Homing in on a Good Brokerage

When trying to find a flat, most people rely on brokerage companies. However, even with the aid of one or more firms, the process can be long, drawn out and aggravating. To avoid this aggravation, it helps to understand in advance how residential brokerage works in Moscow.

The most important aspect of choosing a brokerage company is to select one with a proven track record and an understanding of Western service. Brokerage firms should listen to what you want to find, candidly advise you about whether your expectations for location and price are realistic, and then show you only what you are interested in seeing. Many brokerage firms will not tell you that they do not have a flat that meets your needs or if your expectations are unrealistic.

Brokerage firms should help you sign a valid lease. Most provide their own leases, and many may not be valid or may contain provisions that are invalid. Unfortunately, without the aid of a lawyer most people will not know if their leases are valid, and most people are not going to hire lawyers to review their leases.

A bit of practical advice: Many problems can be avoided simply by confirming that the apartment is privatized, finding out who owns the apartment and who has the right to live there, and making sure all of these adults sign the lease. Ask the brokerage firm to produce the privatization certificate and an excerpt from the building book showing who owns the flat and who has the legal right to reside in it.

Brokerage firms also are responsible for getting the client and the landlord to execute a lease. When the lease is executed, they have completed their job and have earned their fee. The average fee is one month's rent, payable by the client upon signing. Don't sign anything until you have examined the documents, and don't pay until all the relevant parties have signed the lease.

Most brokers receive their compensation as a percentage of each deal. This means that if the fee payable by the client is a month's rent, it is not in the broker's interest to talk the landlord down in price. In fact, if you understand Russian, you may hear the broker telling the landlord not to accept the offer you're making! To avoid this, agree with the broker that you will fix the brokerage fee at the rent the landlord proposed, but you want the broker to get you a better price.

Some brokers sign leasing agreements for several years at a time. If the lease ends while the brokerage company's agreement is still in force, the brokerage firm has the right to broker the apartment again. If you want to stay in the apartment, they may ask you to pay them again or threaten the landlords with legal action if they let you stay without paying their fee.

Also of concern are claims that brokerage companies can help you if problems arise later on. In almost all cases, the brokerage company is powerless to prevent you from being evicted, and their offers of assistance amount to little more than promises to help you negotiate just how much your rent will be raised if you want to stay in the apartment. What brokerage companies should offer is to refund your money or find you another flat if the landlords back out on the deal.

So how do you find a good brokerage company? Word of mouth or long-term presence are good starting points. Unfortunately, at this time the absence of a brokerage license does not say much about a firm, as many of the best brokerage firms are just beginning the licensing process.

Jamison Firestone is managing partner of Firestone Duncan law firm.