cities in Italy, where the market is hotter due to the scarcity of product and strong demand, which translates into a constant rise in prices, there is an unusual practice in real estate companies: they contract the mediation service to the owner/seller customer exclusively, and at zero commission cost, because who will pay them is, in fact, the buyer customer, who normally pays 3 to 4% of the transaction value of the property. In this model, sharing with an agent who has another buyer client will not be viable, as there is no remuneration from the owner/seller client to the agent. Read more: Who buys more houses in Portugal?
Waiting for new legislation in Portugal
There are many different models all over the world. The most important thing is to think about whether each model benefits the customer at each stage of the market. Are the commission amounts currently charged in these countries that I mentioned, including Portugal, adapted to a possible crisis? ability to pay a commission in Portugal in the hope of lowering the sale value, or will it be that, instead of a more balanced market, it will actually be opening doors to another financial difficulty in buying a houseparticularly for first-time homebuyers, or lower-end buyers? We have long been waiting for a new legislation for real estate mediation, which is supposed to come out before the end of this year. Will this theme have news soon? Read also: I’m selling my house. Should I hire a real estate agent? 
A professional writer by day, a tech-nerd by night, with a love for all things money.