News that RBS is investigating two UK based members of staff that were involved in their Spanish mortgage business comes as a suprise. It's a suprise because its amazing that this type of story hasn't been prevalent over the past few years.
Think about it, in the boom years estate agents were earning normally at least 5% and up to 10% of the price of a property in commission.
If you have a client referred to you by his bank manager, and they buy a property that earns you €12,000 in commission, then it's easy to see how kicking back a few grand to the bank manager helps keep the flow of clients coming.
That's what many people were doing, after all, lawyers, Spanish bank managers, uk based agents, and basically any old Tom, Dick or Harry, would refer anyone looking for a property to an agent, in the hope of a sale and a kickback of some commission.
This was almost certainly driving the increase in property prices, along of course with ever greedier developers.
If they were going to pay 8% commission say, then that would simply be built into the price. Agents had no interest in any property that didn't have 5% commission in it, so all resale properties would have the commission added to the price the vendor wanted. All the time the vendors heard that prices were going up so that just fuelled the increases. In a rising market this worked for several years. Not any more I think. Coupled with the normal taxes and costs of 10%, it would be often at least 15% that the client was paying on top of the real price of the property - ie the price that the vendor would receive.
I don't know how we get out of this in Spain......