When Friendship Costs You: A Real-Estate Agent Story with a Twist

Remember Oren, the young guy who flew to a bachelor party in Bucharest and came back having bought an apartment? Remember I wrote here about the apartment Oren bought against our professional advice? So let’s tell the story, and maybe draw a lesson or two from it.

In Romania Oren met an Israeli agent living in Bucharest, and the two became friends. After the first tour, when the agent showed Oren some apartments, they sat down for coffee and started swapping stories about their army service and life in general. The next day, Oren told me, the agent invited him out to a local club with a few of the agent’s local friends, and that became the two men’s routine every evening Oren spent in Bucharest.

On every visit Oren made to the city, the agent invited him out in the evenings, and in the mornings took him on property tours where he tried to sell him more apartments. And Oren, excited, enjoyed the attention and the company in a foreign city. Every time an offer for a new apartment came in, he passed it on to us for legal review.

As Oren’s lawyer, I watched the agent’s influence slowly grow, watched Oren start pushing back on our legal findings, and watched him seem to recite the agent’s words. Oren was probably swayed by the attention the agent lavished on him, and perhaps by the friendship that had formed between them. We had become an obstacle in the way of the agent selling his wares to Oren.

Anyone who knows Bucharest knows that the city center has old residential buildings classified, at different levels, as dangerous and not resistant in the event of an earthquake. The apartment the agent offered Oren was in a building classified as high-risk. I tried to explain the risk to Oren, without success, even when we showed him a letter from the residents’ association, received by another client of ours who owns an apartment in the building, stating that the residents objected to short-term rentals (Airbnb). It also didn’t help when I showed him on Romanian listing sites that the price looked high for that specific area and size. Oren bought the apartment.

The problems began about two months after the purchase, when Oren received a letter like the one our other client in the building had received. The residents objected to the apartment being used for short-term rentals. Attached to the letter was a formal decision on the matter adopted at the owners’ general meeting. A month later, guests staying in the apartment got a visit from the local police, along with a fine that Oren had to pay. When Oren complained to the agent, the agent got angry and put all the blame on Oren and on us, the lawyers.

“You could have rented it out long-term,” he told Oren. “I never told you to put it on Airbnb without getting the proper permits, and if your lawyer didn’t tell you that, or didn’t get you the proper permit, don’t come complaining to me.”

Oren is just one of many examples we’ve seen and lived through over the years: Israelis who go abroad, meet 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 salesperson. It’s easy to fall under the spell of a likeable agent, especially in a foreign country. Remember that his interest is for you to do a deal, not necessarily a deal that’s good for you. Stay objective and rely on objective professionals on your side. Insist on meeting the seller(s); don’t be tempted to negotiate through the agent. Watch out for warning signs such as an unreasonably low price, pressure from the seller to close quickly, or a refusal to provide information. A relatively high price and opposition from the residents should also set off alarm bells. In many cases the agent charges a commission from both the seller and the buyer, which only increases his interest in getting the deal done, so make sure that in your deal you are the only party paying the agent a commission. And if the agent also offers you the services of a lawyer he knows, that should set off an alarm bell too. Always bring your own lawyer and do due diligence before you sign an agreement to buy an apartment (and if possible, before you sign a preliminary agreement too).

Finally, beware of promises of high returns or quick profits. Real-estate investment takes time, patience and careful checking.