The duality of real estate agencies in Valencia

Real estate agencies in Valencia suffer from bipolarity. One of the most striking characteristics of the Valencian real estate market is the high prevalence of dual real estate agencies.

What is a dual estate agency? For us, it is an agency that charges fees (and, by extension, represents) both parties, buyer and seller, in a property sale and purchase transaction (the world of leasing deserves a separate mention). Although this practice is not exclusive to our market, it is very widespread and standardised.

Among these dual estate agencies in Valencia there are several types: those that charge both parties equally; those that charge more to the seller; those that charge more to the buyer... Or there are even cases in which the seller pays in "kind" (I will come back to this "genius" later).

Our customer is one and only one. A bit of research on the web and it is easy to find opinions both against and in favour of this practice. There are even some states in the United States that explicitly prohibit this practice or restrict it, although it is also true that the real estate reality there is somewhat more complex... Representation does not always imply a fee charged to both parties, but I have even read some articles that recommend it as the best option. Anyway.

Monapart's position as a real estate brokerage agency is clear: our client is one and only one.

Monapart's position as a real estate brokerage agency is clear: our client is one and only one. And in 99.9% of cases it is the seller, as our entire value proposition is aimed at them. On occasions I have also been able to work on behalf of the buyer, and I have found that acting with total transparency, advising them that only they were paying us for the service, has always had a positive effect.

Having said all this, I would now like to make some practical observations to help us to understand why charging for the service to both buyer and seller has negative effects It is also a barrier to accessing a quality service.

a) How much does a sale and purchase cost and who pays for it?
First of all, let's state a fact: every sale and purchase transaction has a total amount (read this post): How to negotiate a real estate sale and purchase). This amount is made up of the net amount of the sale (how much money the seller keeps clean, ignoring the tax cost), taxes, registry costs, notary fees, financial expenses and agency fees. We can make a very deep analysis about which pocket actually bears the costs (it deserves a dedicated article), but what we are analysing is not who pays the fees but to whom the service is billed. And to whom the service is provided, of course. And let's not forget one thing: the estate agent's fees are presumed to be fixed, irrespective of whether they are invoiced in full to one party or split in halves (a 5% or a 2.5% + 2.5%). It is important to be clear: invoicing one or both parties should not financially affect the total cost of the sale and purchase.

Invoicing one or both parties should not financially affect the total cost of the sale.

b) Buyer and seller: Neither with you nor without you.
From the point of view of the real estate agency, the client is the active party (let's not forget this concept). It is the one who contracts, who orders the service and it is to whom the agency must give this service and "defend", because in a sale and purchase there are two opposing interests: a buyer who will always want to buy as cheaply as possible and a seller who will always want to sell at the highest possible price. So, as a real estate agency, can we serve both? No! Does anyone believe that any agency is a mere arbitrator, totally neutral, impassively attending a negotiation in which it has no influence?

c) Això ho pague jo.
"I'll pay for that" is a phrase that we estate agents never expect to hear from someone who is not our client. If we used to talk about the active party, who is the one who hires us, now we talk about the passive party. And the reality is that they are often reluctant to pay fees. It is here that we find the key to all this, and it has a name: cold door.

d) Això no ho pague jo.
What are the implications of the cold door in all this? Well, is there anyone who doesn't know what cold door is? Quick, applied definition: the hard art of cold-calling homeowners who have a property for sale. Cold-dooring is common practice in the vast majority of estate agents (not Monapart, in case clarification is needed). When it happens, the owner does not have the feeling that they are commissioning any work, and they tend to say things like: "you found me", "if you have a buyer, bring him to me (and let him pay you)", and so on and so forth. In fact, the cold door is the mother of the "no real estate" flyers that litter the floors of doorways, along with pizza parlour promotions. This reality makes it easier to split fees, as a dual agency apparently charges half as much and is apparently twice as competitive. Good for you.

The cold door is the mother of the "no real estate" pamphlets that litter the floors of the gates, along with the pizzeria promotions.

e) Real estate agency fees, or mathematics for dummies.
Let's look at a practical case: a dual agency searches (via cold door) for an owner, and obtains the marketing, without exclusivity, with a fee of 3%. For whatever reason, the owner contacts an agency that invoices its fees to the seller. This agency offers its services at 5% and, logically, the owner finds it a 40% more expensive than the other agency. Curiously enough, he is making the transaction cheaper at 1%...

f) Poisoned gift.
We have yet to set foot in another important garden: house prices. An agency that represents both parties will always be inclined to defend the buyer's position.even if instinctively. Of course, he wants to close the deal (logical... ) but having no commitment to fairness, he will be inclined to defend the party that makes it easiest for this to happen. The buying side, almost always.

g) Give me poison, I want to die.
And after all these reflections, I would like to show a paroxysmal case of this two-sided game: payment in kind: the seller pays, but not in money, but by signing an exclusive. A practice, in my opinion, aberrant for several reasons: it combines the conflict of interests with the perversion of such a necessary and beneficial tool for the commercialisation of a property as the exclusivity. The paradox is that in addition to there being a conflict of interest which, as we said before, always tends to harm the seller, the agency retains the seller with an exclusive. If we put things in their place and call them by their name, in this case the seller is not a client of the agency, but a hostage.

Monapart is starting up in Valencia and will have to deal with this casuistry of duality. But it is an excellent opportunity to bring a slightly healthier way of working to the city's real estate sector.

Monapart starts its activity in ValenciaThis is the first position in which he will have to deal with all this duality casuistry. It may be difficult, but it is an excellent opportunity to bring a slightly healthier way of working to the city's real estate sector and, incidentally, to help other colleagues in the profession who (they confess) have been struggling with this peculiarity for some time.