We moved to Portugal in 2022 and purchased a home in Portugal in 2024. Here’s everything we experienced and learned during the process of buying our home.
Agent Representation – One, two or none at all.
- Seller’s Agent: There’s no listing brokerage exclusivity, per se. Meaning that a seller could have their home listed and promoted by multiple agents at the same time. From the agent perspective, unless they have an exclusive contract with a seller, they aren’t going to spend a lot of their money on marketing the property.
- Buyer’s Agent: Aren’t widely used in Portugal. A lot of the time, the seller’s agent will “represent” both sides of the transaction – conflict of interest much?! This type of approach has led to some seriously greedy brokerages in Portugal that will only show buyers their own listings to keep all the commissions. It’s becoming more normal to see information at the bottom of a listing calling out the commission split a brokerage is willing to do with a buyer’s agent but it’s still crazy to me that any buyer would willingly agree to have the seller’s agent represent them in a transaction.
- Attorneys: It’s not required by law to work with a real estate agent in Portugal. You only have to use an agent if they toured the property with you, which we didn’t have because the selling agent ghosted us before we could schedule a tour with her. ANYWAY, because I’m a tenacious, stubborn-badass, I insisted that the only way that we would buy the flat was if we did not use an agents on either side of the transaction. The builders took a minute to review their contracts with the selling agent and finally agreed. This arrangement saved the builder tens of thousands of dollars in commissions paid to the agent and thus we were able to negotiate down the sale price significantly. Our attorney handled our side of the transaction from legal perspective including reviewing the contracts, help with negotiating terms and pricing, collecting documents for the mortgage, visiting the site with us to translate as needed, goign to the deed signing, filing all necessary documents with the relevant government authorities, and helping us to transition our life to our new place (change of address, utilities, etc.). This service cost us around five thousand euros but money well spent when you consider the money we saved in not using an agent and negotiating the sale price down.
Finding A Property
There’s no one stop for all property listings in Portugal, like the multiple listing service (MLS) in the United States. If you want to find a property, you’ll have to roll up your sleeves and get your hands dirty. Here are a few ways to find a property in Portugal.
- Idealista: At the time of writing this post, the closest thing Portugal has to an MLS is Idealista. Real estate agents have to list their properties on Idealista, making it a hot mess of duplicate listings since there’s no exclusivity for sellers. I started my search on Idealista for two reasons (1) ease of searchability, it really is better than most individual brokerages websites but lightyears behind sites like Zillow or Redfin, and (2) market knowledge, I wanted to learn the brokerages in the market and how properties are described. One thing I noticed a lot were 3D renderings of homes. Often this means that the property is under construction, construction hasn’t started, or they are looking for a buyer to purchase an existing home or property and want to show the potential – not cool. Sometimes those listings would be transparent about the state of the property, but some were not, requiring the additional step of reaching out to the listed agent for more information. And once an agent has your contact information, get ready for all the calls, emails, and WhatsApp messages.
- Brokerage Websites: I highly recommend visiting each of the major brokerage’s websites to search their listings.
- Off-Market Listings: We didn’t need this, but it might be worth establishing a relationship with a few agents from different brokerages so that they can send you the latest on off-marketing or coming soon listings.
- Drive Around: Yep, once you’ve selected your target neighborhood, hit the streets and take note of new developments or fore sale signs and follow-up.
Touring
This part is very similar to our experience in the US. You find a property, reach out to the listing agent, schedule a time to tour, meet the agent there, walk around, have small talk, leave. The thing that is important to remember is that not all agents in Portugal will speak English. So if you’re going into a tour with a lot of questions you can ask if they can bring a teammate who speaks English to translate, otherwise, get good with your favorite translation app and prepare some common questions ahead of time if you’re worried.
I found our home on Idealista and contacted the listing agent for more info. After a few days of radio silence from the agent, I said “fuck it!” and went to visit the property on my own. Because it was an apartment complex still under construction, I knew it would be possible that someone would be onsite to show us around. Lucky for us we were able to tour the apartment that day and fell in love. Now, because the selling agent didn’t show us the flat, we weren’t required to use her services.
