Estate Agents Fees

[twix38]

I have only just been told (from an insider) of what I consider to be an improper practice.

If you state a net figure to an estate agent here in Thailand (Pattaya at least) then the Estate Agent will of course try for the best sale price. However, not for the seller but for themselves, as any extra above the net price the seller has requested, and after all costs, goes straight into the Estate Agents pocket!!

The buyer may pay 4m Baht, but the seller only receives his net figure, say 3.7m and NOT the actual sale price less costs!

For example if you say that you want a net of 3.6m Baht then the estate agent will put your Condo up for say 3,850,000 Baht to cover costs and allow the the buyer to knock the price down a little bit. They will then try to get the best price, so maybe they sell for 3,800,000. Ordinarily a 3% commission of 108,000 Baht (on net price of 3.6m) and say 30,000 transfer tax, totalling 138,000 Baht could have been charged, which should leave you actually having sold at 3,662,000 Baht net. However, you will just receive your net figure of 3.6m Baht, exactly as requested.

The extra 62,000 Baht (along with the equivalent and acceptable 3%commission had a normal commission been charged) is another, this time, unscrupulous and additional profit for the Estate Agent!!!!!

Conclusion. Don't sell by means of stating a net price! In rare instances this may even entice the Estate Agent to seek a higher price and may delay the sale, whilst they look to maximise their profit margin.

Edited February 3, 2007 by twix38

[think_too_mut]

Conclusion. Don't sell by means of stating a net price! In rare instances this may even entice the Estate Agent to seek a higher price and may delay the sale, whilst they look to maximise their profit margin.

It's like that in theory. What property can be freely sold like that in Pattaya? View Thalay condos?

Nothing sells there other than to some naive Internet buyers.

Knowing that the properties won't sell, and may require many show-visits, the agents just made their time and materials calculated in.

The bigger worry is - the worthless property one loves to poses.

[billaaa777]

What property can be freely sold like that in Pattaya? View Thalay condos?

Nothing sells there other than to some naive Internet buyers.

Dude, you don't have a clue!!! Why post your crap, when it's obvious you have no idea what you’re talking about. There are over 10,000 condos under construction in a city of 250,000 people. Just why do you think that is? The condo market in Pattaya is booming!

Just one more, sit on the sideline expert, with no experience in the field that is allowed to have a keyboard and write whatever fiction they want

[backflip]

"over 10,000 condos under construction in a city of 250,000 "

No, there are not. Are you counting by 10s?

As for "net price"...if you request a net price, and you get it, why would you complain about the actual selling price? You didn't get cheated; you just didn't get smart.

[twix38]

If the seller and buyer had a conversation post sale. The Buyer says, "well I paid your 4 million Baht and hope you are spending it wisely" The Seller "I got 3.7 million net, as I requested" The Buyer "so after costs I paid nearly 200,000 Baht more than I needed!!" The Seller "and I sold an asset and got short changed because I stated a minimum figure, which actually got used as a Maximum figure and the Estate Agent kept any additional monies paid for the purchase".

Sure you maybe didn't get smart, but it is not in the spirit of a net minimum amount and it is rather reprehensible to keep proceeds extracted for the sole purpose of additional profit for the Estate Agent. A minimum net amount does not state or address the maximum and is NOT advertised or expected to be a self imposed cap or limit to the sale price.

This is not good practice and is illegal in any regulated market, for very very obvious reasons!

The Estate Agent provides a service for which they should be paid and take a charge (a commission) they are meant to act on behalf of the seller in good faith and get the best price for the seller. Not rip him/her off by inflating the price above reasonable and equivalent commission rates and keeping the difference!!!

What about this practice do you agree with??

"over 10,000 condos under construction in a city of 250,000 "

No, there are not. Are you counting by 10s?

As for "net price"...if you request a net price, and you get it, why would you complain about the actual selling price? You didn't get cheated; you just didn't get smart.

Edited February 4, 2007 by twix38

[billaaa777]

Written by someone without a vested interest in convincing farang to part with their money

Don't you remember what I told you to do before you made you next uniformed post. If not go look it up.

"over 10,000 condos under construction in a city of 250,000 "

No, there are not. Are you counting by 10s?

View Talay 5 has 2000. VT3 has 1000. VT6 has 2,000. VT8 has 2000. Royal Hill 500. View Talay Residents 500. North Point 500. Ocean Edge 500. Ananya Condominium-Wongamat 300. ANANYA Beachfront Condominium 200. Palm Grove in Na Jomtien at Ocean Lane Villas 200. Nova Atrium 200. JADA BEACH CONDOMINIUM 200. La Royale Beach Condominium 300. Nova Residence Jomtien 150. Nova Suite

These are just some of the condos that are under construction or have just been completed. And there are many more.

