When we first began dreaming of moving to Portugal, we were so excited because everyone was saying how inexpensive property was and how easy it would be to buy. Myths of the 5-bedroom, $250K home with ocean view were shared ad nauseam. It sounded like you’d get off the plane and that the banks were actually paying you to buy property in Portugal with negative rate mortgages and incentives for foreigners.
Much to our surprise, none of this was true. Of course, that happens when you relocate to a country overseas without ever visiting it or confirming with people in the country that this is actually true.
That’s what we call a, “Live & Learn” in our house.
Very shortly after moving to Portugal, we realized that the real estate market was really hot and that we’d not only not be able to purchase a property with all cash, we’d be paying a lot more than we expected for a home, and we’d have to get a mortgage through a Portuguese bank.
Even though we’d quickly learned some hard truths about the real estate market in Portugal (check out our free step-by-step real estate purchasing guide in the member’s resource library), we decided to jump in with both feet and buy a home anyway.
And while there were certainly frustrations with the process of purchasing property in Portugal, what we weren’t prepared for was the way that sellers and agents approach the process. Instead of this being a professional transaction, we discovered that buying real estate in Portugal is an emotional one…at least for the sellers and agents.
Here are a few crazy things we experienced throughout our property purchase journey. If they hadn’t happened to us personally, we wouldn’t have believed them!
MEETING IN DARK ALLEYS & PARKING LOTS TO SEE A PROPERTY
In Portugal, one property can be listed by multiple agents and agencies unlike in the United States. In the US, one agent gets the listing, lists the property and buyers’ agents show their clients the properties. Instead, in Portugal, it’s a free-for-all. Multiple agents can list the same property. This means that one property can be listed at different price points too. Because of this and the way realtor commissions are structured here, realtors in Portugal tend to hide listings from other agents who are not part of their agency.
This creates a super competitive environment amongst agents (instead of the more collaborative one we’re accustomed to). Because of this competition, most property listings don’t show the property’s address so that other agents can’t find the property, contact the seller and become a competing listing agent. What this means is that you might find yourself meeting your agent and the sellers’ agent in an alley or parking lot so that they can drive you to the property location without giving you the address. This happened to us for 95% of the showings. I can’t tell you how many times it felt like we were part of a clandestine operation or arms deal instead of a simple real estate deal. We always felt like we were doing something illegal and not just house shopping. It’s a little bonkers for this to be the agents’ approach to real estate in Portugal for sure.
BEING BLOCKED FROM PURCHASING A PROPERTY
The first crazy thing was hearing over and over again by different buyer’s agents that we can’t negotiate on the price too much or ask for inspections or for the sellers to make any fixes to the property lest we offend them. We heard this at least 20 times from different agents. The sellers’ agents have the bulk of the power. If you upset them, they can block you from the deal entirely. In fact, they don’t even legally have to present your offer to the sellers. So, everyone tiptoes around the agents in order to not “offend” them.
We experienced this first hand, except that it was by the agent representing us! Essentially, in Portugal, if you reach out to a seller, developer or agent directly for a specific property, that person basically “owns” you as their client…and we didn’t know that until this issue happened…
We were interested in a new development being built in our desired area. We thought we were reaching out to the development’s representative directly just to get info on the property as the property was listed to rent or to buy. We wanted to inquire about renting it so we reached out. Well, that’s when everything went wrong.
First, it was never available to rent. The agent used this common bait-n-switch used in Portugal to attract us to her listing. Secondly, the agent made it look like she was the developer’s agent when in fact, she was just a buyer’s agent who wanted to sell the property. After meeting with her twice, we figured out she was quite the shady character and wanted someone else to represent us. When we said we were going to work with someone else, she left us 17 angry and threatening voicemails telling us we were not allowed to work with anyone else to purchase that house and threatening to take legal action.
The realtor we wanted to work with called the developer to see if we could proceed with the purchase deal and the developer said we were not allowed to buy the house we’d chosen in the development unless we worked with the original realtor. He said, “She is a shark and has sued other developers before and has blocked people from buying all homes in certain developments before. You don’t want to mess with her and I won’t.” So, that was the end of that deal.
THREATENING TO SUE THE INSPECTOR
Earlier in our property search, we found a perfect home for our family. It was stunning, sat up on a hillside overlooking a gorgeous valley and it had exactly everything we needed in a home. We were ecstatic to have found it. But as we visited the home, we noticed that there had been a lot of deferred maintenance over the past 12 years since the home was built so we asked the sellers if we could have an inspection done.
The sellers were resistant and reluctant and got emotional about the request. They said, “Don’t you trust us? We are good people.” We tried to explain to them that this had nothing to do with trust or whether we thought they were good people but to confirm that all is well with the property. Eventually, they permitted us to do an inspection.
The inspector came and made notes. There were quite a few things that needed to be fixed but we didn’t even ask the sellers to fix the issues. We loved and wanted the house and wanted to make this an easy real estate purchase transaction so the results of the inspection were a non-issue.
However, we ended up having to pull out of the deal because the house appraised for less than 50% of the asking price which meant we couldn’t get the mortgage we needed to buy the house. In our CPCV (the purchase agreement), the contract stated that if we wanted to back out of the deal, we’d have to provide proof of the financing falling through OR that there was a major structural issue with the house. We had to leave the deal due to the financing but the sellers insisted that we also provide them with the inspection report. We obliged and provided the report. We were NOT expecting the reaction we received. The sellers were livid!
Not only were the sellers mad, the sellers’ agent was enraged. She called our agent and said the sellers were deeply offended by the report and that they were going to legally “denounce” the inspector for “ruining their good name!” The agent and sellers were very emotional and angry and they believed that it was the inspection that was the problem (even though we assured them it had nothing to do with the inspection and everything to do with the financing). We explained that we loved the house and still wanted to buy it but couldn’t go forward with the purchase unless they lowered the price enough for the bank to lend on the home since the appraisal came in so low. The sellers’ agent wouldn’t even convey this to the sellers and the deal died right there.
While this emotional approach to real estate purchases can be a bit frustrating, it does speak to the amazing hearts of the Portuguese people. They are caring, welcoming and want to make a good impression. In a sense, deals are done more on a handshake and a person’s reputation than anything else. It’s quaint and hearkens to a simpler time and days of old. In the end, navigating this cultural difference was enriching and buying a home in Portugal was more than worth it. Even with the crazy experiences, we’re glad we bought a property and can call Portugal home.
p.s. – that picture above = NOT OUR HOUSE. We wish!!