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Selling to Russians News: Russian Real Estate Agents vs. Western
January 11, 2009

Hi Everyone,

Many of you are interested to co-broke with Russian real estate agents to sell your international properties to Russian buyers and of course you'd like to know what to expect from this co-operation.

There are significant differences in how real estate agents work in Russia in comparison with Western countries.

Here's a voice from the ground - an article by Nuri Katz, real estate agency director who works in Russia helping Western clients buying properties in Russia. He writes:

"As the real estate market matures in Moscow there needs to be very serious changes in the way real estate is bought and sold. Real estate agencies, due to competition, will need to work in a much more professional manner. This will be seen not only in the way that agents speak and advertise, but actually in the way they serve their clients.

"There is a lack of understanding on the part of real estate agents about who and how important their clients are. This has also has led to a situation where clients themselves do not rely on real estate agents to play the important role they should be playing in the sale of the property. With market maturity, these issues will most likely be solved by looking at the Western model of how real estate is sold.

"Throughout the world, the sale of real estate involves two sides - a buyer and a seller. In mature markets, each party is represented by a separate professional real estate agent. There is a buyer's agent and a seller's agent. Both agents, although representing two different parties, are paid exclusively by one party, and that is the seller only. The sale price is fixed by the seller with the advice of his agent, and he pays a commission to his agent, who in turn pays the buyers' agent. Currently in Russia there are often two agents involved in the sale of a property. Each agent is paid by the party he is representing, which is the buyer or the seller.

"In Western markets, where real estate agents are licensed, they have no choice but to share their commission with the buyer's agent. If they do not share their commission they can lose their license and will not be allowed to operate. In comparison, the prices of properties are artificially inflated in Russia, due to the fact that two commissions are paid on each sale, as in Russia the buyer has to pay a commission to his agent over and above the sale price.

"The Western model is incredibly important for both buyers and sellers, as it allows the agents to serve the interests of the clients, and they do not have to worry about the interests of agents themselves.

"They know that the price is a fixed price and they know what and how they are paying the agents. There is no room for confusion or room for surprises when the deal is about to come to fruition. Often in Russia sale terms are negotiated by agents, and only then do the buyers find out they have to pay an additional commission.

"The above principle is all predicated on the idea of exclusivity. Exclusivity in Western markets is a legally enforceable contract between the seller and his agent. The seller gives the agent a finite period and price within which to sell his property. During this period nobody else can sell the property and if the seller does, then the exclusive agent still gets paid.

"The security of knowing that he will get paid finally allows a real estate agent to market the apartment to the widest possible audience without fearing that he will be doing this work for nothing, as someone else may sell his property and he will not get paid.

"All agents find clients through advertising and personal contacts. However, they physically cannot reach everyone, and therefore need to work with other agents who have other personal contacts. If they do not have to hide the details of the property for fear of not getting paid, they can tell all other agents about it. Again, this is all predicated on the exclusive contract being legally enforceable.

"Real estate agents currently operating in Russia usually do not market their properties to all other agents. One reason for this is that the agent is fearful that the property will be sold entirely by another agent. Another reason, of course, is that Russian real estate agents do not want to share their commission with other agents.

"Unfortunately, agents in Russia do not yet understand the time-value of money, nor do they understand their duty to their clients who are selling property. They do not understand that it is better for both themselves and their clients to sell a property quickly, even if the commission is lower.

"Real estate agents do not understand that their business is a transaction-based business - the more transactions the better. In Russia, real estate agents continue to be more concerned with the size of their commissions rather than the speed of the transaction and the interests of their clients. This will certainly has to change.

"Once there are legally enforceable exclusive contracts and a binding commission sharing system, then real estate agents will be able to understand who the client is and will be able to serve him best.

"As all the agents know when and how much they will get paid and do not have to worry about protecting themselves, they can share their experience and knowledge in order to protect the clients themselves.

"When the Russian market reaches maturity in this way, buyers, in turn, will feel confident that their real estate agents are serving them and not only trying to make money off them."

Hope this will help you better understand what to expect from Russian co-brokers.

To your best business success,


Olga Kellen,
"Anything Russian",
English - Russian Translator,
Associate member of ATA,
American Translators Association,
Author of the e-book for realtors
Selling to Russians

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