Having decided to buy a property at the end of 2021, I could not have suspected that this process would take almost eight months. During this time, we have been looking for houses and apartments both on the continental part of Portugal and on the Portuguese islands, talked with a dozen real estate agents of various nationalities, and today I would like to share my experience so that you do not make the same mistakes that will be discussed in this material. This article will be helpful for those who want to buy an apartment using a bank mortgage and those ready to pay the total amount immediately in cash without using lending.
Why did we decide to stop renting an apartment in Portugal permanently?
After the end of 2021, we (my husband and I) analyzed the number of losses that we had while renting a house in Portugal. We decided to permanently abandon the lease and buy an apartment on a mortgage. The idea that the minimum salary in the country is about 700 euros and renting a more or less decent apartment in a good location would cost the same, or even more, did not give me peace of mind. Realizing that the real estate market in Portugal was arranged in this way, we did not want to put up with this fact, and that is why we began to consider alternative options, among which was the purchase of housing.
Also, we were not always lucky with the landlords. The rules of the lease itself prohibit making any changes to the housing, so we had to coordinate every little thing (for example, drilling a hole in the wall to hang a picture or repainting something)/ That is not a disadvantage during the first few years of rent, but when you rent a house for 5 or 10 years, such agreements become very annoying. It is also impossible to think about improving the home (for example, if there is a desire to put high-quality windows or doors, for which the government allocates subsidies from time to time) because the apartment is not yours, and there is no point in investing in it. So this is another reason why the decision was made to end the story of renting apartments as soon as possible.
I will not describe the financial analysis we carried out before the purchase. Still, for a general understanding, I will say the following: the apartment that we bought and in which we currently live could be rented out for 600 euros. At the same time, the monthly mortgage payments with insurance and other additional costs of the same apartment is about 300 euros. So it turns out to be 50% of net savings, while we pay money not to some third-party person, but to the bank for our housing, in which we can do repairs and other things, without agreement with anyone. As for me, so solid advantages. At the same time, we chose an apartment within walking distance from the beach, in a small town with all the infrastructure, so if necessary, it will be possible to rent or sell this apartment without any problems.
Our expectations regarding profitability and benefits of buying a home versus renting are entirely justified, so if you plan to live in Portugal, not for a couple of years, but at least five or more, and if, like us, you are not tied to a specific place and work for yourself from home, then it seems to me that you need to buy real estate think about a year later immigration to Portugal.
The main mistake when looking for real estate
Well, if the expectations regarding the financial benefits of buying a home were fully justified in our case, then the expectations regarding the process suffered a complete collapse.
The most serious mistake in our history of finding a home to buy was using a real estate agent, which is an unpleasant aspect of the whole process.
Even though I have been living in Portugal for a long time, I am fluent in Portuguese and well versed in the processes in the country. Therefore, before starting our search, my husband and I sought help from a real estate agent.
Why? Because I firmly believe that everyone should do their own thing, and therefore I used to trust the essential things to professionals, this is my strategy for life. Usually, it works fine, but this time it failed because we did not understand the game's rules and how such an appeal for help could ultimately turn out to us.
Rules of the game in the real estate market in Portugal
Let's take a closer look at the game's rules and the prominent participants in the sale of real estate in Portugal. As a rule, we remind you that Portuguese real estate agents receive 5% of the transaction. Some people mistakenly believe that the seller pays for the work of a real estate agent, although in reality, it is produced by the buyer, albeit indirectly.
Well, let's schematically describe the main participants and the rules of their interaction:
- A homeowner - a confident Donna Maria wants to sell her apartment and get 100 thousand euros for it.
- Real estate agent from the side of the owner - at the same time, there is a particular real estate agent who, without earning a fixed salary, combs the whole city in search of income and throws his business cards into mailboxes with the message: “If you want to sell your apartment, text me”, knocks on the door and tries find owners who want to sell the apartment. And now, to his luck, he finds Donna Maria and, using his negotiation skills, agrees with her that he will help her sell the property. Naturally, for a commission, which in this case will be 5,000 euros in case of a successful transaction. Do you really think that Donna Maria will agree to 95,000 euros for a deal? Sure, she won`t, and the amount of the commission will be added to the cost of the apartment, which is no longer 100 thousand, but 105 (and sometimes 110 or 120, when agents “probe the market”, hoping that they will get a client who will not bargain, so always bargain and try to knock down at least 5-10 thousand).