Why don't you two clowns post comments on something you have just a little knowledge of!!!

[think_too_mut]

What property can be freely sold like that in Pattaya? View Thalay condos?

Nothing sells there other than to some naive Internet buyers.

Dude, you don't have a clue!!! Why post your crap, when it's obvious you have no idea what you’re talking about. There are over 10,000 condos under construction in a city of 250,000 people. Just why do you think that is? The condo market in Pattaya is booming!

Just one more, sit on the sideline expert, with no experience in the field that is allowed to have a keyboard and write whatever fiction they want

Probably unintentionally, you just added more credibility to my (amateur) opinion: who would look into existing (or old) units if there are 10s of thousand springing up all over the place?

Old units may not sell soon, in fact, may never sell at all. 3 years going to different View Talay, shop windows at the ground floor are full of units for sale. None of them has moved an inch, even ads have faded over years. One thing has changed - there are more entries now, the windows are all covered.

Then, a professioanl realtor would find a way (if there is one) to contravene my post.

You know those guys who found a refuge in real estate after police busted their boiler rooms trade?

Are you one of them?

Or one of those who were singing about unaffected real estate in Phuket 3 days after the tsunami, when only 1700 dead bodies were collected, thousands still bloating and roting on the beaches?

[TizMe]

10,000 condos under construction, plus xx,xxx second hand condos for sale and how many buyers? Probably less than a couple of hundred.

I don't need a degree in applied mathematics to realise that there is going to be a lot of empty condos around and the only way that sales will be completed is by prices plummeting.

[billaaa777]

Well guess what I don’t agree with them. In fact I know they are wrong.

I have a Masters Degree in Accounting and am a licensed Certified Public Accountant. I have over twenty years of experience as controller, corporate controller and CFO with various US based and multinational corporations. So, I have a far better education and infinite more experience at evaluating and executing potential business opportunities than any financial advisor.

In addition, it makes little or no difference to me if any individual purchases a condominium or not. I am really sorry that the few purchases you made failed to work out for you.

I made a 135% ROI in 2006 and hope to exceed that in 2007. It took a tremendous amount of work. I intensely researched the market and became extremely knowledgeable of all available condominiums in the segment of the market I operate in.

I then next interviewed a multitude of contractors and selected what I considered the most appropriate of my specific needs. Next, as each project was completed, the contractors I was not happy with I attempted to upgrade them. I have now have a fully function construction crew with all English speaking contractors that have done many condos for me.

I visited every store in the area and attempted to get the highest quality materials at the lowest price. I also searched the internet and found all the real estate agents web sites and reviewed the pictures all the condos I liked. I then attempted to upgrade any designs within the price range I was operating in.

I have never had a condo last over 143 days on the market. That is from the day I purchased, designed it, renovated it, sold it and received the cash for it. The lowest number of days was 51 for the process mentioned above.

I believe there is not another city on the face of the Earth that offers what Patty does. It is my opinion that the continued demand for condominiums will continue to grow as people from around the world decide to buy vacation homes, relocate or retire here.

[billaaa777]

Probably unintentionally, you just added more credibility to my (amateur) opinion: who would look into existing (or old) units if there are 10s of thousand springing up all over the place?

This is an excellent questions and I will be glad to provide you an example of how I was able to take advantage of this situation.

View Talay 3 has just been completed, where I own units. There is another condominium located right next to it named Keing Talay. The condos in Keing Talay are 42 SM. A similar unit in VT3 is 48 SM.

I was able to purchase, renovate and sell a unit in Keing Talay for 1.5 million and make a nice profit. The empty shells in VT3 are running 1.8 or so. Granted Keing Talay is not as new a building, but it is not so bad and it is pretty much in the exact location as the new building VT3. So, I was able to put the buyer in the unit at roughly half the price they would pay for a fully renovated unit at VT3.

This is why the older buildings offer excellent investment opportunities.

[billaaa777]

10,000 condos under construction, plus xx,xxx second hand condos for sale and how many buyers? Probably less than a couple of hundred.

Dude you just don't quit despite the fact you have done no research to back up your statements. You do realize that VT3 and VT5 have recently been completed. For you information, the 49% allotment to foreign buyers has sold out. To the best of my knowledge there are approximately 1,500 units in the completed building which roughly translates 700 plus buyers.

I have looked at the booking for VT6 and VT7. This is where people have made down payments and are making monthly payments. Again, 1,000’s of these units are already pre sold before completion.

