Why LOBA has a commission of only 2.5%

April 20, 2023

​We create a different way of being in real estate mediation and work to serve people, eliminating conflicts of interest.

In most cases, 2.5% is the percentage received by each agency involved in a real estate transaction, when they split a 5% commission between two or more agencies. If there is not more than one agency, there is no added value for the owner or the buyer, so that the referring agency receives a commission intended to remunerate two agencies. However, conventional agencies charge clients double the price upfront and argue among themselves about who gets what.

LOBA always receives a fixed 2.5% commission, based on the net price and not the total. The fixed commission eliminates the conflict of interest vis-à-vis potential buyers and leaves the agency in its role as a neutral mediator. Taking into account the fact that real estate valuations are subject to some degree and it is only possible to estimate the short and medium term selling price range, let us consider a property appraised at around €500,000. The owner receives €500,000 and the buyer of the property pays €515,375 (€500,000 + €12,500+VAT).

In other agencies, the buyer pays the same €515,375 and the owner receives only €483,679 (with -5% commission on the total), or €477,340 (with -6% commission on the total), instead of €500,000. Alternatively, the price will tend to rise to €530,000 to accommodate the mediation service and this is one of the factors causing the price increase. Ideally, properties should be advertised without commission, bearing in mind that new properties are always valued based on the prices of those for sale. At LOBA we separate the price of the property from the price of the mediation service.

If the potential buyer has hired a consultant to accompany him, there is an additional service that incurs an additional cost, which the buyer should be aware of. The commission for the service of this consultant should have been previously agreed between them. As this is still not a common practice, the proposal that the buyer makes through the real estate consultant will have an impact on the business, which, not being remunerated directly by the buyer, is always remunerated through a reduction in the net value that the owner will receive for the property. This agent's function also involves negotiation, so he will try to reduce the price for his client.

At LOBA, it is very rare for the actual buyer to reach us through an agent, but we are always available for that to happen and we do not interfere in what that agent decided to be his commission. It is essential that the buyer is aware of what his agent is charging him, even if he is remunerated indirectly. In the last eight years, LOBA mediated the sale of only two properties with buyers brought by other agencies, who were remunerated by their clients, so the brokerage commission for the properties we transact is only 2.5% of the net price. that the owner received for the sale, in almost 100% of the cases.

On the other hand, LOBA is the only agency to offer 25% of its commission to any person, real estate agent or not, who recommends the property to the actual buyer, using the form available on the page of each property, which allows the recommender to receive proof automatically in your email, increasing the incentives to publicize the property to anyone who may be looking for it. The 25% reward also applies on lease. In both cases, both the commission and the reward are indicated on the property page.

Is this commission sufficient for the necessary investment in each property and to remunerate the LOBA consultant?

Of course. LOBA is a small agency by design, which works for a niche of clients and, therefore, puts all its investment in the quality of the service and not in the brand, in attracting clients, or in recruiting commercials. Customers are the ones who come to us, through those who know our work, so we don't need to look for customers. Our focus is on finding the solutions that our customers need.

Nor do we depend on superfluous costs such as international royalty fees, store expenses, or management positions and team managers. Our investment is channeled into the quality of the team, the tools and resources that provide the best quality and efficiency to our customers.

LOBA consultants work on a collaborative principle of "one for all and all for one", free of competition. By hiring LOBA, you don't just have a consultant dedicated to you, you have a team with a high degree of motivation and enthusiasm.

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