On this page you will find relevant information on some essential elements in the process of selling a property. For any questions or clarifications on these topics, please do not hesitate to contact us.

Real estate commission

With a few rare exceptions, real estate commission in Portugal is almost always paid by the selling party. Payment of this commission is only due if the real estate agency contracted is successful in concluding the intended deal with the seller. Therefore, if the agency with which you have signed a mediation contract has not actually contributed to the process of finding a buyer for your property, the remuneration is not due.

As far as commission is concerned, there are no minimum or maximum amounts set by law. The value of the real estate commission therefore depends on various factors, such as the market situation (supply versus demand), the quality and quantity of the services provided by the agency, whether the contract is exclusive or non-exclusive, etc.

There may be real estate agents who work at 2% or 3% and others who work with percentages of 6% or 7%. In the specific case of Lusoland, we work with the standard market values, which are significantly in the middle of the table and are the most common on the national context. Please note that VAT is to be added to the commission.

Real Estate Contract

Unlike commissions, real estate brokerage contracts are regulated by law. The Instituto de Mercados Públicos do Imobiliário e da Construção (IMPIC) is the state entity responsible for licensing real estate agents and there are certain clauses and information that must be included in all real estate contracts in Portugal.

For you, as a consumer, you can, for example, use the IMPIC website to check whether a certain person – individual or collective – is properly qualified to carry out real estate mediation activity and whether they have a valid AMI (Real Estate Brokerage Permit) number. You can search by location, AMI number or organization name. You’ll find the link here: LINK

The real estate contract is a guarantee for both parties involved (real estate agent and seller) and must always be concluded in writing. In addition to information about the selling party, the real estate agent and the property, the commission amounts and the conditions under which it is paid are also established.

In a brokerage contract, a seller can always choose between two options: exclusive or non-exclusive contract. Both modalities have advantages and disadvantages, both for the seller and the real estate company.

Exclusive contract: In an exclusive contract, the seller generally benefits from a lower commission. The advantage for the seller is that they shall pay a lower fee than if the sale had been made under the non-exclusive regime. The disadvantage is that the seller will not be able to advertise the property on their own; the advertising and the process of finding a buyer on an exclusive basis are reserved for the real estate agency for the duration of the contract.

For the real estate agency, the advantage of the exclusivity contract consists mainly in having the security that, for a certain period of time, only they will be able to advertise the property on the market. The real estate agency will then be able to invest more time, money and resources in advertising the property, without running the risk of another real estate company finding a buyer first, thus undoing all the investment made. The exclusivity contract does not have a legally defined duration, the usual being 6 months.

The disadvantage for the real estate agency in an exclusive contract is the opposite of the advantage for the seller: the commission is lower. The real estate agency will receive less remuneration in the exclusive regime than in the non-exclusive regime.

Non-exclusive contract:

The disadvantage for the seller in this modality is that they will pay a higher commission than in the exclusive regime. On the other hand, this is also an advantage for the real estate agency, as it will receive a higher commission, for example 5% instead of 4%.

As mentioned in the previous point, a non-exclusive contract usually means that a particular property is picked up by more than one agency. Thus, the disadvantage of a real estate agency in a non-exclusive contract is that there is always the possibility that a competing agency will sell the property; a property in whose promotion – online and offline – the real estate agency has invested a lot of resources, namely advertising, fuel, hiring specialized photography services, etc.

Finally, as far as the advantage for the seller is concerned, this essentially boils down to the fact that working with two or more agencies can result in a wider range of possible buyers. And while most agencies promote their properties on the same portals as the competition, real estate agencies – through their own databases and daily connections with potential buyers – can access different client portfolios.

Having briefly listed the main advantages of both modalities, the question remains to be answered as to whether one is better than the other. In short, each case is different and one modality may be more suitable in some situations.

