Murcia, Spain: October 2020 – By Casas247.
Recent research has revealed that online estate agents offering low monthly up-front fees, without the guarantee of a sale at the end is not popular in Spain.
Since Purple Bricks burst onto the British property scene in 2012, offering a new hybrid estate agency to rival their traditional High Street competitors, their low cost pay-upfront business model has been replicated around the world with varying degrees of success – and failure.
Many of the early entrants to the market were simply dwarfed by their well-financed senior rivals. Purple Bricks had a few years head-start, lots of investors and were seen as the original market disrupters. It was a complicated niche to infiltrate.
By 2015, even Purple Bricks were experiencing resistance to their pay-before-you-sell model. Property owners were not comfortable with this form of estate agency, preferring instead the traditional No Sale No Fee approach, even if that meant higher fees. Better to pay nothing for no results than £1500 with no guarantee of a sale.
Eventually, Purple Bricks had to rethink their original business model. Their brand was now established, but profits and returns to their investors were poor. Market survey after market survey churned out the same results – home owners were not comfortable with up-front payments.
With losses mounting around the world, Purple Bricks decided to offer the option of payment at the point of sale. This decision had profound effects, not just for PB, but also for the traditional High Street Estate Agents – large and small! Purple Bricks were now offering No Sale No Fee contracts that were fixed fees of around £2000, far less than the average High Street estate agent’s commissions, set between 1-2%. On the average property price of £280,000 that was a saving of £2,200 or 55% – and even greater on higher value properties.
For the traditional High Street Estate Agents to compete, they had to reduce their own fees and costs. This resulted in many closures, bankruptcies and redundancies. PB were quick to offer jobs to many of these newly unemployed sales negotiators expanding their coverage around the UK.
By 2015, Spanish property agents looked to replicate PB. It was an attractive proposition. Money upfront, no pressure to sell and in many cases, the option to earn more from charging for photography and adding the vendor’s property to their own website. Further extra charges for premium property portal marketing and assisted viewings. By the time all of these add-ons were calculated by property owners, it was obvious there were no savings to be made, in fact, paying upfront for all those costs, without the slightest hope of a viewing, let alone a sale was just too much of a risk.
The main beneficiary of the PB experiment in Spain has been the property seller. Just like in the UK, the traditional High Street Estate Agents have had to lower their commissions to compete. Over the past 5 years, average commissions charged have reduced by half, from 5% to 2.5% in highly competitive areas.
Over the next 3 years, those agents fees will reduce further and as a result, there will be fewer agents, job losses and bankruptcies.
Casas247.net has acknowledged where the Spanish property market is heading, which is why we can now offer 1% agent’s fees on a No Sale No Fee basis, with commissions payable on completion with no upfront fees or add-ons! We believe we are the first in our profession to provide this full estate agency service, with no hidden costs or catches.
Please contact us for more information here.