It’s a jungle out there

(Moscow News – themoscownews.com – Kristen Blyth – January 14, 2013)

When asked how she became qualified to work as a real estate agent, Emma became defensive. “I don’t want to tell you,” she told The Moscow News. “I’m a realtor now, and that’s all you need to know.”

Emma was the broker that Elliott Estebo, an expat English teacher, chose to help him find an apartment to rent in Moscow last September. After deciding on a place – and paying Emma a 100% commission, equal to a full month’s rent – Estebo moved in. He discovered a massive cockroach nest under the kitchen sink the next day.

“When I found out about the nest of cockroaches I called Emma, but she just laughed about it,” Estebo told the Moscow News. In the end, he had to negotiate with his landlord himself for temporary relocation and for fumigation expenses.

When questioned about her work by The Moscow News, Emma claimed that the subject was “too personal.”

Emma’s business conduct is hardly unique. When compared to similar “real estate horror stories” that regularly pop up in the news and the blogosphere, it is not even shocking.

In December 2012, a group of con artists masquerading as real estate agents were arrested in Moscow after scamming over 250 people out of more than 10 million rubles, RIA Novosti reported. One of their alleged victims, who asked that her name not be used, publicized her experience on her private Facebook account.

She said that after being shown an apartment for rent in the center of town, she paid a deposit and arrived the next day to move in – only to find another family already inside. The family, which included a small child, had also paid a deposit for the same apartment. During the initial confusion, a third victim, who had also paid a deposit, showed up. The so-called agents, meanwhile, had vanished.

Moscow’s real estate market is lucrative, and largely unregulated. As a result, it’s plagued by scams, massive inefficiency, and a scarcity of transparent information.

Wannabe experts

Lack of professionalism is one of the biggest weaknesses in the Moscow real estate industry, said Campbell Bethwaite, owner of a short-term serviced apartment rental company. “There are such low barriers to entry into the industry that the majority of agents have no formal qualification or training,” he told The Moscow News.

There are no official licensing requirements to operate as a property agent in Russia. Anyone, at any time, can decide to call themselves a “real estate agent.” As a result, there are a massive number of malicious or unqualified property brokers, usually referred to as “black realtors.”

Many of them come from outside Moscow, drawn to the capital by the promise of a quick buck. The problem of unscrupulous real estate agents is so bad that citizens have begun their own warning system. Blackrealtor.ru, founded in November 2012, is a community project which lists anecdotes and identification information about alleged con artists, though the information provided there can be difficult to verify.

Meanwhile, established firms can be just as problematic.

“So-called ‘big’ companies don’t always provide high-quality, reliable service either,” said Maxim Mokeyev, Executive Director of Evans Property Services. “Some are more concerned with getting the deal done than getting it done correctly and protecting their customers’ interests.”

Property owners also at fault

Apartment owners make things worse by frequently engaging in unofficial rental deals, either for tax evasion purposes or simply for convenience.

Polly Barks, another expat, made a verbal rental agreement with a seemingly reputable Moscow landlady and moved in. One month later, a man showed up at the door in the middle of the night, claiming he was the owner of the flat.

The man, it turned out, was the landlady’s son. He had disappeared for three months and been declared dead, while ownership of the flat was turned over to his mother, who then rented it out. After he unexpectedly reappeared, Polly was forced to move out immediately. The landlady was gracious enough to return her deposit, though she was not legally bound to do so.

Russia’s property market is slowly moving in a more transparent direction, but at a near-glacial pace, Bethwaite said. There is now a unified electronic registry of mortgage owners and property sales in Moscow, which previously existed only in paper form. Use of the registry is patchy at best, however, and the real estate industry still lacks a central governing body and clear methods of conflict resolution.

The ABCs of apartment hunting

Clients in search of property can take a couple steps to avoid scams.

First, do some research. “About 90 percent of available rental apartments, and 95 percent of available sale apartments, are posted on public websites,” said Bethwaite.

Cian.ru is a popular website for real estate properties across Russia. Irr.ru can also be useful for real estate listings. Exploration online will allow you to figure out if a certain apartment’s price is a little too good to be true.

Second, find an agent listed with a reputable agency to assist you with the actual deal, particularly if you plan on buying. According to Bethwaite, the do-it-yourself mentality is particularly risky when it comes to purchasing property. If you are just renting, using direct-advertisement websites like thelocals.ru can allow you to avoid rental commissions entirely – though choices there are limited.

Third, negotiate hard. Commission rates for real estate agents are highly flexible, especially if you minimize their costs by doing your own research.

Above all else, experts advise that one should not be fooled by the omnipresent concrete and lack of wild animals – when it comes to the Moscow real estate market, it’s a jungle out there.