Real Estate Agencies’ Tricks and How to Spot Them

Quick Overview

• Don’t sign a contract under time pressure, and request all attachments in advance.
• For exclusive agreements, check the term, renewal options, and restrictions on direct sales.
• Before paying a reservation fee, verify who you’re sending the money to, what it will be used for, and when it will be refunded.
• Compare claims regarding the property’s price and condition with independent sources.
• Save the listing, all communications, and payment receipts in case of a future dispute.

Are you about to sign a contract with a real estate agency? Let us review your brokerage or reservation agreement to help you understand what you’re committing to, what you’re paying for, and under what conditions you can terminate the agreement.

When Do Real Estate Agencies Engage in Unfair Practices?

A higher asking price, an exclusive agreement, or a cheaper buyout do not necessarily violate the law on their own. Unfair practices by real estate agencies may include, for example, misleading information, withholding material facts, or aggressive pressure that influences the consumer’s decision-making. Protection against such conduct is governed by the Consumer Protection Act.

Fraud committed by real estate agents constitutes a more serious category. For an act to constitute the crime of fraud under the Criminal Code, its legal elements must be satisfied, including intentional enrichment through deception, exploitation of a mistake, or concealment of material facts, and the causing of damage as required by law. Merely being dissatisfied with a service does not constitute fraud.

Tricks Used by Sellers

Selling a property on one’s own can be intimidating for many people. Many people simply don’t have the time for it, which is why they choose to use real estate agencies. Of course, there’s nothing wrong with that, but it’s important to choose an agency carefully and be aware of the tricks they might use on you:

Exclusive Contract for the Sale of Real Estate

Exclusivity can limit your ability to involve another real estate agency or sell the property without the cooperation of the contracted broker. If you are a consumer, according to the Real Estate Brokerage Act, such an agreement may only be entered into for a fixed term, not exceeding six months. Repeated extensions are possible, but they can only be agreed upon at least 30 days before the end of the agreed-upon term.

Before signing, therefore, review not only the duration of the agreement but also the commission, contractual penalties, and the rules in case you find a buyer on your own. When extending the agreement, ask what the real estate agency has done so far and how it plans to proceed with the sale.

Likewise, it’s not a good idea to extend the contract significantly. This is especially true if the real estate agency is unable to sell the property despite favorable market conditions, or if you’re dissatisfied with your real estate agent. Doing so would only further prolong the entire sales process.

Constant Bombardment

As soon as you post a listing to sell a property, you can expect dozens of phone calls and emails from real estate agents within a few hours. This is because many real estate agencies use so-called “ad monitoring,” which tracks all real estate listing portals and selects those listings posted by private individuals. This means that as soon as you, as a private seller, post an ad to sell your property, this monitoring system sends your ad to a list of real estate agencies, and they’ll do with it as they please.

Unfortunately, there’s no way to prevent this. The only solution, therefore, is to decline calls and emails. Alternatively, you can add a note to your listing stating that you do not wish to be contacted by real estate agents.

Immediate Purchase of Your Property

Some real estate agencies may offer to buy your property immediately. Ideally, this works as follows: the agency buys your property at market price, becomes the owner, and then sells it on its own. This way, you don’t have to worry about a thing. Sounds good, doesn’t it? But there’s one major catch. The real estate agency will indeed buy the property from you, but only at a price significantly below market value.

If you do decide to go ahead with an immediate purchase by a real estate agency, we recommend hiring an independent real estate appraiser.

Listing Without the Owner

One common trick is for real estate agents to post listings without the knowledge of the owner or the original poster. What’s in it for the agent? If prospective buyers contact the real estate agent about the listing, the agent can approach the owner directly, claiming to have a buyer for them, and subsequently sign a brokerage agreement to earn a commission. However, this is certainly not fair.

You can easily protect yourself against this by immediately rejecting any offers from real estate agencies. Alternatively, you can take preventive action. Simply upload the photos from your listing to a program that can track where your photos are being displayed. One such program is TinEye, for example, though even a simple Google Image search can do the trick. If you then find your photos posted under the names of real estate agents you’ve never heard of, it’s time to confront them.

Flyers in the Mailbox

Another possible scenario for an off-market listing is when you find a flyer in your mailbox with a brief ad stating that a nice family is looking for an apartment or house in your area. However, once you arrange a meeting with them, a real estate agent will show up at your home. They’ll take photos of your property and then try to push their services on you. The more brazen ones will use the photos of your property to create their own ad and won’t contact you until they have a prospective buyer.

You can easily protect yourself by simply ignoring such flyers. If you’ve already responded, don’t let them sway you, and don’t put up with any subsequent ads.

