There seems to be a lack of clarity about fees payable on buying a property in Italy. So here is the simple clarification and our unique approach which has worked every time for more than a decade.
The Italian standard
The Italian standard adopted by most estate agents is to charge a 3% fee to the seller and a 3% fee to the buyer. The fee is calculated on the agreed purchase price. So typically an estate agent earns 6% (plus 22% IVA if applicable) and the buyer pays one-half of this.
Some agents have a higher standard fee. Sometimes this is because foreigners are ‘difficult’ to deal with – the agent may need to work in Italian and English because the buyer usually speaks no Italian, or the buyer may have questions and requirements that the agent is unused to from a local Italian perspective. For example most of our international buyers like to have a structural survey before they commit to buying which is, surprisingly, almost unheard of in Italy. We know one agency that requires exclusive mandates from sellers, generates few viewings, and charges 5% to each party. Value for money? We don’t think so!!
The Italian purchase process has two stages. First an initial offer agreed in writing with a deposit paid and a commitment to complete the purchase by a certain date. Then there is much to and fro with lawyers and the appointed notary who will oversee the transaction before the hoped-for notary appointment to pay your money and become the excited new owner.
Many purchases in Italy collapse along the way. There are many reasons for this, almost all reflecting a lack of preparation and an inability to persevere when obstacles appear. Alterations that have been made to properties and not notified formally to the authorities will mean that the legally registered documents and the actual property structure do not match, so the notary will not be able to complete the sale and purchase. It takes time and effort to sort out this problem – but it almost always can be resolved with knowledge and patience. Multiple owners of a property (often inherited) can descend into vitriolic family disputes which cause problems in sticking to an agreement to sell, but this can be avoided by taking the right legal steps in advance to ensure they are legally committed to selling and cannot be derailed by a later dispute. There is ‘many a slip ‘twixt cup and lip’ – a preliminary agreement does not always translate easily into a completed purchase.
The national estate agency body’s standard practice is for an Italian estate agent to have you pay your full buyer fee (3%, or unfortunately sometimes more) when you pay your deposit. To us this is wholly unacceptable. There is a lot of work required to move from preliminary purchase agreement to legal completion and you would surely wish your estate agent to have a strong financial interest in seeing a purchase through to a successful conclusion. Paying the agent and then hoping completion will happen is folly.
At Ultissimo we have a refreshingly different approach.
First, we are a buying agent – we work only for our international client and do not represent the seller. Our clients can have confidence that we are working for them without divided loyalties. We will often drive a harder bargain with a seller than if we had to also represent the seller’s interests and try to obtain the best price for them, saving our clients far more than the 3% fee they pay to us.
Secondly, we split our fee into two parts. Half is paid when the preliminary agreement has been signed and your deposit has been paid. We have to earn the second half of our fee by getting you across the ownership finishing line. You can be confident we will do the hard yards to enable you to complete your purchase.
Thirdly, and rather less obviously, we invest time at the outset to cover off many of the issues that otherwise could cause serious problems later on. Checking that the property is correctly registered. Talking to the authorities about property alterations you wish to make and ensuring they will be approved. Ensuring that multiple owners have agreed the basis for dividing the proceeds of sale and cannot back out. Often we require that the deposit is paid to the notary and not to an owner who will be unlikely to repay you the deposit and penalty if they prevent the transaction being completed; cash on the table but not yet in their pocket works wonders! Persistence and patient negotiation is also a vital tool we have, with access to an excellent lawyer who virtually every one of our clients has used. He commands respect from sellers and is a quiet, patient, persuasive chap who has convinced many awkward sellers to behave sensibly.
The results speak for themselves. We have a long list of delighted clients who almost always say they had not realised it was so easy to buy a property in Italy, little knowing how hard we have paddled beneath the surface to overcome numerous challenges. But this is for us to deal with, enabling our clients to enjoy the process of buying their home on Lake Como without having sleepless nights. Not a single client of ours has ever paid a deposit and then failed to complete their purchase (read the horror tales on the internet to find out how many foreign buyers lose money on property purchases because they are poorly served!). In fact only one client has ever had a verbally agreed offer fail to convert into a completed sale – and that was because of their insistence on using a lawyer they knew outside Italy to advise them, a lawyer who knew precious little about Italian property legislation and single-handedly brought their deal down!
A 100% success rate has not fallen into our laps. It reflects preparation, persistence and a thoughtful re-framing of the way that Italian property purchases usually work. Our approach provides a structure that is focused on the needs of our clients, not on ourselves.