‘Let us not have a contract or an invoice; we save some money this way.’

A Terra Nova Selection real estate agent, the night before signing the papers for a transaction, after his ‘forgetting’ about the contract issue for a couple of months. I reckon, a tad upset at my replying and firmly asking for them both before paying anything: a contract and an invoice.

This pretty much says it all about different kinds of service in Romania on the whole, but it says even more when talking about the real estate business in the country. Non-existent during the Communist regime, the business flourished in the early 1990s, when crooks and reliable staff alike shared the ‘real estate agent’ tag. After a few rather dark years when many people lost big money relying on agents and owners producing fake documents and disappearing into the blue with the money, things started to cool down with the foundation of the Romanian Association of Real Estate Agents (Ro. Asociația Română a Agențiilor Imobiliare, or acronym A.R.A.I.) that came with a set or rules its members were required to obey to, back in 1995; to add some confusion to the situation, a few other associations were to appear afterwards, such as the Professional Association of Real Agents in Romania (Ro. acronym A.P.A.I.R.), the Real Estate Broker Association (Ro. acronym A.B.I.) or the National Union of Real Agents (Ro. acronym U.N.A.I.). Things did not however clear up all the way until a more strict law had notaries check and complete their files with several documents before authenticating any real estate transaction, hence diminishing fraud and scams, while later on large amount cash transactions were restricted as well. Alles Gute, but let us go a bit deeper into the business you will have to face if searching to lower medium or long stay costs in Bucharest or Romania.

The pay. With online resources becoming more and more plentiful in this domain as well, things might look to turn brighter. If real estate agents were out of the story, it might be so or on the way there anyway. Let us start with a bit of Mathematics. A real estate agent in Bucharest will charge each of the two parties (the buyer and seller) a commission varying between 2 and 3% of the transaction price; they usually start at 3% and some agree to lower it down to 2%, with a small part of them agreeing to go even further down, to 1.5% (especially if they come from cheaper neighbourhoods or if they are going through a low income period). Take the average transaction of EUR 45000-50000 (a 2 room apartment or a studio in an average district) and you will get the amount a real estate agent makes per transaction completed: some EUR 1800-2000; of course, this is before tax, but only provided the real estate agent does not do tax evasion, which many do, because the law is incomplete in this respect, not having their commission contract and respective transaction done at the notary together with the main transaction, as it should. In such a circumstance, many of them, especially those coming from small agencies, will try not to issue an invoice and not to sign a contract (or will fail to save the contract in their bookkeeping), hence pocketing the money. Illegal and subject to the penal code, this is, and, an important piece of notice those into tax evasion will not tell you, it is for both parties: the payer and the beneficiary of the paperless transaction. Back to the income and assuming the real estate agent pays his taxes by the book, the EUR 1800-2000 per transaction is more than 3 times the average monthly income in Romania (also before tax), of EUR 544 (as of April 2014).

The know. Taking note both of the amount per se disregarding of the country we are talking about, but also of the comparison above with the average income in Romania, one expects high quality a service. Alas, the one expecting so is very likely to be disappointed. People become real estate agents after going through a course done by one of the associations above or a few specialized educational centres; a graduation paper is required in order to be allowed to practice. Again, it looks good. But education in Romania, save for the people that really struggle on their own, is weak at its best. And the same goes for the real estate agent that soon forgets the ethics, requirement for knowledge and research or respect for his customer, to mention but a few basics. The gap is soon filled with lying or telling only a part of the truth, disrespect and a general lack of knowledge. One might argue that the consultancy part of the deal is off, with the customer having two choices: either shut up and swallow whatever the agent says and recommends (valid especially for the short on time, situations immediately taken advantage of by the agent) or ‘do it yourself, but give me the money’ (valid for the rest). Before this turns into frustrated blogging, if not sure about the completion year of a particular building or about whether that building will go or not through the thermic rehabilitation program, rather refer to the city hall’s lists (such as, for District 3, here). If not sure whether the walls are made of classical brick, concrete or alveolar bricks and tapping does not say much, refer to a specialist, for whatever the agent might say has a high chance of being a supposition at best or a plain, convenient lie more frequently. And then, remember that, according to most agents, all dried out water stains on the bathroom or kitchen ceiling are remains of many year old floods, all neighbours are dead quiet and no apartment you are going to be shown ever lies in a building with high debts to gas or water suppliers. Before coming to believe you have finally found the land of milk and honey, do check all these on your own.