If you were to buy an empty shell in VT1 which was finished 8 years ago at the selling price of 400 Baht or so, depending on what floor you were on. If you did nothing to the condo at all the selling price today would be in million Baht range. You tell me you ROI. Quite nice if you ask me.

It’s is really not that hard to do a little research and gain a little knowledge. Just walk into VT’s sales office and find out what’s available. From that you will be able to determine what has been sold.

[backflip]

"...it is not in the spirit of a net minimum amount and it is rather reprehensible to keep proceeds extracted for the sole purpose of additional profit for the Estate Agent. A minimum net amount does not state or address the maximum and is NOT advertised or expected to be a self imposed cap or limit to the sale price."

The OP didn't understand the real estate market, and it is reprehensible that he blames someone else for his ignorance. He received the sales net exactly as he requested. No one forced him to set the sales price at any level. The 80,000THB he didn't receive was the tuition paid to graduate from the school of hard knocks. As far as I'm concerned, if it's a lesson that he won't forget, the tuition that he had was worth it.

[twix38]

You have a point, but as far as I am concerned it is illegal in the West and immoral and a malpractice.

As an agent to sell an asset whilst a primary concern of the Agent is clearly going to be to cream off even more profit that belongs to the seller and is paid specifically by the buyer to purchase the said asset. Either the seller does not get full value (his lesson of hard knocks) or the buyer is robbed. This is the plain truth, even if you want to describe it as a learning curve.

This method is used by the Estate Agent to give a freebie to the said Estate Agent.

It just goes to show how unregulated and typically corrupt business is out here is and how widespread, not even to be disgusted at this common practice. Let's say you are the Buyer, who could end up paying 200,000 - 400,000 Baht more than you need to, so the Estate Agent can have a nice profit after handing over the seller's net amount. Well, just let me know when you have this money spare to throw away, please?

As a standard, very common and uniform terms of business, it's criminal to misuse the term of "net" to mean "maximum"!

"...it is not in the spirit of a net minimum amount and it is rather reprehensible to keep proceeds extracted for the sole purpose of additional profit for the Estate Agent. A minimum net amount does not state or address the maximum and is NOT advertised or expected to be a self imposed cap or limit to the sale price."

The OP didn't understand the real estate market, and it is reprehensible that he blames someone else for his ignorance. He received the sales net exactly as he requested. No one forced him to set the sales price at any level. The 80,000THB he didn't receive was the tuition paid to graduate from the school of hard knocks. As far as I'm concerned, if it's a lesson that he won't forget, the tuition that he had was worth it.

Edited February 4, 2007 by twix38

[quiksilva]

Disclosure time, I have worked in the commercial real estate industry here for 10 years (PM for details if you wish) and whilst this practice does happen I would hardly call it common practice.

There are several glaring holes in this approach that a savvy vendor with a sliver of common sense should be able to spot. The biggest of which is that there is no way this can work if you use a Sales & Purchase Agreement.

If you are conveyancing and do not use a sales contract signed off by both parties, then you are asking for all sorts of trouble.

No right minded fellow would ever sell real estate in their home country without both parties signing a contract that describes the agreed sales terms, so why would you think that you do not need to do that here?

Other cost items, such as marketing expenses etc. should be payable seperately and with full transparency.

Edited February 5, 2007 by quiksilva

[twix38]

I was also told this is not openly discussed but a common enough practice throughout estate agents.

It is clearly common whether you have a contract or not. Let's not forget there is no real regulation and plenty of scope to decide that a higher agreed price does not have to be told or given to the seller.

I was told that of course, the seller will get his/her required net amount, but no more and the sale price details will never be told to the seller, who will happily just accept his requested net sale amount, oblivious to the fact that the buyer paid more and the estate agent kept it!!!

It's not rocket science to see that true details are simply not disclosed and monies are kept, that were given for the purpose of the property purchase and should go to the seller.

Disclosure time, I have worked in the commercial real estate industry here for 10 years (PM for details if you wish) and whilst this practice does happen I would hardly call it common practice.

There are several glaring holes in this approach that a savvy vendor with a sliver of common sense should be able to spot. The biggest of which is that there is no way this can work if you use a Sales & Purchase Agreement.

If you are conveyancing and do not use a sales contract signed off by both parties, then you are asking for all sorts of trouble.

No right minded fellow would ever sell real estate in their home country without both parties signing a contract that describes the agreed sales terms, so why would you think that you do not need to do that here?

Other cost items, such as marketing expenses etc. should be payable seperately and with full transparency.

[quiksilva]

I am not disputing that some unsavoury characters might do this, its not as common as you make out, at least not amongst the international outfits that I have worked at.

