Online real estate service could also curb corruption
Janet Choynowski is one of the more outspoken expats in Poland, even for an American. Always has been. She may "talk southern" and have native southern charm but she can be brutally blunt.
And now she's translating that into a tough business strategy. She has launched the first European cross-border, multi-language, zero-commission real estate listing service. She says the company, Immobel, is shaping "the information super highway for real estate in Europe."
It provides direct contact with owners, circumventing real estate agents. She gets a fee from the sellers to put their properties online. For a three-month online listing, the seller could pay zl. 200-zl. 450, depending on whether they want to list a property with or without photos, have a telephone number or a voice mailbox. Buyers pay no fees.
Immobel started with Polish and English, but Choynowski said she aims to have listings in Spanish, French, Russia, Chinese, German and Italian. In October, she will launch Immobel in Spain and then in France.
She says the Immobel site is one of the speediest in Poland, thanks to their Internetia server and service provider. In its first month, Immobel received hundreds of listings and recorded 20,000 hits a day from interested buyers or sellers (or competitors). She expects to have 1,500 listings by this month and 4,000 by January.
Choynowski knows this may hit brokers hard, but that's fine with her. She says her business won't just circumvent realtors it will curtail corruption, which in Poland (and other fledgling market economies) is tied up in a big way with real estate.
The World Bank report on corruption in Poland research done at the request of the government focuses tangentially on real estate as a major hot spot for corruption. Helen Sutch, the point person for the corruption report, said the depth and breadth of payoff demands are substantial. Poland may not be the worst offender among transition countries "it definitely is not," she said but the risk is that these practices can become ingrained very swiftly.
A U.S. foundation official buying land was hit up by a Warsaw city official for a $300,000 "fee" to get clearance for building permits. He balked at paying and waited it out. Ultimately, the permits were granted and he was shocked to find the Warsaw official coming again, after the fact, demanding the money. He told him to get lost, only in far less polite language.
Antoni Kaminski, the Polish chair of Transparency International, recently came across one deal where a prominent U.S. property management official was selling a space for one price but, on paper, said it sold for 20% more. The obvious implication: The property agent was taking that 20% differential as his own kickback fee.
Janet and Peter Choynowski came to Poland in the early 1990s and set up the Prime Property real estate agency. Today, Peter is running the company, which focuses on new project sales, corporate leasing for expatriates and represents commercial tenants. Ms Choynowski said she spends 90% of her time on Immobel. The two companies are not formally related.
"We have investors and will have more," she said. Kleinwort Benson is currently working on raising $10 million for Immobel's European expansion. Several years ago, she had some illusions that introducing a bit of U.S.-style cooperation between realtors in the form of multiple listings would help both realtors and their customers. Wrong. That idea lasted about a day and then the would-be partners backed out. She says it has been warfare again, only she contends it's foul play with lots of business people demanding a piece of the action themselves.
There wasn't a real estate market when the state owned everything. Since the system changed, in 1989, the homegrown brokers have had a field day, especially since information was a scarce commodity and, as Poland took off, real estate prices skyrocketed and there was intense pressure to find greenfield sites and expansion locations. Brokers are not licensed and Polish law allows them to take fees from all sides, not just the seller as is the norm in the United States and the U.K.
"The payment of bribes is quite common," she said. "Owners offer 'tips' to agents, apart from agency commissions, for a 'good client' i.e., one who will pay top price," she said. Tips to get a discount are also common for potential buyers and renters. Owners trying to sell a property may never be told of a high-priced bid if a potential buyer offering a lower price pays the broker a sizable "tip," she said.
And there are lots of other people in the loop. Ms Choynowski said that companies bringing in foreign employees with good budgets are also arranging long-term leases, and she said it is not uncommon for "secretaries and human resource directors" to negotiate a "referral fee" with the real estate agencies for themselves.
"Agency owners have other troubles, too," she said. She knows from personal experience. "One's own agents often sell information about listings or plum clients to the competition for a referral fee. Or they steal a copy of the property listing data base the active client file and open up in their own flat an 'instant agency' offering discounted commissions." They may take with them some deals nearly closed at their former agency.
"There is no law preventing this. It has happened to me many times. I have never succeeded in a prosecution or a civil case," she said. Ironies abound. "If they stole my computer, no problem, we could put them in jail. If they steal all the valuable data on it, and even erase it so they have it and I don't no 'crime' has been committed," she said.
