Real estate brokers in Sofia number over 1500 registered agencies and thousands of individual brokers, creating an extremely competitive market, which unfortunately often leads to unfair practices. One of the most common scams involves the offering of non-existent properties, which misleads potential clients and wastes their valuable time. In addition, many brokers charge a commission of between 50% and 100% of the rental price from both tenants and landlords, creating a serious financial burden for all participants.
The lack of regulation in the real estate market has contributed to the resurgence of such dishonest practices, especially with the recovery of the market after the crisis. In fact, many brokers prefer to work without formal contracts, which leads to misleading information and non-responsibility. The trend of fake rental ads is increasing, with traditional agencies often using attractive prices and unrealistic photos to lure clients.
It’s time to get to know these vicious practices and learn how to protect yourself from them. In this article, we reveal the most common scams in the Bulgarian real estate market and provide you with specific steps to protect yourself. Whether you’re buying, selling, renting, or leasing a property, knowing these tactics is the first step to avoiding them.
How did the vicious practices in the real estate sector come about?
The Bulgarian real estate market has developed rapidly over the past two decades, but unfortunately, this growth was not accompanied by an adequate regulatory framework. This legislative gap has created fertile ground for the development of a number of vicious practices that today plague both buyers and sellers, as well as honest brokers. Let's look at the main factors that led to the current situation.
- Lack of regulation and control
The issue of regulating the brokerage profession has been discussed for nearly 20 years, but so far the state has not shown serious interest in the topic. The latest bill on brokerage services in real estate transactions is from November 2023, but it never reached the National Assembly for consideration. This continued lack of a legislative framework has created a situation in which practically anyone can call themselves a “broker.”
The requirements for brokers in Bulgaria are almost zero – they are not required to pass any educational or professional qualifications to start working. Currently, anyone with a mobile phone and a laptop can register an agency, without any control over the quality of the services offered. serviceThis leads to:
- Deterioration of professional standards
- Reinforcing mediocrity and professional incompetence
- Inability for clients to recognize qualified intermediaries
- Undermining trust across the sector
The lack of a single register where clients can check whether a broker has the necessary powers further complicates the situation. Of particular concern is the fact that there are currently no clear rules on what property listings should contain or in which cases it is permissible for a broker to take a commission from both parties to the transaction. This creates conditions for conflicts of interest and unfair practices that harm consumers.
- Rapid market growth and digitalization
The real estate market in Bulgaria has undergone rapid development in recent years, which has created additional challenges for the regulation of the sector. Rapid growth, combined with digitalization, is transforming the way brokerage services operate.
The COVID-19 pandemic acted as a catalyst that forced this traditionally conservative business to step out of its comfort zone and turn it towards digitalization. Despite the traditional conservatism of the Bulgarian market in terms of online transactions, technology has begun to fundamentally change the process of selecting and purchasing a property.
In recent years, we have witnessed the increasing proliferation of virtual viewings, video presentations and even remote signing capabilities via qualified electronic signatures. This digitalization has the potential to make the process more efficient, but at the same time it creates new challenges. One of the main difficulties is that digitalization is happening unevenly. Some agencies have the resources to introduce innovative technological solutions, while others do not. This creates an uneven market and further hinders some, especially smaller, players.
It is interesting to note that the real estate industry is among the least digitized, which shows that there is huge potential for development in this direction. According to Georgi Pavlov, digitalization will improve transparency in the real estate market. He notes that the real estate market is associated with a lot of information of various kinds, and currently many people rely on it, which is not available to all users.
Through new technologies, this information can be easily accessible on every user's phone, allowing them to find out how much a property is worth in less than an hour. In addition, digitalization could contribute to unifying the prices of similar or identical properties.
Despite the obvious benefits, this transformation also creates new opportunities for abuse. Without regulation, technologies can be used both to improve services and to mislead consumers.
- Opportunities for abuse in the online environment
Digitalization has opened the door to new forms of abuse in the real estate sector, especially online. One of the most common examples of unfair practices is fake listings on real estate websites that mislead potential buyers and create unrealistic expectations.
Such listings often include fake photos, unrealistic prices, or even descriptions of properties that don't exist at all. This leads to consumers' distrust of the entire market and difficulties in choosing reputable brokers.