What I am saying is that insisting on a clearly worded SPA that specifies the purchase price in black and white should safeguard you to some extent and certainly being present at the date of title transfer would certainly help to promote transparency.

True nothing will safeguard you however against a buyer who has an interest in paying in excess of the asking price / paying your broker some other form of fee. However good agency contracts state that the agent will only take fees from the seller and vendors can seek damages should those terms be proven to be breached.

I can hear the counter arguments now "Contracts are not worth the paper they are written on" and "you will never know" and similar lines of paranoid reasoning, the merits of which are debatable.

All you can do as a vendor to protect yourself is to insist on working with international outfits who can provide quality references and have more than fees to lose by conducting business in this manner. Some agents are even members of international professional bodies such as the Royal Institution of Chartered Surveyors [RICS] that might help to provide some degree of comfort.

Ultimately however, I agree that local regulations/licensing (with real teeth to them) are sorely needed and would actually be welcomed by all the professional players here.

[twix38]

Indeed. I would however state that it is infact much more common than you make out.

It is an International based Estate Agent where my original information came from and stated that it was very common and that at least she was "being honest" with me in telling me. (actually simply further confirming my evidence and experience)

It IS a common practice by many Estate Agents here in Pattaya and why not. Nobody is going to know unless the buyer and seller have direct communication after the sale proceeds are agreed by the Estate Agent, who will and can generally easily make sure there is no need or possibility for the parties to communicate.

I am very pleased to hear it never occurs at your employer(s).

There are ways to help, as you suggest. I guess firstly not to choose the net figure option, but to set a sale price and pay the 3% commission seperately, although still not a guarantee.

My real point has been slightly lost in that Joe Public are completely unaware of limiting their sale price by requesting a net amount. Show me a seller who got more than his/her requested net amount? Not very often if ever.

I am selling my Condo and was asked today what the net amount was, that I wanted for my Condo and had to state three times that I wanted to pay the commission seperately from my sale proceeds as I now know "net amount" really means what "maximum amount" do I want to limit myself to! Why would I want to limit my potential to get a better price for my Condo than the net amount I would guess at. In addition and by definition a net amount is likely to be the sellers minimum amount, so the seller is giving a figure to work to that really does limit his potential return.

I am livid at this scam!!!!!!

Edited August 18, 2008 by Pattaya_Fox

[Sunbelt Asia]

Indeed. I would however state that it is infact much more common than you make out.

It is an International based Estate Agent where my original information came from and stated that it was very common and that at least she was "being honest" with me in telling me. (actually simply further confirming my evidence and experience)

It IS a common practice by many Estate Agents here in Pattaya and why not. Nobody is going to know unless the buyer and seller have direct communication after the sale proceeds are agreed by the Estate Agent, who will and can generally easily make sure there is no need or possibility for the parties to communicate.

I am very pleased to hear it never occurs at your employer(s).

There are ways to help, as you suggest. I guess firstly not to choose the net figure option, but to set a sale price and pay the 3% commission seperately, although still not a guarantee.

My real point has been slightly lost in that Joe Public are completely unaware of limiting their sale price by requesting a net amount. Show me a seller who got more than his/her requested net amount? Not very often if ever.

I am selling my Condo and was asked today what the net amount was, that I wanted for my Condo and had to state three times that I wanted to pay the commission seperately from my sale proceeds as I now know "net amount" really means what "maximum amount" do I want to limit myself to! Why would I want to limit my potential to get a better price for my Condo than the net amount I would guess at. In addition and by definition a net amount is likely to be the sellers minimum amount, so the seller is giving a figure to work to that really does limit his potential return.

I am livid at this scam!!!!!!

Sunbelt Asia was interviewed and we warned about this practice. The interview was in the Pattaya Today in a column called Pattaya Property Sleuth, Volume 5, No. 15 on April 16th-30th 2006. Heres what we at Sunbelt said...

One type of agent you should avoid and found mostly in Pattaya is one that asks the seller what price he wants. Then lists it at a higher price and pockets the difference when it sold at a higher price. This type of agent is SCUM. Make sure you negotiate the best price before you sign the closing documents.

Sorry to say, the scum continues to do it, at some firms.

www.sunbeltasiagroup.com

[twix38]

Thank you SunbeltAsia.

I have only investigated 2 agents here in Pattaya. They both do it regularly and one of them told me that most do it.

Why do the authorities not crack down on this if it is so common and well known. In the West it is simply illegal. Here it is common and permitted knowingly by all, except the poor unsuspecting customers.