By the way, the tasks of the real estate agent on the part of the owner include not only the search for the owner as such (although this is already quite difficult) but also the execution of all documents for the transaction and visits to various state authorities, obtaining certificates, etc. So, in general, there is a lot of work. In this regard, 5,000 euros of commission is entirely appropriate because they still need to pay taxes and a commission to the agency (in case this real estate agent does not work for himself but a large agency with a name), so as a result, the agent will get only a couple of thousand euros for a few months of working with Donna Maria.
- The buyer - let's say it's you, a person who wants to buy property in Portugal in the region of 100 thousand euros. Of course, you can search for housing on your own, but decide to enlist the help of a real estate agent who will help you in your search and to whom you do not pay anything.
- Real estate agent from the buyer's side - it was he who you found on the Internet or by contacting a large agency. His task is to accompany you when visiting various objects and recommend specific apartments for a visit. Also, the real estate agent can provide translation services if you do not speak Portuguese and give you a ride in his car to the objects, if necessary. Because the buyer does not pay his agent for services, then if a second agent is connected to the transaction, the real estate agent from the seller's side will have to share part of his profit (50% or another percentage by agreement) with the buyer's real estate agent.
And here is the time to voice the most important fact, due to which we have lost a lot of time and effort in our personal history. If you want to buy a property in Portugal and involve a real estate agent to help, then you, as a potential purchase candidate, will be "drained" in many cases. As soon as you appear on the horizon with your real estate agent, the seller's side will understand that this threatens him with the loss of part of his commission. Agree; from the description of the critical roles above, it becomes clear that it is the real estate agent on the seller's side that does most of the work on the transaction, and that is why he does not want to share his honestly earned commission with the agent who accompanies the buyer.
Unfortunately, the rules of the game are designed in such a way that the real estate agent on the owner's side will often not refuse you directly (although I have come across several advertisements for the sale of housing in which they asked real estate agents not to disturb or contact) after learning that you also have a real estate agent.
Very often, the so-called “drain” happens as follows: you come with your real estate agent to see Donna Maria’s apartment, but the agent from the seller’s side, seeing your agent, instantly decides that they won’t sell the apartment to you and won’t share the commission, so if If you choose to buy this apartment, then most likely you will be refused under some pretext.
The denial might look like this:
- The real estate agent, on the part of the seller, will not even inform the owner that someone wants to buy his apartment, so the owner will never know about your desire to buy an apartment. At the same time, they will tell you that your proposal did not suit the owner and he does not want to continue the conversation with you. In this case, the seller's real estate agent will continue to look for buyers who do not have an agent.
- You will be put forward with inadequate conditions for the purchase; they may increase the price or even force you to sign an agreement under which you can lose 10% of the down payment (in the case of mortgage lending). In general, you will be forced to abandon this object. In my personal history, there was a case when we wanted to buy a specific apartment. Still, to make an offer to the owner, we needed to familiarize ourselves with some necessary documentation. We, through our real estate agent, requested these standard documents from the agent on the seller's part, and he honestly said that he would not provide them to us because he did not want to. So, naturally, we refused to buy this apartment - that's how the banalest and ingenuous "drain" works.
In addition, such a system to prevent you from accessing particular objects can be provoked by a real estate agent on your part. Usually, it looks like this: they show you apartments only from the agency where your agent works or your agent starts showing you strange flats, and he doesn't show you the ones you want under a specific pretext. Real estate agents do all this because they know that if they come with you to look at a good apartment, for which there is a great demand and many candidates, your candidacy will be "merged." After all, you have a real estate agent behind you with whom you will have to share a commission. But, of course, no one wants to waste time, so they will try to take you away from the most exciting objects on the market.
Returning to my own story, I want to say that during the first six months of searching for housing (during this time, we worked with real estate agents from our side) in Portugal, we had several strange situations in which there was a feeling that we were being merged and thrown out of deals. We did not understand what the matter was and attributed it to the lack of professionalism of our real estate agents until one fine day when we found an exciting apartment on the Internet and wanted to see it with our agent. I sent a link to the agent and asked to call the real estate agent from the seller's side to make an appointment, to which I received the following answer: "Julia, please get in touch with this agency yourself, because if I call them and introduce myself, they definitely won't talk to me, but if you tell them that you are a private buyer, they will immediately set up a meeting with you.
Yes, as the famous proverb says: "Simplicity is worse than theft," and a not very professional agent foolishly yelled out an important insider nuance of the real estate market in Portugal.
It turns out that if you do not have a real estate agent, all the doors will open to you, and everyone will be glad to see you. In this case, you will directly resolve all issues with the agent on the seller's side, and the entire commission will go only to him.
