Private Rental Brokers: Better Safe than Sorry?
Elite rentals Director, Penny Lane Realty
The recent crisis in the rental market brought more private real estate brokers to the playing field. Some of them are employees who lost their jobs during the economic instability in Russia and later became independent brokers; others are new players who decided to start a business in a profitable segment of the market. There are certainly a number of trusted professionals operating in the private segment, but it is easy to come across a “scammer”. So, can you trust a private broker? Or is it best to always stay away from them? Vadim Lamin from Penny Lane Realty shares his opinion in this interview.
Vadim, how does one become a private broker?
There are several ways to become a private broker. I would say there are four basic types of people who follow these paths.
The first type includes people who pioneered a profession of broker working as an independent player. Generally, they have an extensive expertise in rentals and are able to do quality work. However, they do not provide additional services like apartment insurance and legal support. It should be noted that the services of such specialists are expensive. Most of their clients come from referrals from friends or acquaintances.
The second type is comprised of former real estate company employees. Some of these brokers left their position thinking they had gained enough experience in this field to set out on their own, while others were asked to leave due to poor performance. These specialists usually provide minimum rental-related services, but at a reasonable price.
The third type includes people who have moved to Moscow from other regions. They believe that they can successfully work in the real estate market without adequate training. There is always a risk associated with these brokers, as a client may encounter non-professionalism, incompetent paperwork, poor familiarity with Moscow district specifics, inadequate knowledge of average prices, etc. Such specialists work for a minimum fee, but even this fee does not correspond to the poor quality of services.
Finally, the fourth type is represented by scammers, whose real objective is to simply rob clients. This may include everything from common robbery to document forgery.
So, private brokers cannot be trusted?
That’s not always so. If a specialist can produce references, if he or she has considerable work experience in this field, you can use his services. But, if a client wants a secure deal not involving any legal risks, he or she should turn to a professional company. One of the reliability factors of the real estate agencies is that they have corporate clients. No corporation will attempt to use a private specialist for finding accommodation for its employees. Large agencies will provide a tenant with an immense database of apartments for rent and a leaseholder‑with exclusive rental conditions. Moreover, these agencies usually offer legal support, and some, like our company, provide real estate insurance.
What are the common tactics that scammers use?
Scamming scenarios vary. Some scammers take the realtor’s fee from a client and disappear, changing their phone number. In other cases, a tenant would move into an apartment, only to find the locks changed the next day or worse, meeting the real owner, who is not aware of this.
One of the most common scams is to provide so-called “information services” by realtors. This scheme works best with non-Muscovites, who are looking to save money on realtor’s fee. A client is asked to pay a rather small fee (4-5 thousand rubles) in advance. For this amount, dishonest agents provide a list of addresses and phone numbers of apartment owners based on the client’s requirements. There is not a single chance to rent an apartment with the help of this list.
Another variation goes even further. A potential tenant will talk to the owner from the realtor’s office and arrange for an appointment to see the apartment later that day. However, the “owner” on the other end of the line is on the same scamming team. And when the time for the appointment comes, the “owner” would either cancel it under some excuse or just vanish.
Probably the worst scam of all is an outright fraud. Owners lease their apartments through a private broker for an extended period of time. Having rented an apartment, let’s say for the summer, scammers forge powers of attorney and quickly compile a package of documents required to sell the property. When the owners come back home, they find new “owners” living in their own apartment. Situations like this can be settled only in court, but the problem here is to locate the brokers, because, as a rule, after receiving the money, they change residence and cut all ties that may lead to them.
How can people can protect themselves? What would you recommend?
My advice is to go for an established real estate agency. A large company is a guarantee in itself. It is not able to vanish overnight unlike a private broker. If you are a tenant or a leaseholder and have decided to use the services of a private specialist anyway, you should try to gather as much information about this specialist as possible: check his/her references, ask him/her for telephone numbers of former clients, call these clients and ask for their account of working with this specialist. In the event that this broker is a former employee of a real estate agency, call this agency as well and find out, if he/she is competent and if he/ she left the company in good standing. Always check related documents, like passport and certificate of title, when entering a deal. Never pay realtor’s fee in advance, only after the deal is approved. Avoid paying rent too far in advance (like six months or a year in advance). Always sign lease agreement and before signing it, examine carefully every item in this agreement. And finally, be cautious and aware of possible risks.