Investment approach
Conflict of interest when buying a home: who pays whom in the deal
A conflict of interest arises when an adviser is paid by the other side. A map of the parties to the deal, Catalan and Spanish rules on disclosing remuneration, and six questions to put in writing.
A conflict of interest when buying a home is checked with one question to every participant: who pays you in this deal. In Catalonia an agent may not receive remuneration from both sides of the same transaction without an express agreement to that effect (art. 55.6 Llei 18/2007 del dret a l'habitatge, the Catalan housing law), and a mortgage intermediary must disclose in advance the commissions the bank pays them (art. 35 Ley 5/2019).
What a conflict of interest is in a housing deal
A conflict of interest is a situation in which an adviser has a reason to recommend what benefits them and not the buyer. It is not necessarily deception.
A seller's agent, who works for the seller, creates no conflict: the role is clear, and you negotiate with them as with the other side. A conflict appears when someone presents themselves as the buyer's helper and is paid by the seller, the bank or the contractor. How agents' roles differ is covered in the article seller's agent and buyer's agent.
Who is involved in the deal and who pays them
In a typical purchase with a mortgage five or six professionals take part, and each has their own source of income.
| Participant | Who usually pays | What the law requires | What to ask |
|---|---|---|---|
| The seller's agency | The seller, under a nota de encargo (the agency's engagement note) | Remuneration from both sides only with an express agreement (art. 55.6.i Llei 18/2007) | Whether it receives anything from the buyer |
| The buyer's adviser | The buyer | To act with professional independence (art. 55.5.a Llei 18/2007) | Whether it receives anything from the seller or the agency |
| The mortgage intermediary | The borrower and/or banks | To disclose its links with banks and the commissions they pay it (art. 35 Ley 5/2019) | Which banks it is linked with and how much they pay |
| The valuer for the mortgage | The borrower | Independent of the bank and the intermediary (art. 13 Ley 5/2019) | Who ordered the valuation |
| The abogado (lawyer) | The client | Works for their client | Whether you have a relationship with the seller or the agency |
| The renovation contractor | The buyer, after the deal | There is no specific rule | Whether you pay anyone for a recommendation |
The most frequent hidden case: the buyer's helper shares the commission with the seller's agency. The higher the price and the faster the deal, the more they get, and the incentive to negotiate weakens. Why the stock of a single agency narrows the choice is described in the article on an agent's own listings.
What a mortgage intermediary must disclose in advance
Under art. 35 Ley 5/2019, before starting work the intermediary gives the borrower, on paper or another durable medium: details about itself and its registration number, whether it is tied to one or several banks, whether its advice is independent, how much the borrower pays it and what commissions the bank pays it. If it takes money from both the client and the bank, it states whether one is set off against the other.
It is worth asking for this document at the very start and comparing it with what was said aloud. How to choose between an intermediary and going to the bank directly is covered in the article broker or bank, and why the valuer must be independent in the article on the tasación.
How to check for a conflict of interest: questions in writing
Verbal answers are easy to forget and hard to prove, so the questions are put in correspondence or the answers are written into the contract.
- Who pays you in this deal? The full list: seller, agencies, developer, bank, intermediary, contractors.
- Do you or a company linked to you receive anything from the seller or their agency? If so, how much or on what principle.
- Do you have properties of your own for sale, including through agencies you know?
- Do you receive remuneration from the lawyer, bank, intermediary or builders you recommend?
- What do you do if the option that suits the buyer earns you less money?
- Can the buyer bring in an independent specialist instead of yours? The right answer: yes.
A good sign is when the adviser raises the subject themselves, before the first recommendation.
What to check in Catalonia's register of agents
The Registre d'agents immobiliaris de Catalunya (the register of estate agents) is public and mandatory for those who regularly intermediate in property deals for remuneration (Generalitat). The registration number is mandatory in advertising (art. 59 Llei 18/2007), and the agent must hold a guarantee covering the sums received and liability insurance (art. 55.3).
Registration does not show whose side the agent is on and does not replace the questions above. The absence of registration does not by itself make contracts invalid (art. 56.4), but it is a reason to ask why and to clarify the status with an abogado.
When disclosure does not work
Disclosure does not work if the same person in effect negotiates for both sides: even with written consent, the buyer is left without a representative in the negotiation. It does not help either when the amount of remuneration depends on the price of the deal and the adviser at the same time recommends what price to offer.
Signs that call for stopping: the fee is not named or you hear "free for you", you are shown properties from almost one agency only, you are talked out of an independent lawyer or a technical check, you are rushed into the deposit. DNPI's principles for working with investors and properties are described in the section on our approach.
Questions and answers
Can an agent take a commission from both the seller and the buyer?
In Catalonia only with an express agreement to that effect, under art. 55.6.i Llei 18/2007. The buyer must know the amount or the basis of calculation and give consent in writing.
What must a mortgage broker disclose about its commissions?
Under art. 35 Ley 5/2019, before starting work: the registration number, links with banks, whether its advice is independent, what it charges the client and the banks' commissions, if there are any.
Is a lawyer recommended by the agent a conflict of interest?
The recommendation itself is not. The question is whether the agent receives remuneration for it and whether the lawyer works for the buyer. The buyer always has the right to choose their own lawyer.
How do I check that an estate agent is registered in Catalonia?
Ask for the number in the Registre d'agents immobiliaris: by law it appears in advertising. The number is checked in the Generalitat's register, and if in doubt the status is clarified with an abogado.
Who should raise the conflict: the agent or the buyer?
A conscientious adviser discloses it themselves and in writing. It is unwise to count on that: questions about remuneration are asked directly and the answer is requested in correspondence.