The attitude. ‘I have been doing this job for years’. And I have heard this story so many times that I do not remember. The attitude is next to always from a connaisseur to a dull apprentice. The agent is supposed to know it all, you are supposed to know nothing. And memory comes short a matter when you are shown an apartment a mile away from the location you had specifically asked for. Your stunned glance is quickly denied: ‘but I do not understand why you do not like this property, I just don’t’. The tone adds in to make you look like a bloody stupid child not willing to swallow the almond cake the nanny has been holding for a quarter an hour next to your bloody mouth. The other side of the attitude issue is the lying. A few times I popped into tempting ads about a fairly interesting property at too good to be real a price. Calling the number there, I was answered in a plain voice that the respective apartment had ‘just’ been sold, but they have something else for me, at another price and in another area. When it happened a few times with the same agent and always with ads that had just been published one started to wonder whether all was not just a make-up. At other times, the ad mentioned a different floor, location or condition of the apartment so as to make it more appealing than in reality, with the hope that, maybe, the buyer will be short on time and will agree anyway to something he / she was not interested in the first place.

Advice. While as far as the professional consultancy is next to zero in this business, one is always given plenty of free and apparently good-willing advice. Such as declaring a the price of the transaction as lower than in realty so that the seller pays a smaller tax on the transaction. According to districts and a few other criteria, the administration established shoulders of prices and an apartment in the respective category cannot be sold cheaper than that. As the shoulders are quite generous, properties always go at a higher price on the market. The tax (2% for properties purchased more than 3 years before the transaction or 3% for newer purchases) applies to the official transaction amount. So, if you shake hands on EUR 50000 and the shoulder for the respective apartment goes from EUR 40000 upwards, if you declare the transaction was for EUR 40000, then the seller has to pay EUR 1200 as tax instead of EUR 1500 if the real amount had been declared. Such an illegal practice is highly encouraged and promoted by ‘benevolent’ real agents that forget however to tell the parties (and especially the buyer) that things go penal and if found out, the transaction is canceled, which means the buyer gets the money back (but according to the papers, so EUR 40000 in our case) and the seller gets the property back, and with charges applying for both, but nada for the ‘benevolent’ agent.

Business tactics. Strategic questions asked (meant to have them find out if you are in a hurry, have a deadline, a serious family or health issue to solve and such), it is all guerilla pushing afterwards and you start from a losing point if giving the agent all details of your situation. The agent is usually on neither side of the story (buyer’s or seller’s) but on his own. His interest is that the transaction is done quickly, disregarding of the price and whether either party is pleased with the results. To that purpose, all tools that can be got are used: lies about the property, wrong information about the thermic rehabilitation listings, wrong bank commission data and, for the one not familiar with the neighbourhood, all sorts of fake convenience information. And needless to say, the more one knows about things, or the more time he / she has and unwilling to take the first offer just like that, the quicker the agent will back down and look for other, easier preys.

So, why not do without them? The question comes naturally. There is a chance, but that is tiny: because real estate agents will do everything possible not to allow owners to stand up and deal with buyers without middle men. When an ad appears in a newspaper or on an online portal and it is obvious that the property owner and not an agent lies behind it, phones start ringing to the point where the owner either gives up and hands the business to an agent, or turns his phone off to unknown numbers. Stories like ‘we guarantee a serious, secure transaction’ are added in so as to convince the owner to commit and give up trying to do thing by himself / herself and hence save quite a good share of money. Stories which, given the actual law, remain only that, as the notary is the one checking all papers and giving a final, official verdict.

When all is said and done... A few sources of information might help:

The most frequently used portals for ads regarding apartments in Bucharest: Imobiliare dot ro, Anuntul dot ro, Magazinul de case, Olx. Most provide a search engine according to the area you are interested in and all except for Olx also have interactive maps showing the properties on sale. They also show every poster’s ads (usually according to the phone number listed), so that you can easily see whether it is a real estate agent or directly the owner; some owners state ‘proprietar’ in the ad text. Many properties are listed on more than one website, so it is well worth checking them all, because you might pop into the same property, but posted by the owner, which might save you a lot of money with the middle man; you are more likely to do so on Olx or the Magazinul de case.

