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Real Estate Tips > For Estate Agents And Middlemen

Estate Agents And Middlemen

CYPRIOT ESTATE AGENTS SHOULD BE REGISTERED WITH THE GOVERNMENT AND ONLY SUCH REGISTERED AGENTS CAN OPERATE LEGALLY.

Inevitably, because the Estate Agent Act is only recent, many non-qualified and traditional estate agents, have registered with the Government whereas international estate agents with all sorts of bad records are not touched. Thus until some time passes, a sizeable percentage of the local agents, cannot be said to have the same standard as other professions.

In addition to the local Cyprus estate agents, you will find a lot of middlemen dealing in property as "Estate Agents" and they can be anything from your airport taxi driver to the nice barman at your hotel and the owner of the local tavern. These middlemen may get a commission from the local developers if they introduce a client, which, in itself is not objectionable. Under the Estate Agents law registered estate agents have a number of duties and responsibilities towards the buyer. They must also have a professional indemnity insurance. Registered Estate Agents fees are tax deductable.

See our article on inspection filghts)

Inspection Trips - A Con Job?

Several readers have written to this column laying down their experiences regarding inspection trips that are arranged mainly from the U.K. to Cyprus, regarding buying property here through U.K. based estate agents. These “big” but quite illegal estate agents by Cyprus standards, (since they do not abide by the local Estate Agents law), do not necessarily have in mind primarily the buyers’ protection and for this reason we hereby lay down the inspection flight procedure, as we have been informed by our readers.

  1. Extensive advertising in the U.K. and interview at plush offices in U.K.

  2. Excellent treatment during the interview by a “specialized” Cyprus desk person, who has never visited Cyprus, neither has any first hand experience.

  3. The painted picture regarding Cyprus is all rosy with excellent returns regarding rents (quote 7% p.a.) and annual capital appreciation levels (quote 10% p.a.).

  4. If one decides to join the inspection trip group, he must first submit details of his credit card number, which is checked on the balance and credit amount.

  5. An agreement is signed between the U.K. agent and the potential buyer, that for every trip only a couple is allowed (for buying) and can “enjoy the opportunities” of the inspection trip and the trip which will last 4 nights-5 days.

  6. There is a provision that if the buyer changes his mind before coming or whilst he is here, he will be charged €00/p./person – The inspection trip cost which the potential buyers must contribute, is paid upfront - €100/p./person.

  7. The local (in Cyprus) sales staff have instructions to stick to the “hurded sheep”, constantly and the clients are not allowed to visit any other projects, other than those for which the agent handles, neither is left free to compare prices etc.

  8. Each local sales person has 5 clients to entertain. If he does not conclude 2 out of the 5, he loses his job (you can imagine what sort of things the sale person must do – including false information etc).

  9. Promises of guaranteed income (no corporate or bank guarantee, but just a flue guarantee over a conversation) is given, which normally amounts to a 7% p.a. (rental income-no mention for expenses etc) and 10% capital appreciation p.a.

  10. The commission charged for this sort of sales (paid by the developer) is 15% + V.A.T. i.e. 17.25% - This is well above the normal rate of 3% - 5% and as such the difference of 10% plus is added on the price of the sold unit.

  11. As such an inspection trip buyer pays immediately a 10% (+) increased in price, thus reducing his chances of resale and of course increasing his cost (the transfer fees on the added 10% is paid in addition), as well as the 15% V.A.T.

  12. Local sales staff are given a car, no salary and a 10%-25% commission (on the total commission received) depending on the deal. Hence the very large turnover of local sales staff which means constantly new and less informed people.

Of course there is nothing new about inspection trips worldwide, but it reminds us of Time Sharing, for which many countries have passed laws in order to protect the buyers’ rights and regulate the sales. It is a way of selling, not liked by us for the reasons given, but it appears to be an effective way for the developers and the selling agents, but about the buyers, who cares?

The inspection flights are suitable for the lower income groups/investors, whose aim is to buy to let and resell. It is not suitable for own users/those who want to buy for retirement/own holiday. For the reasons explained and due to the lies and misleading information that are now surfacing (difficult to resell, extensive void periods, rental returns of less than 4% etc) this market is going down. This has been helped by the new Central Bank Measures, which require an increased (30%) buyer’s contribution (thus reducing interest from the lower income groups).

We came up with the idea to distribute small information leaflets at the airports, in the hope that these mostly uninformed inspection trippers, get the chance to be informed, as well as explaining the difference between a legal and an illegal estate agent (in Paphos for every 1 legal there are 4 illegal. The ratio over the previous years used to be 1 legal to 6 illegal estate agents).

As we have said before, who cares about the buyers?

Further reading

Inspection Trips: The Pros and Cons - Victoria Crumton Homes Worldwide Magazine

 

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