A Real Estate Consultant is not a Tour Guide
When you begin to search for real estate in North America, generally you go to your computer and search the local Multiple Listing Service. Whether it is for curiousity, looking for comps or initiating research on a pending purchase, virtually all of the information can be found on the web. If the municipality is fully integrated you may be able to find tax records as well.
In many foreign lands, an MLS service is not available or if it is, it is not fully comprehensible (in a foreign language) or fully developed as one would expect in a more progressive country. As a result you are more likely to search out a reputable realtor or real estate consultant who can assist you find the property that you are seeking.
Consider this, you are about to make an investment in a foreign country. You may or may not know the language, the culture, the laws, the country or the city. In virtually every other consulting profession, when you need information about making an investment, to protect your money and hopefully generate an ROI, you will probably pay a consultant in advance for their service. You do not expect them to spend a week with you running around, advising you on investments (properties) with the hope that you will make a purchase with them. The consultant may spend an hour or two with you suggesting what investments that you could make but you won’t have the pleasure of their company for an entire week, at least at no charge !
I have had people tell me, ”well the job of a realtor carries a risk. You show people properties and they may or may not buy.” Rightly so and in most urban areas of North America that works. It works because usually the purchaser is fairly certain they are going to buy in a particular area or town. Some markets are smaller and some markets are slower but generally it works. The realtor, through the MLS, has access to virtually all properties in the marketplace. The choice becomes fairly easy and if the realtor provides a good service, if there is a sale to be made, they should ”get the sale”. Not only that realtors hold open houses so that private individuals can visit a home, with or without an agent.
In some places, realtors have the clients sign a buyer agreement where the buyer agrees to make their purchase with the agent, and the agent agrees to take every reasonable step to ensure their client finds the property they are seeking and get fair and equitable representation in the purchase.
In Latin America, many of these services do not exist. You arrive in a foreign city and may know nothing about that location except what you have read in the local expat blogs. The odds are that you are not even certain whether you want to live there. With the large expat movement today there are literally tens of thousands of people in this situation. Currently it is estimated that there are 300,000,000 expats worldwide and this will grow to 800,000,000 once the wave of baby boomers has subsided.
With this amount of people flooding the various expats markets, a recognition needs to be gained by the potential buyer that they need to compensate the real estate consultants in some manner. It is completely impractical, unreasonable and unfair to expect people to serve you and advise you on a myriad of issues for free. Really, do you work for a week for free in hopes that someone will pay you ?
The real estate industry in tourist areas and in the new and ”upcoming” places to live worldwide have to create a standard that is not only fair and acceptable to the clients but that justly compensates the real estate specialist for their time and expenses. The industry and especially the consultants and agents can not sustain themselves on the hopes that someone completely foreign to the country, culture or city will buy. Large numbers of people are now considering living,working, playing, investing and retiring overseas BUT the vast majority of shoppers do not buy. In my experience over 95% do not make a purchase.
This can be very easily accomplished. If you are a serious buyer, then why not pay a 500 USD retainer that can be deducted from any commissions that would be paid on a purchase ? In Colombia, in order to ensure payment to an agency, the buyer usually agrees to pay the commission to the agency and the seller agrees to have that deducted from the purchase price. A simple adjustment can be made to reimburse you for the retainer.
The North American model no longer functions in many parts of the world. It is time for a change and time that potential buyers understand that the hope and prayer for a sale no longer is acceptable if you want professional guidance in making a solid investment.
If you need a tour guide, you happily pay for a tour guide. If you are a serious buyer, then a retainer should not be an issue, especially when it will be refunded. If you are not committed to buying, then it is time that you realize that you should not expect a real estate professional to give you a free ride.
The phrase ”time is money”, applies in all business transactions.
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Very reasonable information. I have prepaid in similar ways to this and have not felt slighted. However your comments are in contrast to other information on this same site advising never to pay any such real estate fees. The advise states that real estate agents in (Ecuador at least) are no different than in North America. They know the statistics of showing multiple properties before earning a sale. Every show does not equate a sale and it is recommended to not pay any fee for being shown around. You should likely have spent more time describing the type of touring an agent does do – in order to support the title of the article.
I still agree with the title of your article and have found that indeed they consider themselves a tour guide. Any agent that does not describe the area and its attributes should not be showing property.
Would I pay a deposit in the future? Likely yes, but I think your fee suggestion for South America is a bit high. A fee of $100 would be at the upper end of reasonable value for a day with several showings- including descriptions of the areas I am being toured to. I could easily hire a tour guide for $100 and he would have no expectation of selling me a property.
Dave,
Thank you for your comments. I expect my opinion my raise the ire of some folks but I feel this is a very valid topic of discussion. As you noted in your second comment, the Colombia and Ecuador sites are indeed different. Hector Quintana in Ecuador, who is a trusted and respected colleague, does not equally share my opinion. He has been a real estate consultant for 31 years and has a very strong qualification process before he accepts clients.
I do concur with you completely that 100 usd per day would be more than adequate. Some people when they look want to view properties have an expectation of seeing 10 to 20 properties.
Ahh. I see now my mention of “this site” is not quite correct. I was reading the comments I referred to off the Ecuador site. I did not recognize I was now receiving email from all Escape Artist domains. Yours of course is Colombia and will have different information. But good news, as I now have more South America articles to read.
Well said. Many expats come into foreign countries with unreal expectations about what they should and shouldn’t pay for. Often times the most expensive advice in life is the free advice. If you are receiving value from a professional then you should expect to compensate them a little now so you don’t lose alot later.
Thanks Mateo,
My colleague in Ecuador says, ”if you want to pay with peanuts, all you will get are monkeys !”