If you are a buyer and have a real estate agent, then many real estate agents will deliberately "merge" you on the owner's part. This is because they do not want to share the commission with your agent, who did not do any work and just brought you to the website.
As soon as we understood this vital nuance, previously hidden from our understanding, a bright streak began in our search for an apartment. We refused the help of a real estate agent on our part; I began to call on ads and make appointments for flats. At the same time, I noticed how positively and cordially the agents from the seller were because when I called them and said that I was a private person. We were looking for an apartment for ourselves; they were as polite as possible with us, went to bargain and calmly threw off 5-15 thousand euros from the price indicated in the ad. Also, by communicating directly with the agent on the part of the seller, various issues are resolved much faster than when another person (your real estate agent) is involved in communication.
After six months of search hell, with terrible stress draining our candidates from transactions, we completed the entire process of buying and selling with the involvement of mortgage lending in 1.5 months - this is a speedy time for such operations in Portugal.
In addition, I want to note that the situation that I describe above concerns a purchase with a budget of no more than 150 thousand euros. Perhaps if you're going to buy real estate for half a million or a million, then the presence of a real estate agent on your part will not be a hindrance, but this must be checked in practice.
Of course, I was offended that during these six months, none of the many real estate agents we hired told us frankly: “Guys, you already have a small budget, so it’s better for you to look for housing on your own so that the agent on your part does not was another aggravating factor. I would like to hear this so as not to waste half a year, but, unfortunately, not all specialists practice an honest approach and think about their benefit and not the client.
How to be without a real estate agent?
After reading my story above, you can say that, in my case, everything was simple because I speak Portuguese and know the area well. Still, what, they say, should a person do who does not speak Portuguese and does not understand local nuances but at the same time wants to buy property in Portugal? Usually, people are afraid that they will be deceived or mistakenly believe a lousy apartment in the wrong place for a high price.
I believe that in such situations, you need a person who is very well versed in Portuguese realities and is oriented to the area, and this may even be a real estate agent, but in this case, he should not claim an agent commission from the seller.
What would I do if I arrived in Portugal just yesterday, without knowing the language and understanding other vital aspects? Based on the reviews, I would hire a worthy specialist, while this may be an assistant, accompanying, real estate agent, or even just an interpreter, and would pay for their services from her wallet.
For such specialists, I would set the following tasks:
- Accompany me when visiting objects and help with translation.
- Search for the best properties on the market without being tied to a specific agency.
- Bargain, reduce the price as much as possible, and successfully conduct business negotiations to complete the transaction.
In this case, the specialist you hired will work in your interests; when calling ads, he will immediately say that he represents a private person and does not claim any commission, which means you will not have any obstacles when looking for housing.
Yes, you will have to pay out of pocket to such a specialist per day, week, or project. Yes, the amounts can be, in this case, from several hundred euros to several thousand. Still, you would pay this money anyway (albeit indirectly) if two real estate agents participated in the transaction and divided their commission among themselves.
It is a myth that the buyer does not pay a commission when buying a home - no, it is he who produces it because this is an additional percentage initially added to the property's value.
It’s just that if you work with a real estate agent on your part (and he, in turn, will claim part of the agent’s commission on the part of the seller), then out of 10 viewed apartments, you may be merged in 5-8 cases out of 10.
And if you work with a specialist to whom you will pay yourself and who will not claim the commission of another agent, then, in this case, everyone will always be ready to make a deal with you (of course, on the seller’s predetermined conditions).
Just know that the Portuguese themselves rarely use agents when they want to buy a property, so it makes sense for you to work with the seller's agent directly, albeit with the additional help of a person who will accompany you.
Learning from others' mistakes
Everyone decides for himself; someone attracts real estate agents, someone does not, someone is lucky, and the experience of buying a home with an agent turns out to be positive, but in any case, it is essential to know the pros and cons of each decision you make. For example, I, a person who believes everyone should mind their own business and who likes to involve specialized specialists to solve significant problems, created many issues for me for half a year simply because I made the wrong decision to attract a real estate agent to help me.
I love the saying: "The smart one solves problems that the wise one simply does not create," I hope my negative experience described in this article will help you avoid that grave mistake that took me half a year and a lot of nerves and health.
While looking for housing, constantly stumbling over pitfalls, tricks of real estate agents, etc., I thought that it would be nice to create detailed tutorials that would make it easier to solve complex everyday problems after immigrating to Portugal.
I wish you good luck and see you soon on the pages of the WithPortugal portal!