Who is responsible for the current state of the real estate brokerage industry?

In recent years, the Croatian public has increasingly searched for someone to blame for the state of the housing and real estate market. Real estate agents and agencies quickly found themselves cast in that role. In the public narrative, they have become the symbol of everything perceived to be wrong with the market - rising prices, poor service quality, lack of transparency, and declining housing affordability.

This perception has been further amplified by the media, political discourse, and a growing number of business models promising a market without intermediaries, commissions, or “unnecessary” agents. The government has also entered the debate, with the new Real Estate Brokerage Act increasingly being presented as a solution to problems that have been building for years.

Yet markets rarely work that simply.

What happens when a market grows for too long?

Over the past decade, the Croatian real estate market has expanded so rapidly that almost nobody had a genuine incentive to ask difficult questions about the quality of the industry. When prices are rising, nearly everyone appears successful - developers, investors, agents, and projects alike. The real problems become visible only when the market begins to slow down or when the public starts feeling the consequences of years of disorder.

City of Zagreb

One of the industry's greatest challenges has been the way policymakers viewed real estate brokerage for years. Instead of treating it as a serious profession that requires development, regulation, and oversight, it was often seen as a social safety valve and a source of supplementary income. Much like parts of the short-term rental sector, brokerage was left largely to regulate itself for far too long.

As long as the market was growing, serious issues appeared easy to ignore.

Did the industry fail to professionalize?

First along the coast, then in Zagreb and other major cities, properties were selling quickly, prices were climbing, and market growth concealed many weaknesses within the industry. In a market that consistently moves upward, it is possible to survive for a surprisingly long time without deep expertise, high-quality service, or a long-term vision.

At the same time, the brokerage industry itself failed to professionalize sufficiently. For years, much of the market focused primarily on scale and expanding agent networks, while education, professional standards, and service quality often remained secondary concerns. The Croatian market tolerated for far too long the notion that publishing a listing and waiting for prices to rise was enough.

Consumers also played an active role in shaping this environment. Most focused almost exclusively on costs and commission fees, while service quality, experience, and expertise were often treated as secondary considerations. For years, the market rewarded the cheapest service and then expressed surprise when standards declined.

In more mature markets, clients carefully evaluate what an agent actually delivers, how much they invest in marketing, legal protection, presentation, and negotiation. In Croatia, a significant part of the market still operates through improvisation, informal arrangements, and attempts to obtain professional services as cheaply as possible-or entirely free of charge.

Why has the market struggled to establish consistent professional standards?

For years, the government also failed to effectively regulate and supervise the sector. Regulatory inspections frequently focused on formal compliance issues within legitimate and organized agencies, while large segments of the grey and black markets remained largely untouched. This created an environment where professional and unprofessional market participants could operate under nearly identical conditions.

The situation is further complicated by the fact that Croatia has never fully established transparency within the real estate market. In most developed markets, transaction data, professional standards, and participant accountability form the foundation of trust. In Croatia, the market still relies heavily on assumptions, incomplete information, and perception rather than reliable data.

Today, many of these issues are being addressed through relatively simple political messaging and attempts at quick intervention. The problem is that serious markets rarely function that way. Systems that have evolved for decades without clear rules cannot be professionalized or restructured overnight through a single piece of legislation.

It is particularly dangerous to attempt to professionalize an industry while simultaneously undermining its economic sustainability. Over the years, real estate brokerage should have attracted more experienced and highly qualified professionals - individuals from banking, sales, law, hospitality, and other sectors where service standards are high. This cannot be achieved by diminishing the profession, but by creating a serious and economically sustainable marketplace.

The current situation is not the result of a single poor decision, one ineffective minister, or one flawed industry. The challenges facing the market today were created collectively over many years by government institutions, industry participants, consumers, and the market itself. That is precisely why they cannot be solved through populism or by searching for a single scapegoat.

What does the Croatian real estate market actually need today?

Healthy markets are not built overnight. They are developed gradually through regulation, transparency, accountability, and trust. What the Croatian real estate market needs today is not fewer agents, but better agents, stronger professional standards, and a more mature market than the one we currently have.

“When a market rises for ten consecutive years, almost everyone starts believing they are an expert.”

“A market that tolerates improvisation for years cannot suddenly produce professionals overnight.”

Blog author: Ivan Kovačić