When it comes to real estate, location is not the only factor that matters. The buying process itself varies significantly from country to country, and understanding these differences is essential for international buyers.
Many clients who approach us at A1 ALGARVE LUXURY REAL ESTATE have real estate experience in the United States but are new to Portugal’s system. Here is an overview of the main distinctions between the two markets.
1. Representation: Realtor vs. Licensed Mediator
USA: Buyers typically work with a licensed Realtor, who represents their interests. Multiple agents can access the same listings via the MLS (Multiple Listing Service). The agent is paid through a commission split.
Portugal: The role is performed by a Mediador Imobiliário (licensed real estate broker). However, there is no national MLS system. Each agency markets its own portfolio, and collaboration between agencies is less structured. This means choosing the right broker with strong connections is crucial.
2. The Offer Stage
USA: Offers are submitted in writing with standardised forms. Once accepted, the property is placed “under contract,” pending inspections and financing.
Portugal: Buyers usually submit a Letter of Intent or proceed directly to the Contrato de Promessa de Compra e Venda (CPCV) — the Promissory Contract. At this stage, a deposit of 10–30% is typically required.
3. Due Diligence
USA: Buyers rely heavily on home inspections, appraisals, and title searches conducted by independent professionals. Escrow companies and title insurers play a big role.
Portugal: A lawyer conducts full due diligence, including confirming land registry details, checking building licences, and ensuring there are no debts or liens. Title insurance is rare; legal verification is the safeguard.
4. Closing the Deal
USA: Closings are managed by a title company or attorney, with all documents signed and funds transferred through escrow. The buyer typically receives the keys on the same day.
Portugal: The final deed (Escritura Pública de Compra e Venda) is signed in front of a notary. Payment is made via a bank-issued cheque or transfer on the spot, and ownership is registered immediately afterwards.
5. Financing
USA: Mortgages are common, with competitive rates and a wide variety of lending products. Pre-approval is expected before making an offer.
Portugal: Mortgages are available to foreign buyers, but banks typically lend up to 60–70% of the property value, and approval can take longer. Interest rates are influenced by the Euribor.
6. Taxes and Fees
USA: Buyers pay closing costs (title insurance, attorney fees, etc.), while sellers cover broker commissions. Property taxes are annual and can be significant, depending on the state.
Portugal: Buyers pay IMT (Property Transfer Tax), Stamp Duty, and notarial/registration fees. Annual property tax (IMI) is relatively low compared to U.S. property taxes.
7. Renting and Investment Logic
USA: Short-term rentals are often subject to local zoning and HOA restrictions. Long-term rental yields vary by city.
Portugal: Short-term rentals require an Alojamento Local (AL) licence, which is tightly regulated in some municipalities. Luxury properties in the Algarve, however, continue to enjoy strong demand and high yields, especially during peak summer months.
8. Cultural & Lifestyle Considerations
USA: Speed and efficiency are priorities. Buyers expect standardised processes and fast closings.
Portugal: The process can feel more personal but also slower and more bureaucratic. Patience — and the right broker — are invaluable.
Final Thoughts: Is Portugal Easier or Harder?
For American buyers, the Portuguese system may appear less structured, but it offers greater legal certainty once due diligence is complete. Transactions are final and binding, and taxes are relatively modest compared to U.S. property ownership.
With expert guidance, buying in Portugal is a smooth and rewarding experience — and the Algarve’s Golden Triangle continues to be one of the most secure and prestigious investment destinations in Europe.
