Looking at what brokers are "doing", I (Bulgarian financier and blogger Vasil Kendov – ed.) decided to highlight their activities a little. In the last week, I have had two clients who decided to purchase a new building, and both with identical cases.

The scheme is as follows:

Signing a contract that is not preliminary, but involves the payment of real commissions to the broker.

As soon as you have demonstrated your interest in purchasing a home, brokers immediately shove a contract into your hands, which is not a preliminary contract, but in reality is something that does not make sense. At least from a legal point of view. The purpose of such actions is to take money from you immediately, while you are "warm". Usually, they explain to you that for 1 thousand euros they will "delete the ad for sale". Okay, but this is an agreement with the agency, not with the seller. Who can easily remove ads in one place and give them in five others with a price of +2 thousand euros. After all, for the initial amount, he has already found a client in your person. If the seller can earn another 2 thousand, then "why not"?

No one can guarantee that your ad will be removed! Therefore, I cannot understand what exactly this so-called "stop deposit" of 1 thousand euros is given for. I think that its meaning is only that you have this money. But One way or another, the broker has already taken some money from you. Further, if you manage to take more – OK, if not, he will have your 1 thousand euros. With all this, you still need to get a loan.

"Our agency is resolving the issue of a loan. We have a special person for this…"

Not at all! Why, then, do you think these people come to me afterwards? (The author works in the field of credit consulting – ed.). I'll tell you why. Because clients need a loan and the agency has not "solved" this issue. But brokers have taken 1 thousand euros and are not so much interested, are they? There is another assumption. If the agency is familiar with the lending system (although practice shows the opposite), then they understood that they would not give you a loan. But despite this, they took 1 thousand euros from you. Not bad earnings, isn't it?

Let's approach the topic of the preliminary contract. You are given a document called a "Standard Preliminary Contract". But such an animal does not exist in nature! Once I argued with a "broker" who explained to me that there was no point in involving a lawyer. That these lawyers are always confusing everything and only disrupting deals. Which in reality is not uncommon. I personally failed more than one transaction, for which, in the end, clients thanked me.

Brokers write preliminary contracts themselves, and this is the cornerstone of real estate purchase transactions. At this point, you are asked to pay 10% of the trade value, after which the broker disappears. That's it, he is no more! With rare exceptions. And if you have not been "resolved" with the loan and are not expected to receive a commission from the bank, but more on this below.

In fact, you pay 10% of the deposit and 3% of the commission not yet being sure whether you will be given a loan, whether the documents for the property are in order, and what else The bank will demand what your notary costs, state payments and taxes will be… Until then, you don't have a lawyer to represent you. There is only a semi-literate broker who positions himself as a lawyer. That is why there is so much fraud in the real estate market.

It is important to understand that lawyers' fees are much less than brokerage fees, but at the same time, lawyers do many times more work. And the most important part of it is to prevent deception! After all, in the end, just an excellent scheme for making money emerges. A little calculations: 1000 euros deposit for the removal of advertising – "stop deposit", 10% – deposit under a preliminary agreement (we deduct 1 thousand euros from 10%), 3% – broker's commission.

But unexpectedly, the bank refuses a loan. And in the preliminary contract it is written (usually they do not read it carefully, and if they do, they do not understand subtleties) that if you miss a certain period, then you lose the deposit. Congratulations! That's why you just need your own lawyer. Not the one that was advised in the real estate agency, but his own. This is necessary at least in order not to incur unnecessary expenses without the ability to get your money back. And this is only a "minor evil". Because if the property itself turns out to be problematic, then there is a high probability of losing the entire amount.

There is an opinion in society that the bank will definitely check the object itself and the documents for it. But the situation looks like this only as long as you don't know the people who come to me. They also thought so and saved on the services of a lawyer.

Notary and transaction payments

Surely you know that agencies insist that documents are drawn up by "their notary". Can you guess why? It's simple – they get commissions from it. I once had a rather confusing deal. The agency realized that the client would not receive a loan, but they took 1 thousand euros of the "stop deposit" from him and also deceived him with a preliminary contract. The client allegedly could not get a loan due to a bad credit history. I come up with a new scheme with housing, solve the issue with the loan. The next day, the broker calls and explains how important it is that the transaction is carried out by "their notary". I had to explain to the clients that they choose the notary and no one else. To their luck, they chose another notary and everything worked out for them.

Interests and payments

I have already said this, but I will repeat once again – the only way to insure yourself against fraud is to have your own lawyer, not from the agency! Unfortunately, there are many brazen and incompetent brokers. After all, they take money from you and me once, and they still have to work with the developer. Guess who they will be more loyal to? With a notary, everything is exactly the same as with a lawyer. I made a deal, and then look for the truth as much as you want.

Practical tips for buying real estate:

1. The most important thing is to know whether you will be given a loan. This is the most important thing. And how many exactly. To do this, you first go to the bank or seek advice from a specialized specialist. Even if the consultation is paid, in the end it will be cheaper.
2. Negotiate with your lawyer so that he gets acquainted with the object and assists with the notary.
3. Only after that you start looking for an object to buy and involve brokers in the process.

If your actions follow this order, then the whole process will definitely cost you less and it will be much more difficult or even impossible to deceive you.
Recall that we are personally acquainted with all sellers properties on our website. If necessary, we will be happy to advise you on a trusted lawyer.

Source: kendov.com