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Editor’s note: The Association Professional a Agentilor Imobiliari din Romanian is officially under the National Association of Realtors’ umbrella.
The ongoing debate around the value of U.S. local broker marketplaces (also known as multiple listing services) is a hot topic in the real estate world. However, critics of U.S. local broker marketplaces fail to understand what it’s like to operate without them because the U.S. has had them in place for more than 100 years.
Having seen how markets work both with the local broker marketplace model and without, I can tell you that local broker marketplaces are much more beneficial for consumers, agents and the economy at large.
As an international Realtor for over 20 years based in Romania, I’ve seen how real estate is bought and sold in both markets and have been working for decades to advocate for the adoption of the U.S. model in Romania.
My experience has proven to me that local broker marketplaces promote equitable access to homeownership for consumers and for real estate businesses of all sizes by ensuring that all available homes for sale are obtainable by everyone.
Homebuying and selling processes in Romania
Romania’s real estate market functions much differently from the U.S., which prioritizes consumer experience through accuracy, transparency and efficiency. Ninety-nine percent of the market in Romania operates in chaos, and there is no Code of Ethics in place to protect against this dysfunction.
Without a Code of Ethics, such as the one 1.5 million members of the National Associations of Realtors (NAR) abide by, we can’t ensure agents act in the best interest of their clients.
Similar to other countries, the dysfunction within Romania’s real estate market stems largely from three factors:
- Lack of cooperation between agents: Without local broker marketplaces, agents have no incentive to work together in the best interests of their clients.
- Instead, agents here prioritize dual agency, where they represent both the buyer and the seller. This is common and expected in Romania. There is no fiduciary responsibility nor disclosures.
- Lack of consumer education on what a transparent market actually looks like.
Ultimately, consumers are the ones who lose out. Ninety-eight percent of homes in Romania are For Sale by Owner, meaning two parties are making one of the biggest financial transactions of their lives without any experience or professional representation. While consumers in Romania often think they’re saving money on commissions by going at it alone, the reality is both buyers and sellers are losing money.
If at least one party would hire a real estate professional, the transaction would be beneficial for all involved since the professional agent would guide the whole process with a keen focus on consumer benefits.
Comparing the US market to Romania
Those who are accustomed to the U.S. model don’t appreciate how well it works for both buyers and sellers. Local broker marketplaces are designed to encourage agents to work together to help consumers buy and sell homes efficiently and transparently.
In the U.S. there are centralized databases, licensing requirements, regulations and a strict code of ethics which together ensure a pro-consumer market.
Agents in the U.S. are better equipped to guide consumers through this process because they have access to transparent and complete market data all in one place, made possible by all market participants agreeing to share information for the benefit of consumers. In other countries with an unregulated market, like Romania, there is an extreme lack of quality in the service real estate agents provide.
Interestingly, in 2009 Romania launched an “NAR-like” real estate association, Association Professional a Agentilor Imobiliari din Romanian (APAIR), adopting NAR’s Code of Ethics, rules, procedures and even some of its educational programs. We also launched a local broker marketplace, using American software provider Flexmls by FBS.
Since implementing these changes to our real estate business, Realtors are now respected by authorities and customers as the most reliable professionals in our field. However, we still have a long and difficult road ahead of us to ensure all Romanian agents adhere to the local broker marketplace guidelines and regulations, and our local associations play a crucial role in educating their members.
Buying in our current market in Romania is like looking for a needle in a haystack. There is no standardization of listing information (accurate prices, pictures, floor plan, location, etc.) and locating this information can be extremely difficult since it is not regulated. As a result, agents and consumers alike are flooded with junk options, fake listings and a multitude of websites to sort through.
Furthermore, agents in Romania have no fiduciary responsibility. They are not required to disclose that they’re already working with the buyer or seller, and they have no Code of Ethics requiring them to act in the best interest of their clients.
Therefore, they don’t. They act in their own best interests, usually seeking to work both sides of a transaction to receive higher commissions (again, without disclosing this to the buyer and seller). It makes it very hard for consumers to trust agents here and even harder for consumers to buy or sell without representation.
My goal as an international Realtor is to inspire the larger market in my country and in other European markets to adopt a model similar to the U.S. and, ultimately, shift our countries’ current standards to align more closely with America’s. However, consumer education, particularly for agents, is critical to getting us there.
I firmly believe that U.S. local broker marketplaces are the gold standard and will continue to push Romania in the right direction so we can create an equitable real estate market that protects consumers and small businesses across the country.
Americans must not take the U.S. real estate model for granted and squander something many countries are trying so hard to replicate. Instead, I implore you to appreciate the benefits local broker marketplaces offer and learn from countries like mine.
Dan A. Negulescu is a Romanian real estate broker and Regional Director of REALPRO Romania. He is also a National Association of Realtors ambassador for Eastern Europe and serves as an international member of the association’s board. Connect with him on Instagram and LinkedIn.