The Offer
We put in an offer. It was declined by the seller. We sulked away for a couple of months and continued our search. After touring a few more places we realized that this property was the one for us so we made a new offer and it was accepted.
Because we agreed to not use agents, we calculated the agent fees and took that off the list price, plus a little more. The builder required a 10% deposit, we did 20%. We also had to pay 50% deposit on our alterations. Because we found the place while it was still under construction we were able to make some alterations that will suit our life better including:
- Moving the clothes washer from the kitchen to the upstairs hall closet and adding a clothes dryer
- Replacing the clothes washer int he kitchen with a wine fridge
- Adding a garbage disposal in the kitchen sink
- An American sized fridge with water and ice in the door
- Outdoor ceiling fans with lights on the terrace
- Privacy glass on our bottom floor terrace and balconies
- Converting the huge storage space on the other side of the entryway wall into an office space that connects to the rest of the flat
- Adding an electronic door
- And making the terrace ready for a jacuzzi, meaning adding a drain, water and electrical hookups
The cost of these alterations came to 12,000 euros and was not added to the price of the home but paid separately as “home renovations” so that we wouldn’t have to pay the taxes on it associated with the home purchase.
Contracts
There are a slew of contracts to be signed and deposits to be paid. Every contract required an in-person meeting including our attorney. Maybe if we had used an agent, this wouldn’t have been necessary, I don’t know.
They don’t do contingencies in Portugal. We asked for a financing contingency which is very normal in the US. So if we couldn’t get a loan, we could back out. Nope. So come prepared to stick it out.
The Wait
Because our flat was under construction we had to wait. We signed our contract in September 2023 and wired the deposit in October. They finished construction in February 2024 and submitted the paperwork to city hall (câmara) for the final occupation permit in March. The contract said that if the builder didn’t deliver the home to use by April 30th that we could back out and get our money back. April 30th came and went. But we still wanted the flat, so we continued to wait. In late June the câmara finally spoke to the builder and said that they needed to plant some trees and install a spot light in the garage before they would issue the occupancy license. Within two weeks of fixing the issues, we had our habitation license.
What’s wild to me is the difference in how long it takes to get this stuff done. In the US, getting that final occupancy license take 1-2 weeks and you get the report quickly. Why couldn’t the person who was reviewing the property have told our builder on the day of the inspection, “Hey! You need trees and a spot light here.” I know that our builder would’ve fixed it the same day. Sometimes it feels like Portugal creates red tape and hoops to jump through just to keep people employed.
New Builds
Buying a new build will take longer than purchasing an existing home. The reason is that once construction is finished, the city hall has to get involved and do a number of approvals. Portuguese bureaucracy is no joke. If you have a tight timeline, do not buy a new build. Friends have told us that they’ve waited YEARS for the final occupancy license in order to move into apartments or houses where they’ve money tied up. Just be prepared to wait. If someone tells you the construction will be done in February and you can move in in March, they are lying to you. A more realistic timeline for receiving an occupancy license is 3-18 months depending on what municipality you’re in. I hear Lisbon takes the longest.
Mortgage Brokers
Not all banks will work with a mortgage broker. We needed to work directly with two banks, Millennium and Abanca, but our broker reached out to the rest. The broker has acted as our main point of contact with the banks, facilitating the entire process and has been a dream come true in this entire, frustrating process.
Qualifying For A Mortgage
I can only speak from our experience but this part was the most frustrating. I can see why so many people complain about the home buying process. Getting a mortgage here was confusing and stressful.
Our income is from our investments in the US. However, in 2023 Mr. Scribbles wanted to challenge himself so took a job here with a UK/Portuguese company so he actually has locally sourced income. We wanted to get approved for our loan based on our US income alone because Mr. Scribbles job was getting weird (more to come on that). However, we quickly learned that we HAD TO use his income to get a loan. We spoke with three different bankers, one from Millennium, one from Abanca, and one broker who helped with all of the other banks, and each told us that it would be very hard to get a loan without using Mr. Scribbles job here in Portugal. No one would tell us why but I think it has to do with Portugal wanting people to be invested in the country and have more skin in the game. And, since they don’t have credit scores in Portugal, your employment is the proof of ability to pay your loan back.