Case confirmed. Case proven. Case awaiting action by authorities and will probably remain so for years to come.

Edited February 7, 2007 by twix38

[Sunbelt Asia]

Why do the authorities not crack down on this if it is so common and well known. In the West it is simply illegal. Here it is common and permitted knowingly by all, except the poor unsuspecting customers.

No idea. In my opinion its fraud.

www.sunbeltasiagroup.com

[Gravelrash]

I don't work in Pattaya, but we do get owners that want to sell for net price, usually Thai owners. Our contracts have the option of 3 percent or net price, it is all transparent. On the sale contract the owner can see what the actual selling price was, as it usually ends up about 3% anyway there are no dramas as it was their choice. We actually prefer to work on commission as it gives more flexibility in negotiations; we are more interested in turn over. Ridiculous net prices or bumped up prices don't sell, just waste everyone’s time. Net prices are not negotiable, they are not a minimum or maximum, that is the only amount the owner will accept.

The net price is more common in large land deals where the separate land owners gets so much, the land gatherer bumps it up, the real estate then bumps up that and quite often there is another party working for the purchaser that bumps it yet again. These can get very confusing. Occasionally there can be a freelance in there as well who has also bumped it up. It would be much easier (and safer) to just sell on commission, but you often don't have that option. Usually the buyers are Thai and are well aware of what is going on, but ignore it all if the final price is still reasonable.

Saying that it is immoral or fraud is ridiculous, it is all contracted like that. Generally the purchaser has seen a number of properties and has a feel for comparative market value. Perhaps the buyers in Pattaya are less savvy, as generally buyers here do haggle for good deals.

Buyers tend to forget who the agent is working for: the owner. If the owner instructs to sell for a net price then that is what you do. Does anyone really think a commission price will be cheaper to buy? The higher the sale price the higher the commission. If an agent is pushing you to set a net price and you don't want to do that, then find a better agent, you are the seller and it should be your choice.

Likewise people who try to sell their properties themselves. There is a perception among some buyers that these are the bargains. Is the seller selling below market value? No. he is simply selling at the same price the property would be set at any way, he just wishes to pocket the commission amount rather than pay the agent which is his choice. Also if you think it is clever to contact the building manager to get a deal, think again, they are in the commission either by percent or net price. Likewise the taxi driver who took you there, the hotel concierge or guide who recommended the building etc.

Finally my favorite, the foreign customer that shows up with his Thai spouse, as she is going to get the best deal for him. I gather the assumption being that her speaking Thai somehow makes her an authority of real estate values? Either that or use her to speak direct with the owner and then cut the agent out. I've seen a few of these where the guy actually paid more than he had to, guess who the commission went to? We definitely do try to keep buyers from meeting owners. Firstly to avoid getting cut out and secondly to prevent buyers negotiating direct with the owner. Why? Because often they are just testing the market and not serious, no signed contract at offer with deposit, then no offers put forward. Saw another girl do an auction between owners (in the days we didn't keep them apart) as to who would pay her the most, she got an amazing 500k. Her husband, yes husband, would have been much better off coming alone. Bring her to approve the choice but keep her out of the negotiating...but, up to you.

[twix38]

I don't work in Pattaya, but we do get owners that want to sell for net price, usually Thai owners. Our contracts have the option of 3 percent or net price, it is all transparent. On the sale contract the owner can see what the actual selling price was IF IT'S THE TRUTH, AS BOTH PARTIES KEPT APART, as it usually ends up about 3% anyway there are no dramas as it was their choice. We actually prefer to work on commission as it gives more flexibility in negotiations; we are more interested in turn over. Ridiculous net prices or bumped up prices don't sell, just waste everyone’s time. Net prices are not negotiable, they are not a minimum or maximum, that is the only amount the owner will accept. FINE WHEN ALL HONEST AND VISIBLE, AS YOU SAY. I AM TALKING ABOUT A WIDESPREAD PRACTICE HERE IN PATTAYA THAT HAS BEEN CONFIRMED FROM PERSONAL EXPERIENCE, MY GIRLFRIEND IS IN THE TRADE AND BY OTHER ESTATE AGENTS THEMSELVES. IT IS WIDE OPEN TO ABUSE AND OCCURS HERE, IF YOU HAVE READ MY POSTED DETAILS.

