Making an offer on a property in Portugal
Hopefully, at the end of your viewing trip to Portugal you will have found the property of your dreams and be ready to make an offer.
However, in Portugal, it’s important to consider that the buying process, legal system and language may differ to that in your home country, so negotiating a fair price can feel even tricker. Here we offer advice on getting the best deal.
Before you go: your golden three
Preparation is key when making a significant investment, especially with thousands of euros at stake. Be ready to act fast when you arrive in Portugal.
To start, assemble a team of professionals to guide you through the process:
- Estate agent: Your estate agent should be able to shed light on whether the price asked is fair, and hence if your offer is fair. Their income relies on a sale, however, so they are not entirely impartial.
- Independent lawyer: Consult an independent lawyer familiar with Portuguese property laws. They will also be able to provide more impartial advice.
- Currency specialist: We recommend the services of a currency specialist with experience managing overseas property transfers, like Smart Currency Exchange. If your offer is accepted, you will need to transfer your home currency into euros to pay for your reservation fee and deposit. Having an expert on hand is crucial when time is of the essence.
Research the market
Research the market in general
It’s best to be methodical and look at the national picture first, before focusing in on your area and property type. You can find a wealth of national data online about the Portuguese property market, and the wider economy which will also have a bearing on market conditions.
At a national level, see how the economy is doing via reports in publications like the Financial Times, International Monetary Fund (IMF) and World Bank. You may find Statista and Eurostat, the statistical office of the European Union, useful.
Getting into the detail, Portugal’s official statistics agency has reports in English. These should give details of how property prices are moving, as well as the volume of sales. One good source of property price intel is the UK-based Royal Institution of Chartered Surveyors (RICS) which conducts regular market reports in Portugal.
Research specific types of property
Your market report will offer a snapshot of market conditions and enable you to make a more informed decision based on whether you’re in a buyer’s or seller’s market.
The next stage is to understand the right price for your specific property. Gaining a detailed knowledge of local prices is easy in the digital age. On most portals you can filter properties by number of bedrooms, bathrooms and other features, so it is easy to compare prices of similar properties to the one you want to buy.
Look at properties in areas that Portuguese people are likely to buy in to ensure you’re not paying a premium as an international buyer. Remember, though, that some areas are highly desirable for international buyers because of local amenities or proximity to transport, tourist attractions and beaches. These features will come at a premium.
Don’t just glance at prices online, be thorough. You could be savings thousands on your purchase so putting in a little work is worth it. Create a spreadsheet, document what you’re seeing, and use this as evidence if you think it’s clear that the property is overpriced.
Be clear on your finances before you go
If you are purchasing a property as a couple or with friends or family, it’s best to discuss finances early in your buying journey.
You do not want your negotiation with the seller to be delayed because you are having to negotiate between yourselves. If only one of you is headed to Portugal on a viewing trip, then the must respect the other person’s (or people’s) elected price point.
How the offer process works
Once you have consulted with your team of experts, you can then make an offer via your estate agent.
It is possible to end up in a bidding war, especially in highly sought-after areas like the Algarve and Lisbon. However, it is more likely that the buyer offers below the asking price and then negotiates with the vendor.
If your offer is accepted, you sign a reservation contract and pay a reservation deposit (around €5,000) for the property to be taken off the market. At this stage, your lawyer will perform necessary checks, such as ensuring that the property legally belongs to the owners, and they have the right to sell.
Tips for making an offer
When negotiating, you want to tread the fine line between coming across as overly keen and not interested enough. Let the seller and their team know how much you understand the property market and that you’ve viewed a lot of homes. You want to be polite, but also aim to be business-like.
There’s a lot of competition in many areas for homes, so keep up a good relationship with the vendor.
When making an offer on a home in Portugal, many people think they’re in a position of weakness, when actually, you’re in a position of strength. The seller has one property to sell, whereas you can choose from the whole market and walk away at any point. Use this knowledge to your advantage when negotiating. Take a look at our guide on how to negotiate abroad to learn more.
If it comes to it, make a quick counter offer. Any delay in responding leaves room for a seller to consider other offers. Make sure you have decided on what price you’re willing to go up to before entering negotiations and be quick and confident when upping your offer.
Locking in the contract
Once an agreement is reached, you will sign the deposit/promissory contract, which is known as promessa de compra e venda. Then, you pay the deposit on the property, which tends to be between 10-30% of the purchase price. It may be less, dependent on the reservation contract. This ensures both parties’ commitment to the transaction.
