In this article you will find out why abroad the buyer of a property does not pay commission while in Italy he does.
I know it sounds bizarre in the eyes of an Italian to read these introductory lines but, as you have just read, in almost every country in the world the cost of the real estate agency is borne by the seller while the buyer does not pay a euro for the brokerage.
Why is this not the case in Italy?
In our country, the law governing real estate mediation is very old and finds its basic principles in the Civil Code, which dates back to 1942.
In Italy, the figure of the real estate agent is considered"super partes" that is, he or she must serve the interests of both the seller and the buyer, receiving compensation from both. This position actually runs counter to the commercial logic of a sales relationship.
Let's take a look at how the standard sales process is carried out in Italy:
The agent takes an assignment to sell a property from the seller where the owner chooses his or her contact person and instructs him or her to find a buyer for his or her home by agreeing on a price for the sale and a fee for mediation.
The buyer looking for his property "suffers" the work of the real estate agent hired by the seller, paying a fee for a service that does not always serve his specific interests.
Some considerations:
In any other area, those who hire a professional, assuming the costs, do so because they want their interests to be put first. The interests of the seller (selling the house for the highest price) are pitted against those of the buyer (buying the house for the lowest price) how can one expect that the mere payment of the mediation by both is a sufficient condition for seeing one's interests protected to a fair degree?
The Italian real estate agent often finds himself "stuck" in the awkward position of having to pursue the interests of a buyer while respecting the limits of the written mandate given to him by the seller.
The result is that the deal will close on the basis of the discretion of the real estate agent who will conclude the negotiation with whoever will guarantee him a higher profit, which will not always mean, conclude at a higher price paid for the property.
How it works in the rest of the world:
Anglo-Saxon countries consider brokers to be party consultants, with compensation paid solely and exclusively by the party that appointed them to perform a given task. This does not mean they earn less; normally the percentage of the brokerage paid entirely by the seller is 5/6%, and the buyer pays nothing. Often buyers in turn hire trusted real estate agents to protect their interests and the brokers, share the fee paid by the seller for payment of their services. (so-called collaboration) in this way we will have interlocutors who will fight for the best possible result for their client, without a position of conflict of interest.
Pros and cons:
the two operations just seen have advantages and disadvantages, here are what they are:
ITALIAN MODE
- pro: the buyer does not compete with other buyers, and the "competitive auction" effect among various buyers does not occur as often
- Cons: The seller will potentially realize a lower price than what they could realize by competing with multiple buyers
- pro: the obligation to inform both parties of known events makes the procurement process more transparent with less subsequent litigation
- Cons: The buyer cannot choose his own intermediary but suffers the one chosen by the seller
ANGLO-SAXON MODE:
- pro: the seller will often have offers in line with the asking price without much negotiation, pitting multiple buyers against each other.
- Cons: Buyer finds himself in a more competitive market.
- pro: parties have a dedicated advisor who protects 100% of their interests
- Cons: The seller's agent does not always inform the other party of any unknown defects in the property. There is much more post-sale litigation
Biased advice is also conceived in Italy and can be applied if the client wishes. The important thing is to be aware of its existence. Given the well-established practice of the 3% double commission, if you as a buyer or seller wish to be followed by a biased adviser , you must put your adviser in a position to work even with those who do not think like him, guaranteeing him a fee such that he can share it with the other party's real estate agent.
It becomes clear, therefore, that those who want a biased consultant must put in the expense "formally" a higher commission, although in reality, considering the fact that the latter will follow his interests (sell at a higher price, buy at a lower price) he will save the additional cost(2/3%) by making a better deal, recovering this difference on the price of the property.
What do you think? In what mode of operation would you best operate?
Let me know with a comment!