However, many of our clients choose to combine the two: initially they choose to work with us exclusively, so as to pay a lower commission in case of a sale. If, however, during the term of the exclusive contract it has not been possible to find a buyer, they usually choose to continue the contract, but this time on a non-exclusive basis, signing other non-exclusive contracts with one or two additional agencies, in order to increase the pool of potential buyers.

Whenever possible, we advise our clients to work with a maximum of 3 agencies at the same time on a non-exclusive basis. On the one hand, this reduces the total number of people involved and allows for more efficient management in communicating with real estate agents, organizing viewings, etc. On the other hand, a property that is being promoted by 3 different agencies probably won’t sell with an increase in the number of agencies to 5 or 6; the impediment to the sale in these cases will certainly be related to the property itself and possibly also to the asking price.

For all questions related to real estate prices, we suggest reading our article on this topic.

Promissory contract of sale and deed

Promissory contract of sale:

The promissory contract of sale (in short: CPCV) formalizes the buyer’s intention to purchase a property and has legal force. The property is still legally owned by the seller and it is only at the deed that the property will be registered in the buyer’s name. CPCVs are signed for various reasons and are not compulsory. In most cases, the buyer is still waiting for funds to be released from their bank, for example in cases where the buyer needs a bank loan. In other cases, some of the documentation relating to the property may still need to be updated before the deed can take place. The time between the CPCV and the deed is flexible and is always agreed in advance between buyer and seller, but, on average, its duration is 3 months.

A deposit is made when the CPCV is signed. Here, too, there is flexibility and no compulsory values. But the buyer usually pays a deposit of 10% of the agreed sale price. The remainder is due at the time of the deed. The deposit is usually paid directly to the seller and is mostly concluded by bank transfer, while when the deed is signed the remaining amount is paid by bank cheque or draft.

Is there a risk of losing the deposit? Yes. It rarely happens, but in cases of default by the buyer, the seller is allowed to keep the deposit. The seller can then choose to put the property back on the market. Conversely, in the event of default by the seller, the buyer is entitled to receive their deposit back plus the same amount, i.e. twice the value of the deposit. These terms are always included in the clauses of the CPCV and guarantee both parties compensation in the event that the deal fails.

A brief note on an issue that often arises, regarding one of the clauses in mediation contracts, linked to the CPCV and the deposit. Real estate contracts state that: “Remuneration will only be paid under the following conditions: 50% upon conclusion of the promissory contract and the remaining 50% upon conclusion of the deed. If no promissory contract is signed, 100% of the fee is due when the deed is signed.. “

This clause is justified for two reasons. First: the work of a real estate agency essentially consists of just one task: finding a buyer for a property. And when a CPCV is signed, the real estate agency has already achieved its goal and should, therefore, be entitled to its remuneration. In the vast majority of purchase and sale processes, the deed is completed on time and the deal is concluded.

However, and this is the second reason, there are some cases in which one of the parties decides not to go ahead with the deal. If, for example, the buyer withdraws from the deal, the seller can keep the deposit and, at the same time, remain in full possession of their property. It was, therefore, the real estate agency’s work that resulted in a financial gain for the seller and we believe that the real estate agent should be rewarded for said work.

In cases where the deal doesn’t go through for reasons attributable to the seller, the seller’s actions have meant that all the work invested by the real estate agency in finding a buyer has been in vain. Here too, the real estate agent should be rewarded, hence the clause mentioned in the mediation contracts.

Finally, here’s an issue about drawing up the CPCV. Who is responsible for preparing the promissory contract? As a general rule, the buyer’s lawyer is. Some agencies can offer draft CPCV contracts, but estate agents are not legally entitled to draw up promissory contracts. We therefore advise all sellers, regardless of whether they are Portuguese or foreign, to hire a lawyer or solicitor once they have made the decision to sell a property. The lawyer will represent their interests by checking the property documents, the form and content of the promissory contract and all other legal issues relating to the purchase.

To find out more about these and other topics, don’t hesitate to contact us .