US Paperwork
We were asked to provide our US credit scores, the previous year’s tax return, the last three months of bank statements, and pay slips. For proof of income, we showed Mr. Scribbles pay slips and an official letter from his employer saying that he was a permanent employee. We also provided a print out of our recurring withdrawal from our US Brokerage Firm for our US income. They will also ask for specifics about the property like location, build year, price, etc.
Mortgage Pre-Approvals & Approval
Whatever the banks or brokers send you at first is like a draft of what COULD eventually be approved, it’s not the final numbers, don’t get excited.
Once you pick a bank to work with, then they will gather even more documentation about the property, send an appraiser out to inspect the property, and then give you your final loan terms. This approval can be locked for up to 90 days, after which point you’ll have to submit new bank statements and get re-approved (we had to do this because it took so long to get the occupancy license from the câmara).
Once the bank has the appraisal and all the documents, then they will send you the carta final and THIS is your final mortgage rate. There’s a 7 day cooling off period once you receive the carta final. Once the 7 days pass, you can sign the deed and finish the transaction.
At first we decided to go with Abanca (our bank at the time). But once we got pass the “pre-approval” phase and they ACTUALLY looked at our information, they rejected our application with no explanation. When we pushed for details the banker said that they wouldn’t give us as much money as we requested. It’s amazing, they really didn’t want to work for our business AT ALL because they didn’t ask if we could do a lower loan amount or anything. We had to ask them if they’d approve us for a lower loan amount. Eventually, they did approve us for a lower loan amount but by then we found a bank who would give us what we wanted. Bye bye, Abanca!
Types of Mortgages & Discounts
- Variable – Your rates change subject to the EURIBOR and the terms of your mortgage. Every bank adds a spread to your rate, usually between 0.8 and 0.65, that is added to the EURIBOR rates. Rates are assessed on either six or twelve month intervals and could have an impact on your payment. Rates go up, you monthly payment goes up. Rates go down, your monthly payment goes down.
- Fixed – This is what we were used to from owning in the United States. When you select your loan, you get a rate and a monthly payment, and that’s it. for the life of your loan.
- Mixed/Hyrbid – These loans often start with a fixed rate for as little as six months up to fifteen years. After the period of fixed rate, the loan becomes a variable loan and the terms of a variable loan apply.
- Discounts – Most banks will over discounts on their fees or their spread if you contract additional services such as checking accounts, credit cards, depositing your pay checks, paying bills, taking their insurances, etc.
- Loan Term – If you’re older, they won’t loan you money past age 70 or 72 so keep that in mind as you’re running your numbers.
We decided to go with a fixed term loan because we value the ability to project our expenses into the future. Additionally, we don’t want to HAVE TO go back to work in order to have locally sourced income to qualify for a new mortgage in the future if variable rates were to skyrocket. This approach is insane to most Portuguese we speak to here because they are so use to super low variable rates but the last few years have seen rates shoot way up and hit their pocketbooks hard. We got a 33 year fixed rate loan at 3.65%. This rate is on par with what we got back in 2012 when we bought our first home in WA. We are happy.
Early Payoff Fee
Unlike in the US where you can pay off your mortgage early without penalty, in Portugal the banks will make you pay for pre-payment.
- Fixed Rate Fee – You pay 2% of the remaining principal at the time of early payment/pre-payment. This is true for the fixed rate period of mixed/hybrid loans too.
- Variable Fee – You pay – 0.5% of the remaining principal at the time of early payment/pre-payment.
- These fees apply if you choose to refinance or move your loan to another bank. Some banks will reimburse or cover the pre-payment fee if you are refinancing.
Mortgage Insurances
Banks in Portugal require you to have two different types of insurance:
- Life Insurance – This insures the total amount of your original loan and pays out in the event one or both of us die. I guess this kinda nice because if a spouse were to die then the other spouse doesn’t have to worry about not being able to afford the mortgage. The bummer is that you have to have this insurance for the life of the loan and the premium increases each year as you get older, and decreases again as the remaining principal reduces in the last 10 years of the loan. Some banks will require you to take out life insurance through them, more money in their pocket. Our bank allowed us to get life insurance through a third party. We chose MetLife because their rates and coverage were competitive and didn’t require a physical to qualify. We asked if our life insurance in the US would suffice, but it doesn’t because they want the bank to be named as the beneficiary.