Many of us have experienced the disappointment of being invited by a broker to view a property described in a few sentences, only to discover that the apartment does not meet the requirements or the photos presented. Such a waste of time, energy and nerves has become a common practice for the Bulgarian real estate market. The lack of legislation and ways to limit false and misleading advertisements is a major reason for the anomalies of the rental market.
The most common scams by real estate agents
The vicious patterns of behavior by unethical brokers have become a serious problem that is undermining trust in the entire sector. Let's take a look at the most common scams that consumers encounter every day when searching for or listing a home.
- False ads and misleading photos
Fake listings have become a daily occurrence in the Bulgarian real estate market, especially in recent years. These scams do not only affect buyers – renters are equally vulnerable to such practices. Fake listings represent property offers that are not actually on the market. Regardless of whether the properties exist or not, they are not for sale or rent at the time the listing is published. The main purpose of such postings is to generate a lot of interest and get potential clients to contact the broker.
How do dishonest brokers operate?
Unscrupulous brokers use so-called “hooks” – ads written in an extremely attractive manner in order to stand out from the rest and attract maximum attention. Such ads often stand out with several specific characteristics:
- Attractively low price, not in line with market levels
- High-quality photos of apartments that do not exist in Bulgaria or are taken from foreign sources
- Short, vague descriptions that allow the broker to complete the story according to the client's wishes
- Ads with the inscriptions “Only for private individuals”, “Only for agency clients”
- The same offer posted in several different neighborhoods at the same time
- Property that is supposedly being sold and rented at the same time
After a potential client contacts the author of the fake ad, it is usually explained that “the property has already been sold/let,” but the broker immediately offers “alternative options.” These alternatives rarely meet the client’s initial criteria and are often at significantly higher prices.
The most worrying thing is that this practice is used to collect personal data (name, phone, email) of potential clients. The broker then starts calling repeatedly, offering different properties, trying to convert the misled user into a client.
The dangers of fake ads
The consequences of false listings can be serious for buyers and renters. The financial risks are significant – imagine saving for years for your dream home, only to find out that the listings you based your financial projections on are a scam. In addition to the waste of time and energy, consumers can also suffer material damage.
Moreover, fake listings undermine trust in the entire industry and create a negative image of real estate agents as a whole. This makes the job of honest professionals more difficult and harms both sellers and buyers.
- Double commission and conflict of interest
The second widespread bad practice in the real estate sector is related to the commissions that brokers demand from their clients. Currently, there is no official regulation in Bulgaria on the remuneration of real estate brokers and it is often not clear who owes the commission – only one or both parties to the transaction.
What is double commission?
Double commission occurs when a broker hired by a seller of a property contacts a buyer and a transaction is completed. In such a case, the broker demands a commission from both parties, even though he was originally hired by only one. This practice raises a serious question – can an intermediary simultaneously protect the interests of two parties who have opposing goals in the transaction?
According to specialist Palpurin, the potential conflict of interest in serving both parties is obviousBroker Ivaylo Skulev shares the opinion that a broker in a transaction who does not have a brokerage contract with the other party has no reason to ask commissionAccording to him, a broker cannot simultaneously protect the interests of both parties, as they are in natural conflict - the seller wants the maximum price, and the buyer wants the minimum.
Conflict of interest in double commission
The problem with double commission is particularly serious because it creates a situation in which the broker finds himself in a conflict of interest. According to broker Georgi Palpurin, the intermediary has no right to take any position in the negotiation of a given deal if he serves both parties. In the hypothesis of servicing a buyer and a seller in a single deal by one broker, this is impossible without harming one of the parties.
Broker Darina Zaduryan confirms that a contract that protects both parties equally is not existsThis raises the question of the professional ethics and responsibility of brokers who collect double commission.
Another unethical practice related to commissions is the situation when a potential buyer or seller, who has decided to search for a property on their own through advertisements, is forcibly assigned an “appointed” broker. In such cases, the broker, to whom the other party has assigned the search or sale of the property, requires the prospective counterparty interested in the advertisement to conclude a brokerage contract with an obligation to pay a commission.
It is important to note that according to Art. 51 of the Commercial Law, the commercial intermediary is entitled to receive remuneration by both parties to the transaction, but only if such are the arrangements between the parties and there is an explicit consent. No party is obliged to use intermediary services and cannot be pressured to agree to pay a commission on the condition that otherwise it will be denied information about a specific object.
