How to ensure I won't be ripped off on the sale of my asset

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How to ensure I won't be ripped off on the sale of my asset

Postby Admin » Fri Jun 13, 2014 2:20 pm

Dear Forum members and mainly dear owners of properties in Bulgaria,

Couple of days ago we have received a letter by a person who has decided to resell their apartment in Sunny Beach. He has already contacted a local estate agent and has made arrangements with them to find Russian buyers (being the major part of the market now) against a price of 25k Euros. Our communication has lead us preparing the below leaflet, which has the role to warn people in the same situation to be very careful what they sign when selling their properties.

1/The first thing that we note in the mentioned case is that the sale price for the property is unusually low. The apartment is located in a very good complex with good common parts /bar, restaurant, pool/, so selling a partly furnished apartment of almost 60 sq.m. for 25k Euros seems strange to us. If you are willing to sell your property, please do not agree the first price you are told, but make your own survey about the current market prices of similar sized properties in the area. Some real estate agents will try to convince you that a price is good for your property, they may mention the crisis between Russia and Ukraine, bla,bla,bla, but their desire would be to put a smaller price so it can be attractive for buyers and resp. to get their agent commission. Who cares what is the sale price of the property, if the seller agrees to pay fixed 3000 Euro commission fee anyway? As you can guess, putting smaller price sometimes may not be in your interest, but in the interest of a third party only.

2/The particular apartment owner has agreed to pay the extremely high agency commission of 3k Euro (i.e. 12%) of the price he receives (compared to the standard 3-5% agency commission fees on the Bulgarian market). As stated above, non-regulated real estate agents do not care how much you will get for the sale of your Bulgarian property as long as you agree to pay to them extremely high fixed commission fee (2000-3000 Euro). In the particular case the agent’s commission will be taken from the sum of 25k Euros, so what the owner will actually get at the end will be the sum of 22k Euros for their 60 sq.m. partly furnished apartment in Sunny Beach.

3/ In order to avoid visiting Bulgaria for selling the property the seller has approached local lawyers to represent him on the sale, i.e. – to obtain all needed documents at the local Authorities and to pay the related state taxes/fees, to receive in specially opened bank account the sale price on his behalf and to transfer it then to his home bank account. So he has received a quote for legal representation of 1000 Euro only (equal to 800 Sterling) legal fee. He has claimed this was too expensive for the above detailed legal work. This is non-understandable, because in practice, only the hired independent & regulated lawyer may look after his interests and ensure that he will receive the deposit, then the total price, and to ensure that the proxy of the buyer won’t pay less than what it has been taken by the buyers. The independent lawyer is the only regulated party involved with business insurance. The lawyers work on tariff for their taxes, where stated minimums under which they cannot charge. On the other hand, real estate agents in Bulgaria are not regulated especially to charging fees, very often against not signing and not obliging to you anywhere. So obviously the seller has no problems paying fixed 12% commission fee, i.e. 3000 Euro without any agency contract signed, but pretends that a 800 Sterling legal fees for obtaining all needed documents and for ensuring that the seller will get the actual/real price paid by the buyers is too high.

4/ In Bulgaria it is common practice local agents to be representing both parties and get commission from both parties - seller and buyer. As you can guess, this means that the agents get huge commissions, but it is doubtful if they are actually protecting the interests of the parties, because you can’t protect the interest of people, when their interests are completely opposite and they are standing on the opposite sides of the deal.

So we believe we should spread a free advice to any seller who wishes to sell their property in Bulgaria – please don’t be cheap on the couple hundred Euros expenses which you may have to spend for protecting your interests by regulated practitioner, while on the other hand you do not actually care about your money, resp. if you are being ripped off with thousands of Euro by non-regulated proxies of yours who neither sign nor oblige anywhere towards yourself, but receive from your full rights to deal with your money and “sell for whatever price they choose”, detailed precisely in a letter of authorization which you are asked to sign to them. You should ensure that you avoid a situation where a proxy, to whom you have given only rights to sell “for whatever price he chooses”, does complete the sales and get the sale price in local accounts, but never transfers the money to the owner in his/her account in their own country. This is why leaving the whole sale process on your end should be given in the hands of independent lawyer who to look after your interests.

Bulgariandeals Team

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