Notaries: there seems to be one around every corner in the city and all are members of the National Union of Public Notaries in Romania, respectively licensed by the Ministry of Justice.

Charges: a calculator for the notary and tax charges according to the transaction price here.

On prices. A few considerations that might help while looking for or negotiating properties.

1. -In Romania, apartments on the ground and the last floor of a multi-storey building are the cheapest (like in 15-20% cheaper than apartments on other floors) and sell slower than the rest.
   

2. -In a country with a seismic activity, respectively with a major earthquake every 40 years or so (the 7.2 Richter scale degree earthquake in March 1977 had over 1500 casualties across the country), the construction year is given great importance, even in the absence of any professional data or experience. Buildings of a high seismic risk (marked with a red circle) sell at low prices - if at all - and people are reluctant to buy apartments, especially in multi-storey buildings set before the 1950s. Buildings set between the 1960s and 1977 come next; some people simply avoid them, some others are willing to pay less for them than for a newer one; for many however it does not matter. Even though the construction regulations did not change instantly following the 1977 earthquake, an apartment in a building completed in 1978 can be more expensive than a similar one completed in 1976. And, needless to say, the buildings set in the 1960s stood up well during the earthquake, which shows the extent to which this all 1977 threshold is more of a psychological criterium rather than a real one based on hard facts.
   

3. -With most apartment buildings in the city being set during the Communist period (a good share dating from 1965-1989), and especially as the 1980s saw a dwindling quality in everything there was produced in Romania, rotten built in electrical wires, leaking fittings and sewage might turn into a problem. Apartments where they have been replaced cost more and if the pipes in all building have been replaced, that is a plus.
   

4. -A thermic rehabilitation process (see above) started a few years ago, at the end of which many apartment buildings set in the Communist times or before had their exterior walls covered with an insulating layer and repainted, respectively all windows replaced with new better ones, in an effort to save on the heating. Apartments in such a building are more expensive than those in a building not done yet.
   

5. -There is a price difference between apartments where one has to pass through the living room in order to get to the bedroom, respectively one where there is a central hallway with separate doors to the living room and the bedroom(s).
   

6. -The parking situation, a real issue in many parts of the city, is yet another thing to consider when making a purchase.
   

7. -An easy access to a subway stop, a market place, malls and other such conveniences add to the facts to consider and to the price.
   

8. -It next to always pays to bargain, whatever the agent or owner says in the first place.
   

9. -If buying with cash, you stand out as most people buy with credit, which takes time (1 month at least) and comes with the risk that the loan will not be granted by the bank.
   

10. -If you feel a certain property is interesting, but its price is way over the market average, you can let it ‘bake’ for a month or two and then call back. Do not hurry and do not give in to an agent’s persistent calls. I have had agents calling me at 10 PM using different mobile phone numbers, not because that was a particularly good deal, but because they needed money.
    

11. -Do not hurry. Do not get nervous. Do not give in to anything and anyone but your inner decision to buy a certain property.
    

12. -Allow as a criterium the other person’s attitude. Do not encourage arrogance, disrespect and the typical egocentric ‘I know it all’ approach.
    

And last, but not least: stick to your principles, they do apply here like everywhere else. You do have the right to fair service in exchange for your money and if you join wrongdoers, you have no right to complain, you will be just as bad as they are. And things will never change. Of course, this is not to say there are no hard-working, serious and well informed agents; there are. This is just to say that you might be better off doing all the search yourself and, if in doubt, paying a lawyer or notary to check all documents before agreeing to a transaction; as for the notary, he / she will have to check all documents before proofing the transaction anyway. But even so, it will be cheaper (a lawyer charges EUR 300-400 per hour) than most real estate agents and you get professional advice as far as official documents are concerned. Also, doing your own search provides better chances to find what you - and not the real estate agent - are looking for. As for the time ‘saved’, think of the time wasted with agents that will try to get you into tax evasion schemes, will not understand what you want, will be pushy or plain rude. In the end of the day, the extra time you will use searching for a property will be time invested in it, and not wasted like that.