More unfair practices
It is common practice for some brokers to not allow clients who work with another broker to trade because this would mean they would not receive a commission from both sides of the deal. Without the knowledge of the property owners who want to sell or rent, potential deals are stopped and a direct client is waited for, from whom a second commission can be taken for the same deal.
How to protect yourself?
Protection from unfair brokerage practices begins long before the first viewing of a property. With the right approach and preparation, we can significantly reduce the risk of falling into the traps of unscrupulous brokers. While the lack of regulation creates challenges, there are tools through which every buyer, seller, or renter can protect their interests.
- Require a written contract with clear terms
Once you have chosen a reliable broker, the next step is to insist on a written contract with clear conditions. Never make hasty decisions or sign documents without reading them carefully. If necessary, seek professional advice.
The preliminary contract for the sale of property must be in writing. The regulation of the preliminary contract is contained in several provisions of the Obligations and Contracts Act (ZZD). One of the texts provides that the preliminary contract for the conclusion of a certain final contract, for which a notarial or notarially certified form is required, must be concluded in writing.
What should a good contract contain?
The contract must contain agreements regarding the essential terms of the final contract:
- Country data – full names with relevant address details, personal identification number, etc.
- Subject of the contract – the property must be described in detail, using the description in the notarial deed or other relevant title deed
- Price – precisely and specifically stated
- Contract term – deadline for concluding the final contract
- Rights and obligations of the buyer and the seller
- Deposit amount and what happens to this amount in the event of default by either party
- Cost allocation for notary, state and local fees
It is important to know that the preliminary contract should not be underestimated and should be approached with care as a final contract. Although in writing, it is concluded freely, i.e. not in any legally protected form.
- Insist on a legal inspection of the property
Buying a property is a significant investment that requires careful preparation and in-depth research, and one of the most important steps in this process is checking the legal status of the property. This expert verification and assessment of the facts ensures that there are no unpleasant surprises after the transaction is concluded.
Why is legal due diligence important?
Conducting a legal due diligence can help ensure that the property is free from any legal encumbrances and that the buyer will receive full ownership of the property without any risks arising from this. A due diligence is of utmost importance because it can help prevent unforeseen legal disputes or financial losses on the part of the buyer in the future.
Additionally, a legal due diligence of a property can help the buyer negotiate the terms of the purchase contract, as any legal issues can be identified and addressed before finalizing the deal.
What does legal due diligence involve?
There are six basic steps you need to take to protect your rights and interests when purchasing real estate:
- Verification of the legality of property documents – The goal is to determine whether they meet all legal requirements. This includes checking the authenticity of the title deed, whether it contains all the details required by law, and whether there is a detailed and detailed description of the property.
- Property history analysis – This analysis aims to determine whether the owner has not disposed of the property after acquiring it and is not attempting to re-transfer it. The history of the property is the transactions carried out for its transfer – from older to newer owners.
- Check for real encumbrances – It is important to make sure that the property is not mortgaged or encumbered with debts that could negatively affect its future value and your peace of mind as the new owner. If such encumbrances exist, you should consult with a lawyer to help you resolve them before concluding the transaction.
- Check for legal proceedings – As a rule, the conduct of a court case concerning real estate is mandatory entered in the property register, in order to notify all third parties that there is a dispute concerning this property.
- Check for mortgages or foreclosures – The Property Register includes foreclosures and mortgages on real estate. It is important to note that there may be several foreclosures on one property, some of which may have been lifted and others not.
In conclusion, the Bulgarian real estate market undoubtedly suffers from serious regulatory gaps that create fertile ground for vicious practices. False advertisements, double commission and conflict of interest mislead numerous potential buyers and tenants on a daily basis. These problems not only financially harm citizens, but also undermine trust in the entire sector.
Of course, there are alternatives to traditional brokerage services. Platforms like Flatimo for example, they offer only verified listings, online booking of viewings and a clear, transparent commission, which significantly reduces the risk of fraud. The digital approach to property transactions puts more control in the hands of consumers.
Whether you work with a traditional broker or use modern digital solutions, your awareness remains your strongest weapon against fraud. Educate yourself about the most common traps and learn how to recognize the warning signs. If all of us as consumers raise our standards and demand professional treatment, we will gradually contribute to the recovery of the real estate market in Bulgaria.