- Multirisco / Home Insurance – This is your standard home insurance. The banks always require you to take out this insurance through them.
Portuguese Bank Account & Moving Money
Open a USD Account in Portugal – When we selected our bank (BPI), we had them open a USD account in addition to the standard euro account. This is because we anticipate doing more USD to EUR conversions in the future. It costs a few euros per month to maintain the USD account but it’s worth it.
Getting USD to Portugal – We sold stock in the US, did a wire transfer from US Brokerage Firm to our USD bank account at BPI, then had BPI convert our USD to EUR. We didn’t have US Brokerage Firm convert our USD to EUR because their rates are trash. It took less than 48 hours for the money to hit our USD account in Portugal. The US Brokerage Firm did not charge any fees for the international wire, but BPI charged a very small fee (17 euros) when the money was received in our USD account.
Currency Conversion, USD to EUR – Whenever a bank converts money, they are going to add a spread to make a little off of the transaction. Because we were converting a large sum, we had to come into the local bank branch and sign in person. Boo. It took 2 days for the money to convert from USD to EUR in our BPI accounts.
Closing Checks – Banks have a daily limit of how much you can transfer. If the amount you need to pay out of pocket to close the transaction exceeds the daily max, you’ll need to get checks from your bank. We are choosing to sign the deed at our BPI bank branch so our banker will be there with the checks for the seller and to pay taxes and fees to the government.
Pay Taxes and Fees – You have to pay the taxes and fees out of pocket, they cannot be rolled into your mortgage.
Day of Closing, around the table was…
- Our BPI banker – he will have the checks ready to pay the seller and our taxes/fees to the government
- Notary – the bank will provide a notary, we need to bring ID which can be our passports or temporary resident cards
- Seller – The builder will be there and likely bring their attorney
- Our attorney – Who will also act as our translator because the transaction will be completed in Portuguese
Complicating Life Factors
Mr. Scribbles hating his job. We needed Mr. Scribbles to keep his job until the deal closed in case we needed to re verify his Portuguese sourced income. Whenever we’ve wanted to do something with real estate there’s always some shit going on. When we bought our home in WA, Mr. Scribbles hated his job and whether he would stay or go was up in the air. When we bought our rental property in WA, I was in the process of leaving my job. So it only fits that as we are trying to buy our first home in Portugal that one of us would have some shitty work situation.
Mr. Scribbles will likely do a guest post about his experience working for a British / Portuguese tech company at some point but I have to note that his company made this experience more frustrating. We made more money in the market in one month than he did in an entire year at that job. They didn’t offer any profit sharing, bonuses, or stock options so when the owners and executives talked about growing the business or taking more market share all I want to say is “who the fuck cares, bruh!?” Not the employees because they don’t see a goddamn cent of that growth. That, PLUS, they had some ass-backwards HR, hiring, leadership practices that made my head want to explode.
At the same time, Mr. Scribbles’ new manager was an ass hat. Mr Scribbles told him that we’re in the final stages of buying a home and we could close any day now. His manager then asked him to drop everything and go to the UK, telling him that it’s their jobs and sometimes they have to do things they don’t like. OH MAN! I could not wait for Mr. Scribbles to give his notice. Remember the white house correspondents dinner where Obama had an anger translator (“Luther”)? I’m Luther. I wanted so badly to be on the phone line with Mr. Scribbles and his boss when he gave notice and give him a piece of mind.
Ok. I’m done now.
We’ve been in our new home for over one year and we absolutely love it. Would we go through all this madness again? Yes. But I definitely would’ve appreciated a crash course in the differences between US and Portuguese real estate transactions so that I could temper my expectations around timelines.
Now, will we keep this home forever? Sell it? Rent it out? I can see us staying in this home for as long as our Tiny Humans are going to their current school because it is just so convenient. If they academic needs send us to another school and the commute worsens, maybe. If we decide to move outside of Portugal, we’d probably explore turning it into a long-term rental. BUT WHO FUCKIN’ KNOWS!? Not me.
