November 13, 2006
Viva commissions reviewed by the agents
I have some interesting points of view from recent conversations with the directors from several real estate companies on the subject of Vivas recent tactic of lowering commisions, droping the MLS system they shared with numerous small agencies along coast and charging an upfront fee for the conveyancing of the property when is registered in the company.
Their thoughts were as follows:
Viva’s recent advertising campaign with the dolls is part of an advertising campaign to demonstrate that Viva is a "soft and cuddly" company. Viva has traditionally never been a “soft and cuddly” company!
The upfront property listing fee is a bad idea because:
1. Most people who own a property will already have their own lawyer and will probably not accept having to take a Viva lawyer in order to sell their property through Viva.
2. The idea of people paying upfront runs contrary to every single agency practice in Spain. Other methods have failed in past related to upfront payments and flat fee commissions
Most agencies viewed Viva’s move to to a 3% commission with synicism because:
1. Viva’s new commission pledge does not take into account the commissions earned through selling new build property which typically run between 5 to 7%.
2. The company is still in the process of listing and registering their properties on their database. Commission for the properties not yet signed over to the new system would remain on the original rate of 7%.
It was the consensus of several companies that the most successful way properties get properly marketed is through some form of MLS network of agencies. Infocasa the current MLS tool favored by most agencies on the coast (for its affordability) currently supports over 500,000 properties. Without the MLS, Viva's limited network will now be much, much smaller.
Most agents think that this move will be the downfall of a company that has dominated the Costa del Sol property market for the past seven years.
From my own perspective, I think Viva’s change to three percent commission is a good thing and one of the right moves in order to retain their market share. It is now a question of whether or not the organisation is sufficiently market led to continue to dominate.
After all there is no reason why the company shouldn’t be able to succeed as the current revenue from an average sale at a 2 to 3 % commission is similar to the revenue generated by 7% commission 5 years ago. If businesses could survive then, then companies that have a good operations and reputation should sail through this period.
Category: The Costa del Sol Property Market.