Remember Oren, the young man who flew to a bachelor party in Bucharest and came back from there with an apartment he had bought? Remember that I wrote here about the apartment Oren bought contrary to our professional position? So let's tell the story, and maybe also draw an insight or two from it.
In Romania Oren met an Israeli agent living in Bucharest, and the two became friends. After the first tour the agent took Oren on to show him apartments, they sat down for coffee and began sharing stories from military service and about life in general. The next day, Oren told me, the agent invited him to spend time at a local club together with several other local friends of the agent's, which became the routine of the two on all the evenings Oren was in Bucharest.
On each of Oren's visits to the city the agent would invite him to outings together in the evenings and in the morning to property tours at which he tried to sell him more apartments. And Oren, enthusiastic, enjoyed the attention and the company in a foreign city. And every time an offer for a new apartment came in, he passed it to us for legal review.
As Oren's lawyer, I saw how the agent's influence was slowly growing, how Oren began to resist our legal determinations, and how he seemed to be reciting the agent's words. Oren was influenced, apparently by the attention the agent showered on him, perhaps also by the friendship that formed between the two. We became an obstacle to the agent selling his wares to Oren.
Anyone who knows Bucharest knows that in the city center there are old residential buildings classified as dangerous and, to varying degrees, not resistant in the event of an earthquake. The apartment the agent offered Oren was an apartment in a building classified as high risk. I tried to explain the risk to Oren, without success, even when we put before him a letter from the building committee, received by another client of the office who owns an apartment in the building, announcing that the residents oppose renting the apartment for short periods (Airbnb). It also did not help that I showed him on Romanian real estate websites that the price looked high for the specific area and size. Oren bought the apartment.
The problems arose about two months after the purchase, when Oren received a letter similar to the one received by another client of ours who owns an apartment in the building. The building's residents oppose the use of the apartment for short-term rental. Attached to the letter was also an official decision adopted on the matter at the apartment owners' meeting. A month later, tenants staying in the apartment received a visit from the local police, along with a fine, which Oren was required to pay. The agent got angry at Oren when he complained to him, and put all the responsibility on Oren and on us, the lawyers.
“You could have rented it out on a long-term lease,” he told Oren, “I didn't tell you to rent it on Airbnb without getting the appropriate approvals, and if your lawyer didn't tell you that, or didn't obtain the appropriate approval for you, don't come to me with complaints.”
Oren is just one example among many that we have seen and experienced over the years of Israelis who come abroad, meet/get to know a local agent, and put their trust in him after a superficial acquaintance.
I want to remind all of us that an agent is a salesman. It is easy to fall under the spell of a pleasant agent, especially in a foreign country. Remember that his interest is for you to carry out a deal, not necessarily a good deal for you. Stay objective and rely on objective professionals on your behalf. Insist on meeting the seller(s), and don't be tempted to negotiate through the agent. Be alert to suspicious signs such as an unreasonably low price, pressure from the seller to close a deal quickly, or a refusal to provide information. A relatively high price and opposition from the residents should also raise a red flag. In many cases the agent collects a commission from both the seller and the buyer, and his interest in carrying out the deal only grows, so it is important to make sure that in the transaction you are carrying out you are the only party paying the agent a commission. If the agent also offers you the services of a lawyer he knows, that should raise a red flag for you. Always bring a lawyer on your behalf and carry out due diligence before you sign an agreement to buy an apartment (and if possible also before you sign a preliminary agreement).
And finally, beware of promises of high returns or quick profits. Real estate investments require time, patience and thorough examination.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית