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Vendors Beware - Upfront Fees - False Agents

This time of year sees heightened activity in the Bulgarian property market; many owners have reached the end of the summer season and not had the anticipated rental return or have simply not found a buyer via their chosen estate agency.

In either case, the autumn months see an increased level of vendor enquires as owners decide it is time to sell their Bulgarian property investment. Unfortunately, the opportunists in the market know this trend too and bolster their efforts to defraud owners looking to sell. The scheme is nothing new, but sadly has gained strength within this marketplace as prices have tumbled and owners understandably remain in disbelief.

In essence, these so called ‘agencies' claim high values are indeed possible and owners can still resell for the prices they paid. It is music to the ears of vendors; finally an agency delivering some good news and a price in line with their hopes. All this can be achieved for the meagre sum of a 500 Euro listing fee, which seems a minor expense given what the property cost in the first place and surely it is money well spent as this agent's buyers are paying 50% more than valuations of other agencies.

Unfortunately, it is just a scam as money is swindled from vendors using false hopes and exaggerated claims. The end results are websites filled with paid for ‘adverts' from private vendors asking for their dream price, confirmed and reassured by the apparently professional agent, yet neither have any connection at all to the real market or the actual achievable prices. The reality is that these companies are only structured to attract British and Irish vendors, to collect their enquiries and dupe them into paying for a slot on their unknown websites, which are not in any way geared towards finding property buyers. Sadly, it is just a con as there are no magical pockets of investors who will pay double for your property when your neighbours above and below are available for half your asking price. The market sets the maximum achievable price, neither the owners nor the agents can influence it upwards, it is simply not possible to sell a 10 Euro note for 11 Euros no matter how much you pay to advertise it.

When no activity results the onus is placed upon the poor state of the market, a database of excuses are deployed to prolong their involvement until eventually the renewal date is reached, when the vendor is asked to pay all over again. Sadly many owners have been deceived in this way and strung along for months if not years, some spending upwards of 2,500 euros per property before realising the scam.

It is commonly accepted that more than 90% of the current Black Sea holiday property demand is from Russia and ex-soviet states, yet these companies have not a single overseas office, no website in Russian or any Russian speaking staff. They might well claim to be working with partners, but the reality is that if the key words ‘buy Bulgarian property' (in Russian) are searched for in any Russian portal such as google.ru or yandex.ru you will never find any of their listings or your property. They entirely lack any of the necessary marketing to promote property, let alone actually sell them to paying buyers, the truth is that their business is complete the moment you pay their listing fee.

The property crash has generated an overwhelming volume of vendors and thus the conditions of a true ‘buyer's market', which has the downside of enabling some agents to survive by misleading rather than competing. However they will eventually vanish too as market forces always ensure balance in the end, those who do not deliver a fair product for a fair price are ultimately pushed to change or go out of business. Fortunately there are several straight, honest and reliable companies who will sell your property without any risk to you or any upfront costs. As is traditional, professional and correct; agents must first invest their time and marketing money to find you offers, if successful and only after the buyer has made payment should the agent get paid their pre-agreed commission. It would never be acceptable to pay your estate agent in advance in the UK or in Ireland, it is definitely not necessary in Bulgaria either.

The Bulgarian property market is largely dominated by aboveboard professionals keen to work for a fair fee, however it is essential that you research thoroughly the agent you are considering. Definitely ask for contact details of previous clients for references, always be sure to have a fixed service price in advance in writing and never sign a Power of Attorney that lacks the exact sales figures you have agreed. Any agent not willingly offering these or disagreeing with the content of this article is well worth steering clear of.

This article has been prepared for Quest Bulgaria Magazine in association with NewEstate Bulgaria Ltd, one of Bulgaria's leading estate agencies www.newestatebg.com