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Selling to Russians News: Inside secrets of Russian real estate agents
February 02, 2014
Russian magazine "Your Home Abroad" published an article on the topic that revealed the difficulties Russian real estate agents in St. Petersburg were facing working with foreign partners like you. Their major concern was (and still is!) about getting their chunk of sales commissions and getting it on time.
Here are the major points from this article for you in English.
Russian realtors in St. Petersburg selling international properties to Russians prefer to work with new properties right from developers in foreign countries. Why? It is easier as many properties can be sold following the same procedure with one and the same foreign partner, the developer in this case. Selling properties from the secondary international real estate market obviously requires more efforts and knowledge, very often exposing Russian realtors to specific to each property, unexpected and non-standard situations that are demanding.
To avoid such difficulties Russian realtors often get into cooperation relations with local realtors in foreign countries and usually both realtors share commissions 50:50.
Of course, the size of the commission matters for Russian realtors a lot. There are no regulations on the commission size and rules on sharing real estate commission in Russia at all. Each real estate company and each realtor choose from the offers they receive from various countries just those that are more profitable for them.
As a rule of thumb Russian realtors in St. Petersburg prefer to work directly with developers in countries like Bulgaria, Spain, Greece, Turkey, Egypt, and Portugal where developers' commission is often higher than from secondary sales. On the other hand with countries like France, Italy, Germany, Czech Republic, Finland where secondary market prevails and prices are rather high in its elite segment, Russian realtors are more inclined to work in secondary market to make more money.
The size of commissions that Russian realtors get from international sales can be from 2% to 15% and depends on the country, market segment and property's price. The lowest commission level percentage-wise is for luxury properties, the highest for economy class properties. Money-wise to work the first option is more profitable, but the second one is much easier to do.
Usually Russian buyer's agents receive their commission at the moment when their Russian buyers pay developers the first deposit on particular properties, but in the secondary market they receive commission only on closing the deal.
In the past Russian realtors were searching for reliable foreign partners and suitable properties by all means even traveling abroad, but nowadays so many foreign real estate specialists come to Moscow and St. Petersburg that there is no need for Russian realtors to put that much effort – nowadays foreign partners like you are looking for Russian agents to cooperate with.
The article cites several interviews with experienced Russian realtors selling international properties and their common opinion is that in the past when they only started working with international sales, cases of not getting their commission happened pretty often, but with time and experience they feel much more confident in their own skin, but inexperienced Russian realtors still suffer from not getting their commissions often. The method of probing and making mistakes in the process takes its time and price for Russian realtors. There are no rules, and each Russian real estate agency gets their own way...
Basically there are 2 methods for Russian realtors to secure their commission: to travel with their buyer to a country where the buyer is supposed to purchase a property and stay there as long as required or to have a reliable cooperating partner in that country who would do all the leg work abroad till closing on the property and getting the commission.
Any other arrangements seem questionable as it doesn't seem practical for Russian realtors to go to courts in foreign countries and legally fight for their commission.
To resume: if you want to sell to Russian buyers through Russian realtors, make sure you are open and convincing about how you are going to pay their commissions.
To your best business success,
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