The U.S. has a population of almost 332 million people and a PIB per capita of around 70k. Portugal on the other hand, has a population of just over 10 million and a PIB per capita of around 24k.
Nonetheless, Portugal is becoming one of the top destinations for immigration from all over the world, and particularly from the United Estates. What attracts people to Portugal? Well, three main factors stand out : safety, health and quality of life.
It's definitely important to be mindful of the obvious - the real estate market in Portugal and in the U.S. are just as polarised as their economies.
The first major difference that is immediately recognized is the Lack of regulation of real estate Licenses while in the US, these licences are quite expensive, time-consuming and will be promptly revoked if significant mistakes are made, in Portugal this is not the case at all. In Portugal, real estate licences are extremely under-regulated, to the point where not even the government knows how many real estate agents there actually are.
How is this possible? A common question among our U.S. clients. The short answer is that a real estate licence in Portugal can be obtained by any company and consequently shared with its employees. It becomes exceedingly difficult for the portuguese government to know or control how many people are sharing the same licence. Adding the fact that the only mandatory training to mantain this licence, strangely enough, is on capital Laundering. And so, the lack of competence can be blatant.
On top of this, the concept of conflict of interest is very much Lacking in the portuguese real estate market. Let's go over this - 95 percent of real estate agencies work as sellers, that is, sign in properties, and make contracts with the owners, in order to create a portfolio. However, it is standard practice that the selling agent represents the buyer as well, without any wavers, contracts or guarantees to the buyer. There is also very Little to no access to previous selling prices, or transactions in the area, and a market study is not required prior to placing a property on the market.
In short. sellers can price the property however they see fit, as long as there is someone willing to pay that (often above market) price, the transaction will proceed with no impediments.
Lastly, exclusivity is rare. The vast majority of portuguese people do not trust real estate agencies and so they often refuse to work with them. When they do, they tend to refuse exclusivity.
There is a very simple and logical explanation for this - it stems from the idea that the more agencies they are working with, the higher their chances of success.
Unfortunately, this only results in agents working against each other, further deepening the competition between them and therefore worsening the problems with the market in Portugal.
It comes at no surprise that my U.S. clientelle usually ends up labelling the portuguese real estate market as a "wild west".
Having grown up with two judges as well as two significant real estate investors, I have been intrinsically connected with legal matters and real estate from a young age. The natural course could be to become an agent. However, in the few months that I tried to work for an agency, I quickly learned that it was a mess that I did not want to be a part of.
An opportunity arose as I realized there was a better way. Savvy Cat Realty was born to offer a service aligned with values of integrity and empathy, combined with technical and Legal insight.
Our goal is to help foreigners make better-informed decisions and, therefore, better investment choices. We do not want our clients to overpay, which, in return, helps locals by contributing to a more sustainable real estate market and hopefully, on the long run, counters the negative effects of gentrification.