The net price is more common in large land deals where the separate land owners gets so much, the land gatherer bumps it up, the real estate then bumps up that and quite often there is another party working for the purchaser that bumps it yet again. These can get very confusing. Occasionally there can be a freelance in there as well who has also bumped it up. It would be much easier (and safer) to just sell on commission, but you often don't have that option. Usually the buyers are Thai and are well aware of what is going on, but ignore it all if the final price is still reasonable. THE NET PRICE IS VERY COMMON HERE AS THIS IS WHAT MOST AGENTS ACTUALLY ASK "WHAT YOU WANT NET, SIR" YOU NEVER GET MORE THAN YOU ASK FOR NET, NO MATTER WHAT THE BUYER ACTUALLY PAYS (ANY EXTRA IS THE ESTATE AGENTS ADDITIONAL PROFIT ABOVE AND BEYOND THEIR AGREED COMISSION)

Saying that it is immoral or fraud is ridiculous, it is all contracted like that. Generally the purchaser has seen a number of properties and has a feel for comparative market value. Perhaps the buyers in Pattaya are less savvy, as generally buyers here do haggle for good deals. OFTEN THE PURCHASER HERE PLACES TRUST IN ESTATE AGENTS PRICING GUIDE AND ITS SO EASY TO PAY AN EXTRA 50,000 OR 100,000 ON PURCHASE VALUES IN THE MILLIONS. GREAT TO HAVE A SALE BONUS OF 50,000 OR 100,000 EXTRA THOUGH, AFTER THE SELLER GETS HIS NET AMOUNT. IT RIDICULOUS TO ARGUE AGAINST THE FACTS AND EVIDENCE JUST HERE ON THIS THREAD LET ALONE WHEN YOU SEE IT AND GET TOLD ABOUT IT PERSONALLY.

Buyers tend to forget who the agent is working for: the owner. If the owner instructs to sell for a net price then that is what you do. Does anyone really think a commission price will be cheaper to buy? The higher the sale price the higher the commission. If an agent is pushing you to set a net price and you don't want to do that, then find a better agent, you are the seller and it should be your choice.MY POINT ENTIRELY, MOST AGENTS HERE ARE WORKING FOR THEMSELVES FIRST AND FOREMOST, THEN THE SELLER. DON'T GET CONFUSED WITH WORKING OUT THE HIGHER COMMISSION AMOUNTS ON HIGHER SALES PRICES. IT'S IRRELEVANT IF YOU JUST KEEP THE EXTRA CASH AS YOUR RIP-OFF BONUS, AS WELL AS THE EVER SO SLIGHTLY AGREED LOWER COMMISSION. JUST KEEP ALL THE EXTRA ABOVE SELLER'S REQUESTED NET PRICE!!! AND THEY DO, OFTEN.

THIS PRACTICE IS WHAT WE DO CALL IMMORAL, FRAUD, RIP-OFF. I LIKE TO CALL IT WHAT IT IS!!!!!

I WOULD BE DISMAYED TO FIND OUT MY BUYER PAID 50,000 BAHT MORE THAN I WAS TOLD OR RECEIVED BECAUSE THE AGENT DIDN'T JUST NOT TELL ME AND TAKE A SLIGHTLY INCREASED COMMISSION AMOUNT, GIVING ME THE TRUE SALE AMOUNT. OH NO, THE AGENT KEPT THE WHOLE 50,000 AS I GOT MY NET AMOUNT, SO I SHOULD BE HAPPY. I AM NOT HAPPY AT THIS LIE AND RIP OFF. IT'S INDEFENSIBLE TO ANY RIGHT THINKING PERSON AND DISINGENUOUS TO SUGGEST IT DOES NOT HAPPEN. IT HAPPENS IN PATTAYA EVERY DAY AND SELLERS ARE IGNORANT THAT THEY WERE ROBBED OF THE REAL FULL VALUE OF THEIR NEGOTIATED SELLING PRICE!

AN AGENT I KNOW SAID SHE MADE A MISTAKE IN DROPING A PRICE TOO MUCH TOO FAST AND LOST 100,000 PROFIT. I ASKED HOW? BECAUSE THE NET PRICE WAS 300,000 BELOW THE AGENTS SALE PRICE AND THE UNINFORMED BUYER WAS WILLING TO PAY MORE THAN THE EQUIVALENT NET PRICE PLUS ALL COSTS AMOUNTED TO. IT TRANSPIRED (OBVIOUSLY) THAT THE AGENT WAS GETING THE BEST PRICE FOR THEMSELVES AND NOT THE SELLER, OF COURSE. THE SELLER'S NET PRICE IS THE BASE LINE AND ANYTHING MORE IS THE AGENTS GOOD FORTUNE.

