Without wanting to sound dramatic, what I am about to talk about is possibly the most important piece of information in this guide. It will help underpin your relationship with all of the professionals and service providers that you deal with while helping to ensure that all the advice and guidance you receive is given with your best interests in mind. 

The Traditional Customer-Product Dynamic

Normally when we go shopping, be it for something big like a car or small like a pint of milk, we are accustomed to the dynamic whereby we are the customer and whatever we are buying is the product. When we employ professionals to give us advice, be it a lawyer or an accountant, we become that professional's client, and the service they provide is given in your best interests.

It’s a very simple process. You pay for a product or service and you receive that product or service. From a legal perspective you form a contract for goods or services with whoever it is that supplies those goods or services to you in return for money. The product flows in one direction and the money flows in the opposite direction.

When you start shopping for Spanish property, you have to be constantly mindful that this dynamic is reversed.

The Reversed Dynamic in Spanish Property

Despite the fact that the estate agent will call you their "client," you are not paying them for a service. You may be spending a huge amount of money buying a property and they may well be selling that property to you, but you are not buying it from them.

For an estate agent, the real customer, or client, is whoever has instructed them to sell the property, be it a homeowner who wants them to find a buyer for their apartment or a property developer who wants somebody to promote and sell the development they are building. It is the property owners and builders with whom the estate agent has a contract and from whom they will receive their commission.

Therefore the fundamental business model of an estate agent is to sell a property in order to fulfil their contract with the builder or homeowner and get paid for providing them with the product or service that they requested. 

If we look at the diagram again, it becomes clear where you, as the property buyer, fit in:

There is a common saying in the tech industry that refers to free online services, like Facebook or Google. I’ve read lots of different versions of what is essentially the same quotation:

It refers to the idea that when you are using free online services your data is being farmed, and your attention is being grabbed and then sold to paying advertisers. The advertisers are the customers; you are the product. It’s not a new concept. In the 1970’s the same was being said about television. Richard Serra and Carlota Fay Schoolman created a short film titled "Television Delivers People," which included the line: "You are the product of T.V. You are delivered to the advertiser who is the customer."

The Spanish Property Industry works a very similar way. From TV shows to live exhibitions, property portals all the way through to the estate agent you are being offered everything for free (or a very small entrance fee) to grab your attention. You will be offered free ‘buyers guides’ , and may even be invited on free or heavily subsidised viewing trips, all of which are designed to   draw you in and then provide you, as a product, to the builders and home sellers. 

But the builders and the homeowners are not the only customers in this marketplace. Lawyers, surveyors, currency exchange brokers, accountants, banks, alarm companies, furniture providers and many other companies are all looking for the same ‘product’ and will happily pay the estate agent a referral fee for an introduction.

The Benefits and Drawbacks of Free Introductions

On the face of it, the upside of this dynamic is that you can be introduced to lots of service providers for free; agents who are keen to capitalise on the investment they made to get your attention will help you find any service you need. They will go the extra mile to keep hold of your attention, booking you a hotel room, arranging a meeting with a currency broker, lining up an appointment to open a bank account or discuss a mortgage application. Even once you have completed the purchase, an agent might pick you up and take you furniture shopping, arrange for an architect  to come around to plan an extension and a builder to build it. They will know somebody for every job you need doing, and they will likely be receiving a commission from every one of them. They are in a situation where they can appear to go the extra mile and provide what appears to be fantastic customer service while simultaneously boosting their income. 

This practice is an example of “affiliate marketing” which is commonplace across many industries, and, certainly for larger companies, the referral fees are factored into their marketing budget so the direct expense to you is likely to be minimal (although beware, sometimes a practice called “commission loading” inflates the price of a service to cover the cost of the introducer fee). 

It's also fair to say that despite the introducer fees they receive, many estate agents will strive to provide you with an excellent service, and it's only fair they get paid for their work whether you pay them directly or not.

The indirect cost, however, could be considerable. In many cases, the agent will not necessarily be making an introduction to a service provider because they have assessed that the particular provider is the best to meet your needs at the most reasonable price. Rather, they will have made an agreement with the provider who is best suited to their own needs, be it in terms of convenience or the value of their referral fee. 

This could lead to a situation where you pay more than you could have done for a service that may not have been the best option for you, and, when you are talking about the amounts of money involved in property transactions, even small percentages can add up to thousands of euros of waste.

In addition to potential financial losses, allowing the agent to make all the introductions for you runs the risk of ending up caught in the centre of conflicts of interest - I will go into this in more detail below when I discuss choosing a lawyer.

Most importantly, however, you will find agents offering to help you find all the services you need very early on in the process, when you chat to them on the phone about a property you are interested in, perhaps when you meet them at an exhibition or exchange emails about your plans to visit Spain. Although they will assure you that they can help you with it all, they are very unlikely to make these introductions straight away. In most cases, they will wait until you have found the property you want to buy. At that point, you shift from "sales" to "aftersales" in the agent's process, with larger agencies a different person will take over your file. 

This means that you will effectively place the estate agent in control of finding the services you need as you head into one of the most crucial points of your property buying process: negotiating a price and drawing up a contract. Not only could this lead to an unscrupulous agent introducing you to a service provider that directly acts against your best interests in order to secure their sale and commission, but, by ceding control of the situation, you could find yourself lacking confidence as you move forwards through the purchase. Buying a property can be a stressful experience and especially so if you do not feel like you are in control of the situation.

Maintaining Control Throughout the Purchase Process

In this chapter, I will discuss the main service providers you will need to engage with when purchasing a property. These include lawyers, surveyors, and mortgage brokers, among others.

For each service provider, I will explain their role in the buying process, when you should first contact them, and what they will do for you. I will also provide guidance on how to choose the provider that best suits your needs, rather than someone else's interests. 

The aim is to ensure that throughout the purchase process the people who are acting for you are acting entirely in your best interests and that you remain in control at all times.