Buying A Home in Portugal: 9 Common Mistakes To Avoid

If you’ve been following Amon and me recently, then you’ll know that we own our home on the Silver Coast of Portugal, and are currently buying another in the country. In the past year, we’ve received a ton of questions about these purchases.

Since we’ve learned so much about Portuguese real estate, and have talked to so many people about their experiences buying homes here, I thought it would be valuable to write about some of the biggest mistakes people make when buying houses this year. That way, if you’re considering doing it yourself, you know what to look out for. Let’s go!

Only Working With One Agent

If you’re coming to Portugal from the US as we did, you’re going to be faced with a verydifferent system for finding properties. In the States, you can use the Multiple Listings Service, a database that lists all homes currently on the market. Unfortunately, in Portugal, there is no MLS equivalent.

You can find different agency websites that list properties, but you won’t see all of them. And if you only work with one agent, you only see what their agency is listing, meaning you miss out on a ton of opportunities. Though some agents will show you properties outside of their agency, you do have to put pressure on them to do it.

Not Using A Lawyer or Solicitor

In Portugal, notaries are always involved in the real estate purchasing process. They are a neutral party that makes sure all documents are in place and taxes are paid. And as a neutral party, they don’t have your best interests in mind.

A lawyer or solicitor will be looking out for your interests and helping you through the process. They will check a property's legal status and titles, draw up contracts and promissory notes, and check whether it has a mortgage or debts attached.

That last part is super important, because in Portugal the buyer inherits any debts or mortgages attached to a property, and is required to pay them off. So don’t forget to make these important calls early on in the process.

Not Understanding Zoning Laws or Property Allowances

Many ex-pats come to Portugal with all kinds of ideas about their dream home, and all the trimmings that they’ll add to it. They soon realize pretty quickly that Portuguese zoning requirements don’t allow for many of these things, and their dreams are quickly dashed.

Another common one is planning to demolish an existing building to construct something new. But because of the country’s impetus on historical preservation, it can be a long tedious process to get permission to flatten a property.

It’s essential that you understand all of these rules and regulations before you consider buying your “dream” property. Otherwise, you could end up very disappointed.

Buying Property With Illegal Units

When buying property in Portugal, you need to make sure that anything you’re interested in has the correct permitting documentation to show that all pre-existing constructions have been legally authorized. Our first home here was built ten years ago, so we asked for all the plans, specs, and permits before we considered buying. It’s an essential way to find peace of mind before you make such a large investment.

Failing to Negotiate

Many people who look at properties in Portugal online see the buying price and don’t even consider whether they can get it for less. This is a huge mistake because, in Portugal, negotiations are commonplace, if not expected. For example, we were able to negotiate our house prices down from 250k to 190k!

Sellers here understand that negotiations are likely to happen, which is why they set their initial price high in the first place. Prices are almost always negotiable here, and you shouldn’t assume you’re getting the best prices just because the property is cheaper than your home country.

They Don’t Understand the Weather/Heating & Cooling Systems

People often come here when the weather is warm, so when they view a house they don’t consider how it might be during the colder seasons. And without a good heating system, you’re going to have problems. Just the other day it was negative zero here on the Silver Coast, which didn’t bother us because of our home's heating system.

Many people don’t realize how cold it can get in Portugal, so they end up with huge bills tacked onto the initial sales price of their new home. They’re buying heating systems, cooling systems, and the services to have them installed.

Failing to Look at Nearby Businesses and Industry

In Portugal, neighborhoods in the same area can vary drastically, and your neighbors will play an important part in your lifestyle. For example, if you live next to bars and restaurants, be prepared to deal with a lot of extra noise at unusual hours. And if you live in the countryside, you want to make sure your neighbors aren’t frequently burning their trash next to your backyard.

When you view a property, make sure to check out the neighboring streets and houses in case there are any problems to identify. If you’re really interested in a place, make sure to walk through the neighborhood at different times and days of the week to get a more well-rounded feel for it. It may seem excessive, but we’ve seen million-dollar properties across the street from a church, and on Sundays, there are cars parked everywhere. You’d have no idea if you only visited it mid-week. This is just one example of many unexpected issues that might arise nearby your dream property.

Not Renting First

Amon and I rented in Portugal for over a year before buying our home. By the time we were ready to buy, we had learned so much about the property market that we got a much better deal than we would have otherwise. By doing this you also save a lot of money, better understand where the deals are before you buy, and form good relationships with real estate agents that can help you out in the future.

It can be tempting to move straight here and buy a property, especially if you’ve found an online listing that you really love. But in the long run, you’ll thank yourself for renting first.

They Don’t Pay With Cash

A lot of people have asked why we chose to pay with cash rather than finance our home, so I’m going to explain it here. Cash is our go-to strategy for purchasing real estate because it’s such a powerful negotiating tool. We were able to negotiate almost 25% of the asking price for our home because we offered cash.

With cash, you’ll have no problems financing and the closing process will be quicker, incentivizing sellers to accept a much lower price. We were also able to avoid mortgage transaction fees. We feel we save more by opting to pay in cash no matter how low the current interest rates are.

These are some of the biggest mistakes we’ve seen people make when purchasing property in Portugal. If you avoid these, you’ll be well on your way to making a reasonably quick and secure purchase if you’re looking for a home here. For more tips and advice on real estate in Portugal, and much more, check out more of our articles on OurRIchJourney.