You might have read headlines lately that the number of Americans moving to Portugal is higher than ever.
In the USA, it’s common for buyers to use one agent to help them in the buying process and the agent would split the commission received with the agent who has the listing.
Lately, you’re also seeing a lot of agents in the property industry in Portugal sprung up like wild mushrooms claiming they’re BUYER’S AGENTS.
A typical pitch to a potential property buyer would be something like this:
“We work for you and on behalf of your interest. We can represent you and select the best deals. Agents in Portugal are typically the seller’s agents but since we represent you, we can source your dream home from multiple agents. At no cost to you.”
It’s true that in Portugal all property agents work for the seller. And in Portugal, it’s the seller that pays the commission, usually between 3–5% (Plus 23% VAT) of the acquisition price.
Worth mentioning here is that Portugal has no MLS (Multiple Listing Service). Each agent or brokerage is just representing the listings they have.
Many Americans do not understand how things work here and have fallen into the trap of those self proclaim Buyer’s Agents. And this has become an obstacle for them and they might even miss a good deal because the listing agent refused to work with that so-called Buyer’s Agent they have appointed. Why is that?
Because in Portugal there is no such thing like a Buyer’s Agent. Although agents do sometimes split commission amongst themselves here. When one has the listing and the other has the client. It is a collaboration between agencies. Conditions do apply. Let’s get back to that later.
In many cases, when the client first began researching the real estate in Portugal, they contacted multiple agents on various property portals or even the broker’s website. Thus many agents would already have this lead as a direct client, the agents would already have been working on this client. Until one day, when an aggressive “Buyer’s Agent” convinced this client that he/she can fully represent in the buying process; and then sent out a notification to all the other agents claiming so.
Now put yourself in the shoe of one of those agents. You have been working with this client, been presenting things to him/her, or might even spend time showing him around, and all of a sudden, one day you got a message from a random agent that your client is now represented by him, and the client is looking for one of the properties you have shown earlier. The deal is closed and you’ll have to split 50% of the commission with this buyer’s agent. That’s literally theft.
Having explained all these, let’s go back to the case when agents split a commission among themselves. There are indeed some clients who would like to be more discreet and they only appointed a sole agent to represent them from day one. However, this agent does not have the listing the client is looking for so he would seek out other agencies to procure that dream home. In this case, it makes sense for the listing agent to split and most of the brokerages are happy to do so. In fact, referrals, as it’s called here, account for a high percentage of the business. Generating direct leads, after all, is an enormous marketing effort and is also very costly.
To conclude, there is really no such thing as Buyer’s Agents in Portugal. The Golden Rule for agents here is LISTING. Having a good listing is the basis of this business. Of course of the hundreds and thousands of homes across the country, it’s impossible for one single brokerage to cover 100% of the homes for sale. And those who are claiming to be buyer’s agent are simply just people without listings. This is an indicator that they are weak and simply, unprofessional.
Within the industry, specially in the second-hand homes market, a metric to measure the agent’s performance is their ability to obtain the listings. It’s a cutthroat world and those who obtain exclusive listings (being appointed as sole agents) are the “Chickens that give golden eggs” within their organization.
Be careful. You probably don’t want to miss your golden opportunity by appointing such an unprofessional person.
Here’s what you should do:
1) Contact all agents, and compare everything. And work with them directly.
or
2) If you don’t want to be bombarded by different agents, work with one from the beginning. But please note that some agencies in Portugal made it clear they don’t split commissions. So here’s a RED FLAG: If you like one listing and this agent you appointed gave all reasons why you should NOT see this listing, it’s possible that the listing agent does not split the commission thus your agent is discouraging you from considering it. Watch out for dishonest behaviour.
