Real Estate Commissions in Uruguay
Real Estate Commissions in Uruguay – Who Pays What
Buyer Commissions and Real Estate Transaction Costs in Uruguay
“I had never paid a commission when I bought a property,” said one of our American clients. Matter in fact he did but didn’t realize it. In the USA, sellers build it into the asking price, and they pay standard 6% for both commissions. 3% for the Buyer and the 3% for the Seller.
In Uruguay, each party pays his own commission on top of the agreed sales price. This seems to be more logic. The Buyer employs his trusted agent and expects that he only works for him. So make sure you work with a real “Buyers Agent” if you already have to pay for him. Maybe also read our article about the common issue with “Dual Agency.” To pay your own agent directly is Internationally not so uncommon as you can see in this overview.
Real estate commissions in Uruguay are not negotiable like in the United States and are standard 3% plus VAT. The VAT is 22% and calculated on the commission amount only.
Is it Worthwhile to Pay for a Real Estate Agent in a Foreign Country
3% looks like a lot of money but rather than paying your consultant hourly, or weekly salaries. A real estate agent doesn’t see a dime until a Buyer finds a home he likes, the Seller accepts the offer, and all parties meet at the closing table. This process can mean weeks or months of a lot of searching, driving, and paperwork. Sometimes the conveyance attorney finds a title issue in the last minute, the whole deal falls apart, and the agent doesn’t get paid. Most other professional service industries like doctors, lawyers, consultants, etc. charge for their service whatever the outcome is.
You can purchase Real Estate in Uruguay directly or through a real estate agent known in Spanish as an “Inmobiliaria.” A good professional “Buyers Agent” is worthwhile the money. He can steer the client through potential pitfalls, foreign paperwork, and has the market know-how to come up with the right comparables to negotiate the best possible price for you the Buyer. As with most things in life, you get what you pay for.
Too Many Cooks in the Kitchen
A foreign Buyer should always work with one representative and a real “Buyer’s Agent” who has, at the same moment, access to the entire local market. Team Haverkate has resolved this by generally not taking on listings directly. We work mainly with one of the largest inventories of the worldwide firm Engel & Voelkers. We offer the same commission conditions and the same or better prices as the competition for the Buyer. Make sure that always another agent represents the other side. Of course, we know the entire inventory but can herewith avoid direct contact with the homeowners when it comes to a transaction. It prevents “Dual Agency.”
Choose One Reliable and Knowledgable Real Estate Agent and Work with Him
A good Buyer’s Agent shows you the entire market depending on your needs and criteria. Work with your trusted chosen real estate agent to establish a mutually loyal relationship. After all, real estate is a personal relationship business.
Watch out by running around with different brokers. They could offer and show you the same properties as many brokers offer the same inventory. Upon a successful transaction with one of them, the other one may sue you for his commission. Read also up on our article regarding the issue running around with different brokers.
Watch it with walking into new developments without your chosen agent. In Uruguay, the agent who introduces you to a property becomes your agent and is entitled to a buyers commission in case of a successful transaction. If the salesperson of the builder becomes your agent – whom do you think is he working for. So, always call your agent to accompany you and to properly register you so that you are not represented at the end by a “Dual Agent” with a huge conflict of interest. You will not get the property cheaper by not bringing your own agent.
Make sure Your Broker is Licensed in Uruguay
Always make sure you work with a registered Real Estate firm who has a license with the Uruguayan Board of Real Estate. Team Haverkate works under the Engel & Voelkers license in Uruguay.
The standard Real Estate agent fees, conveyance attorney, all expenses and taxes, transaction costs on a purchase will usually be around 8-9% of the purchase price of your property in Uruguay. Work with Team Haverkate at Realestate-in-Uruguay, and the total closing cost amount is approx. 6.5-7%. Due to the volume in transactions, Engel& Voelkers has secured an agreement with one of the best and largest law firms in Uruguay and can offer a 50% reduced conveyance attorney fee so that your total closing costs are reduced to approx. 6.5-7% as you can see below.
All Costs you will have to Pay when Buying a Property in Uruguay
- Real Estate Agent Fee: 3% plus VAT (22%)
- A conveyance attorney in Uruguay charges 3% of the sales price plus 22% VAT. If you use the notary/law firm we recommend, you will pay half and reduce this cost to 1.5% plus VAT (22%)
- Deed Registration Stamp Duties (“Montepios”): 0.55%
- Expenses for Registry and Tax Certificates Stamp Duties: US$ 600-800 on average
- To cover the costs of bank transfers, translations if needed, etc. you should plan to spend an additional US$ 500.
- If you need to appoint a representative through a power of attorney, this will cost approximately US$ 350 plus VAT.
- The Real Estate Transfer Tax (ITP) determines the “Fiscal Catastral Value” of the property based on its location and condition (which is usually well below the market value) and charges a fee of 2% of this amount (Estimated at 0.6%). This amount can vary slightly due to exchange rate fluctuation and will be determined at the time of closing date.
Seller Commissions and Real Estate Transaction Costs in Uruguay when Selling a Property
- Real Estate Agent Fee: 3% plus VAT (22%)
- The Real Estate Transfer Tax (ITP) determines the “Fiscal Catastral Value” of the property based on its location and condition (which is usually well below the market value) and charges a fee of 2% of this amount (Estimated at 0.6%).
- Capital gains (when reselling): 12% of the gain
By Ralph Haverkate, Real Estate Broker