Likewise people who try to sell their properties themselves. There is a perception among some buyers that these are the bargains. Is the seller selling below market value? No. he is simply selling at the same price the property would be set at any way, he just wishes to pocket the commission amount rather than pay the agent which is his choice. YES AND YOUR POINT? Also if you think it is clever to contact the building manager to get a deal, think again, they are in the commission either by percent or net price. Likewise the taxi driver who took you there, the hotel concierge or guide who recommended the building etc. YES, NOT A GREAT PRACTICE BUT YOU LOOSE A VERY SMALL PERCENTAGE ONLY AND NOT QUITE SUCH A MAMOUTH LIE. THERE'S NO SIGNED CONTRACT OR TRUST BUILT UP.

Finally my favorite, the foreign customer that shows up with his Thai spouse, as she is going to get the best deal for him. I gather the assumption being that her speaking Thai somehow makes her an authority of real estate values? Either that or use her to speak direct with the owner and then cut the agent out. I've seen a few of these where the guy actually paid more than he had to, guess who the commission went to? We definitely do try to keep buyers from meeting owners. Firstly to avoid getting cut out and secondly to prevent buyers negotiating direct with the owner. Why? Because often they are just testing the market and not serious, no signed contract at offer with deposit, then no offers put forward. Saw another girl do an auction between owners (in the days we didn't keep them apart) as to who would pay her the most, she got an amazing 500k. Her husband, yes husband, would have been much better off coming alone. Bring her to approve the choice but keep her out of the negotiating...but, up to you. YES, DIGRESSING AWAY FROM THE CORE POINT OF IMMORAL, FRAUDULENT, RIP-OFF ESTATE AGENTS THOUGH. THANKS FOR THE LARGELY OBVIOUS HEADS UP THAT THAI GF'S ARE NOT PROPERTY EXPERTS, DON'T HELP AND MAY BE ON THE TAKE. THEY WOULD DO WELL TO SET UP ESTATE AGENTS HERE IN PATTAYA - PERHAPS WITH THEIR FORIGNERS MONEY, MANY HAVE .

Edited February 10, 2007 by twix38

[PMK]

Personally I think it is too bad that the admins/moderators don't step in and put a stop to the bickering and ad hominem attacks that occur in so many of these threads. It seems to get worse every week.

Peter

[twix38]

Peter,

Thanks for your invaluable comments on a serious debate that Sunbelt Asia has actually called fraud.

If I was robbed of thousands of Baht by those Estate Agents, masquerading in effect as lowlife unregulated thieves, I would be rather unhappy.

Personally I think it is too bad that the admins/moderators don't step in and put a stop to the bickering and ad hominem attacks that occur in so many of these threads. It seems to get worse every week.

Peter

[Gravelrash]

I don't work in Pattaya, but we do get owners that want to sell for net price, usually Thai owners. Our contracts have the option of 3 percent or net price, it is all transparent. On the sale contract the owner can see what the actual selling price was IF IT'S THE TRUTH, AS BOTH PARTIES KEPT APART, as it usually ends up about 3% anyway there are no dramas as it was their choice. We actually prefer to work on commission as it gives more flexibility in negotiations; we are more interested in turn over. Ridiculous net prices or bumped up prices don't sell, just waste everyone's time. Net prices are not negotiable, they are not a minimum or maximum, that is the only amount the owner will accept. FINE WHEN ALL HONEST AND VISIBLE, AS YOU SAY. I AM TALKING ABOUT A WIDESPREAD PRACTICE HERE IN PATTAYA THAT HAS BEEN CONFIRMED FROM PERSONAL EXPERIENCE, MY GIRLFRIEND IS IN THE TRADE AND BY OTHER ESTATE AGENTS THEMSELVES. IT IS WIDE OPEN TO ABUSE AND OCCURS HERE, IF YOU HAVE READ MY POSTED DETAILS.

The net price is more common in large land deals where the separate land owners gets so much, the land gatherer bumps it up, the real estate then bumps up that and quite often there is another party working for the purchaser that bumps it yet again. These can get very confusing. Occasionally there can be a freelance in there as well who has also bumped it up. It would be much easier (and safer) to just sell on commission, but you often don't have that option. Usually the buyers are Thai and are well aware of what is going on, but ignore it all if the final price is still reasonable. THE NET PRICE IS VERY COMMON HERE AS THIS IS WHAT MOST AGENTS ACTUALLY ASK "WHAT YOU WANT NET, SIR" YOU NEVER GET MORE THAN YOU ASK FOR NET, NO MATTER WHAT THE BUYER ACTUALLY PAYS (ANY EXTRA IS THE ESTATE AGENTS ADDITIONAL PROFIT ABOVE AND BEYOND THEIR AGREED COMISSION)