Tips for Buyers

Selling an apartment, house, building lot, or any other property without a real estate agency. That sounds good, doesn’t it? Unfortunately, today’s real estate market plays right into the hands of real estate agencies, and it’s almost impossible to find a property for sale or rent without one. That said, real estate agencies do have their advantages—the whole process tends to be simpler and faster. On the other hand, you need to be careful about which agency you work with and learn to recognize their tricks:

Artificial Shortage

Some real estate agents may artificially create the impression of a shortage of properties to put time pressure on buyers. Alternatively, they may claim that there are numerous eager prospective buyers interested in the property. This puts pressure on the buyer to purchase as quickly as possible, otherwise they’ll be searching endlessly.

As a result, they may not think the purchase through carefully enough and often end up regretting it, or they may fail to thoroughly review the contracts they’re signing. This can lead to major problems in the form of hidden fees, non-transparent pricing, or uncertainty about the scope of the property being purchased.

For this reason, before you start house hunting , you need to thoroughly research the current state of the real estate market. You can easily find this out by asking a real estate expert, reading a few articles, or keeping track of how quickly listings are selling over an extended period of time. For a specific property, it’s also a good idea to check the date the listing was posted. If the listing is several months old, you can be sure that there aren’t many serious buyers still waiting for it.

Case from court practice: A reservation fee does not automatically forfeit: Inits June 20, 2023, ruling, Case No. 33 Cdo 1507/2022, addressed the refund of a reservation fee of 72,600 CZK, which a real estate agency had retained as a contractual penalty for failure to complete the purchase. It confirmed that the three-party reservation agreement in question was subject to the prohibition on imposing an obligation on the consumer in a real estate brokerage contract to conclude a purchase agreement, and the agency was required to return the money. In other cases, the specific content of the contract and the reason for the requested payment are decisive.

Is the real estate agency refusing to refund your reservation fee? Have your claim for a refund reviewed. We’ll examine the contract and the reasons the agency gives for withholding the money, and we’ll suggest the next steps.

Concealing Problems

Some real estate agencies may lack transparency in their efforts to sell a property as quickly as possible. As a result, they may fail to mention that the house has leaks, insulation issues, or a boiler that’s on its last legs. They certainly won’t mention that the family living in the neighboring apartment loves to listen to loud music late at night. Keep in mind, however, that under the Real Estate Brokerage Act , a real estate agent is required to disclose all known defects to the buyer; otherwise, they may be held liable for damages.

You can identify some of the property’s technical issues yourself through a thorough inspection. However, it’s always necessary to have the house inspected by a professional inspector as well. They can uncover defects that you might miss on your own. As for problematic neighbors, even an inspector can’t do anything about that. It’s worth asking around the neighborhood or getting to know your neighbors in advance. This will help you get at least a partial idea of the situation.

Price Inflation

Another trick used by real estate agencies is artificially setting the price above the actual market value. The reason is simple—an effort to sell the property for the highest possible price, plus the opportunity to offer the buyer a discount and thereby earn brownie points.

You can easily defend against this by negotiating. However, prepare carefully for negotiations by researching the prices of similar properties in the area. This will allow you to base your arguments on the actual market value. When negotiating the price, you can hint that you’re considering multiple offers or that the price exceeds your budget.

How to Protect Yourself Against Unfair Practices by Real Estate Agencies

1. Save your records. Keep the listing, contracts, attachments, correspondence, and payment receipts. Also, take notes on the course of important negotiations.
2. Describe the problem in writing. State what you are accusing the real estate agency of, what remedy you are seeking, and within what reasonable timeframe you expect a response.
3. Distinguish between a complaint and a monetary claim. Filing a complaint with the Czech Trade Inspection Authority (ČOI) may lead to an investigation, but it will not, on its own, resolve your dispute over a refund. In the case of a consumer dispute involving services, you may also, depending on the circumstances, seek out-of-court dispute resolution through the ČOI.
4. If you suspect a criminal offense, describe the specific facts to the police. Attach any available evidence and describe how the incident unfolded and what damages you have incurred.

Summary

Real estate agencies may use tactics such as time pressure, misleading information, or unclear contract terms. However, a higher price, exclusivity, or a quick buyout do not in and of themselves constitute illegal conduct. Sellers should verify the scope of the agreement, the commission, and any penalties; buyers should primarily verify the condition of the property and the terms of the reservation. Have important statements confirmed in writing and keep the documents. If a dispute arises, the next steps depend on whether you are seeking rectification of the service, a refund, addressing property defects, or suspecting a criminal offense.