10 % OF THE PRICE

Talk is cheap, right? Wrong. The buyer thinks that he pays to the agent much less than 10 % because he is aware of the sum that he pays directly only. For example the vendee pays 50 Euro per square meter to the middleman directly. He however pays another 50 Euro per square meter to the same middleman indirectly because the agent gets another 50 Euro per square meter from the developer. And the developer pays these by simply adding them to the price of the estate. For a 100 square meters apartment costing 100 thousand Euro that makes 10 thousand Euro! Other agents are paid between 3 and 6 % of the price of the estate. For the same reason that respectively means between 6 and 12 %.

I copied part of the text of an agent's website. Let's see in detail what you pay for! With blue are my comments. Here's the quotation:

“ For transferring the ownership of a property we charge 3% commission and it includes:

• Full legal checks on the property (On ownership documents, land sketch, securing accurate title deed)
To start with a buyer pays separately the lawyer to do this. Besides, the agent is no more qualified to do this than I am to perform surgery. However, as you see, the agent implies that he is actually doing this .

• Organizing of a preliminary contract
A contract is not organized, but signed. Signing requires negotiating and a power of attorney. Negotiations are lawyer's job, they require one to distinguish between a right to build and a Permit to build, to know what different acts say and what the case-law on these acts say. As for the power of attorney it is prepared by the attorney, then notarized and apostilled by the buyer himself. Again the agent has no contribution here .

• Signing of a final contract .
It is signed by the lawyer and this lawyer is paid by the buyer, not by the agent. The other option here is the buyer to come to Bulgaria and to sign it himself.

• Organizing the payment of the (mandatory)
2% government property tax . There's nothing to be organized here. The buyer goes to the nearest bank and sends the sum along with the other sums (like the notary's fee) .

• Declaration of the purchased property in the Government Tax Office .
This is hardly a big deal. Most Bulgarians do it themselves, no law degree's needed here. I do it for a 100 Euro. Hardly anything to justify the agent's fee. Besides these 100 Euro are paid again by the buyer, not by the agent so it has nothing to do with the agent's fee!

• Changing of the electricity and water supply account .
Some of the developers do this for free. If they don't, I would do it for another 100 Euro.

• Translation of the notary deeds into English
This translation is again neither done, nor paid for by the agent. But even if it is paid by the agent, this is just 50 Euro or so.

Not included in the price are the legal costs for transferring the ownership:
The (mandatory) 2% property tax payable to the Government of The Republic of Bulgaria and the registering of a Bulgarian Ltd company if required. The text is not clear here. Actually the registration of a Bulgarian Ltd. Company has nothing to do with the 2 % and these 2 % are actually not paid to the government of Republic of Bulgaria, but to the municipality where the estate is situated.
Lawyer fees - 1,5 % of the price of the property but not less than 600 lv (approx. 308 Euro) . Again the text is not clear. Does this include the preliminary contract, the checks and the rest?
Notary fees- approximately 1,2 % of the property's price . There's a table about the notary fees and they are never 1,2 %. The percentage depends on the price of the estate.

End of quotation. Here I have to add that the agent failed to mention that you have to pay for the registration of the deal (that's one thousandth of the price) and the Bulstat registration (another 15 Euro) is not mentioned either. These two are paid to the government of Republic of Bulgaria.

The 5 or the 10 thousand Euro the agent gets from you are however not the whole story because there are a lot of hidden costs. But these are insignificant. What's significant is that for a number of reasons the involvement of an agent pushes the price higher. For example the agents usually limit their search of apartments to internet search and limit the list of the developers to the famous ones. This makes the job of the agent easier, but makes the price of the estate higher. The agent knows that the purchaser of the realty has no idea what the real price of this realty is. There's no way for him to know: on one hand the websites oriented to foreign customers offer inflated prices and on the other hand these prices are still very low as the prices in Bulgaria generally are. Anyway, pricing involves economics therefore it is outside my area of expertise so I'll not elaborate on it.