FEZ, MOROCCO (Fortune Small Business) — It’s slow progress at best, strolling through the Fez medina with David Kellar and Brian Smith.

The heavily laden donkeys don’t help. Nor do the boys playing pickup soccer games, or the shopkeepers who spread their wares in the cobbled alleys of the medieval walled city.

But what slows you down the most is that Kellar and Smith seem to know everyone. Just a few minutes into our walk, they’ve already greeted half-a-dozen merchants, their banker, and one of their property managers. Each encounter requires hearty exchanges in Arabic and in some cases kisses planted on the other man’s cheek, in true Moroccan style. It may not look like it, but the pair are hard at work.

“Fes Properties,” says Kellar, “wouldn’t work without our having the local language - and local relationships.”

It’s a clichй to say that business hinges on relationships, but they’re priceless in the Arab world, particularly in close-knit communities such as the Fez medina. So it’s all the more remarkable that Smith, 32, a burly, blue-eyed business graduate from Nebraska, and Kellar, 35, a former actuary from North Carolina, have penetrated the medina’s byzantine property market.

Fes Properties (”Fes” is an alternate spelling of “Fez”), the medina’s first foreign-owned real estate firm, specializes in selling and renting traditional Fez townhouses, or riads, to American and European clients. Before the duo started the business three years ago, the local property market was dominated by local brokers. Their designation, simsar, means “agents of poison” in Fez dialect. As the name suggests, real estate brokers are viewed with disdain in Fez: Professional training is nonexistent, and trade ethics vary widely. Barriers to entry are low: Simsars range from well-established agents to the local vegetable seller with a tip that a widower on his street wants to sell.

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Foreigners shopping for property frequently meet nasty surprises: Morocco must be one of the few markets on the planet where sellers tend to bargain up, starting with low sell prices that they increase as negotiations proceed.

“I kept hearing stories of Americans getting ripped off,” said Kellar. “I met a guy last night who assumed he was buying a whole house. Turns out he only got the top story.”

Enter Fes Properties, dedicated to providing “a cultural bridge between Eastern sellers and Western buyers,” according to its brochure. The partners spend a great deal of time explaining Moroccan culture to Western clients. Kellar’s PDA, for example, is programmed to translate dates between the Muslim and Christian calendars.

Nevertheless, much can be lost in translation. One British client walked out of a closing after mistaking a characteristically animated Arabic chat between sellers for a fight. That deal fell through, but the business is growing quickly from a small base, say the partners. Their combined net income has yet to break six figures, but they enjoy a comfortable lifestyle, thanks to Morocco’s low cost of living and the absence of corporate pressures.

Several other Western property firms have followed Fes Properties into the local market. Century 21 set up shop last year, complete with glossy brochures, computerized window displays, and plans for two more Fez branches. Some riads have doubled in value over the past few years, but prices are still reasonable compared with Europe and even go-go Marrakesh. Today unrestored riads start at around $40,000, but restored ones can easily fetch $650,000.

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