Friday, 15 December 2017

Developers seeking help of real estate agents

By Denisa Novotná |
E15 |
19 January 2009

Developer project. (ČTK)

Developers have started realizing they will not be able to sell flats on their own. Until recently they had been cooperating with a minimum of real estate agencies and were offering their projects directly in their own sales centres. They opted for this solution as they often had had bad experience with their mediators' services and also mainly because of huge demand. Now that the demand has fallen by at least one third, developers have started looking for help.

"Many of those who were not interested in cooperation last year are now coming to us," said Ivo Ščuka, the manager of Lexxus real estate agency. Also the business manager of Satpo Development, Irena Reichlová, confirmed his words at the Building Forum: "The time has come now when real estate agencies have the opportunity to show what they can do."

About half of real estates are sold through real estate agencies in the Czech Republic. On the European market this is a usual ratio, but in the United States it is higher. The Czech market has been recently expanding through chains of supranational real estate agencies and subsidiaries of domestic companies, which push out small real estate sellers. The largest of these chains is the franchise RE/MAX, which is American by origin.

"Four years since our entry on the Czech market we have 100 branches and over 900 real estate agents," said Vojtěch Krátký, the firm's regional director. Another American franchising chain, Century 21, with whom RE/MAX was in a dispute about which of the companies sells most real estates in the world in the past, is also beginning to expand its network. Also the company Mexx Reality introduced a franchising system three years ago. For example AAA byty, Sting, Real Spektrum or Realitní společnost České spořitelny also have their networks of branches.

Franchising real estate agencies cite quality service for their clients including legal service as their distinct advantage. Consequently, they can find themselves in a difficult situation when selling developer projects. The developers' lingering shortcomings are often purchase contracts, which put the customer at a disadvantage, for example, when they report a warranty defect or demand sanctions for missing deadlines. "The work of a real estate agent is a fight between a developer and a customer. Nowadays, the conditions have to be equal. If they are not, the project will be basically unsellable," said Century 21's financial director Lubomír Milek. The RE/MAX representative, however, admits that real estate agencies are mostly on the developer's side. "A real estate agent has to negotiate with both parties. In the first place, though, they act in the interest of the party that's paying them and that is the developer," Krátký said.


Translated with permission by the Prague Daily Monitor.