Saying that it is immoral or fraud is ridiculous, it is all contracted like that. Generally the purchaser has seen a number of properties and has a feel for comparative market value. Perhaps the buyers in Pattaya are less savvy, as generally buyers here do haggle for good deals. OFTEN THE PURCHASER HERE PLACES TRUST IN ESTATE AGENTS PRICING GUIDE AND ITS SO EASY TO PAY AN EXTRA 50,000 OR 100,000 ON PURCHASE VALUES IN THE MILLIONS. GREAT TO HAVE A SALE BONUS OF 50,000 OR 100,000 EXTRA THOUGH, AFTER THE SELLER GETS HIS NET AMOUNT. IT RIDICULOUS TO ARGUE AGAINST THE FACTS AND EVIDENCE JUST HERE ON THIS THREAD LET ALONE WHEN YOU SEE IT AND GET TOLD ABOUT IT PERSONALLY.

Buyers tend to forget who the agent is working for: the owner. If the owner instructs to sell for a net price then that is what you do. Does anyone really think a commission price will be cheaper to buy? The higher the sale price the higher the commission. If an agent is pushing you to set a net price and you don't want to do that, then find a better agent, you are the seller and it should be your choice.MY POINT ENTIRELY, MOST AGENTS HERE ARE WORKING FOR THEMSELVES FIRST AND FOREMOST, THEN THE SELLER. DON'T GET CONFUSED WITH WORKING OUT THE HIGHER COMMISSION AMOUNTS ON HIGHER SALES PRICES. IT'S IRRELEVANT IF YOU JUST KEEP THE EXTRA CASH AS YOUR RIP-OFF BONUS, AS WELL AS THE EVER SO SLIGHTLY AGREED LOWER COMMISSION. JUST KEEP ALL THE EXTRA ABOVE SELLER'S REQUESTED NET PRICE!!! AND THEY DO, OFTEN.

THIS PRACTICE IS WHAT WE DO CALL IMMORAL, FRAUD, RIP-OFF. I LIKE TO CALL IT WHAT IT IS!!!!!

I WOULD BE DISMAYED TO FIND OUT MY BUYER PAID 50,000 BAHT MORE THAN I WAS TOLD OR RECEIVED BECAUSE THE AGENT DIDN'T JUST NOT TELL ME AND TAKE A SLIGHTLY INCREASED COMMISSION AMOUNT, GIVING ME THE TRUE SALE AMOUNT. OH NO, THE AGENT KEPT THE WHOLE 50,000 AS I GOT MY NET AMOUNT, SO I SHOULD BE HAPPY. I AM NOT HAPPY AT THIS LIE AND RIP OFF. IT'S INDEFENSIBLE TO ANY RIGHT THINKING PERSON AND DISINGENUOUS TO SUGGEST IT DOES NOT HAPPEN. IT HAPPENS IN PATTAYA EVERY DAY AND SELLERS ARE IGNORANT THAT THEY WERE ROBBED OF THE REAL FULL VALUE OF THEIR NEGOTIATED SELLING PRICE!

AN AGENT I KNOW SAID SHE MADE A MISTAKE IN DROPING A PRICE TOO MUCH TOO FAST AND LOST 100,000 PROFIT. I ASKED HOW? BECAUSE THE NET PRICE WAS 300,000 BELOW THE AGENTS SALE PRICE AND THE UNINFORMED BUYER WAS WILLING TO PAY MORE THAN THE EQUIVALENT NET PRICE PLUS ALL COSTS AMOUNTED TO. IT TRANSPIRED (OBVIOUSLY) THAT THE AGENT WAS GETING THE BEST PRICE FOR THEMSELVES AND NOT THE SELLER, OF COURSE. THE SELLER'S NET PRICE IS THE BASE LINE AND ANYTHING MORE IS THE AGENTS GOOD FORTUNE.

Likewise people who try to sell their properties themselves. There is a perception among some buyers that these are the bargains. Is the seller selling below market value? No. he is simply selling at the same price the property would be set at any way, he just wishes to pocket the commission amount rather than pay the agent which is his choice. YES AND YOUR POINT? Also if you think it is clever to contact the building manager to get a deal, think again, they are in the commission either by percent or net price. Likewise the taxi driver who took you there, the hotel concierge or guide who recommended the building etc. YES, NOT A GREAT PRACTICE BUT YOU LOOSE A VERY SMALL PERCENTAGE ONLY AND NOT QUITE SUCH A MAMOUTH LIE. THERE'S NO SIGNED CONTRACT OR TRUST BUILT UP.

Finally my favorite, the foreign customer that shows up with his Thai spouse, as she is going to get the best deal for him. I gather the assumption being that her speaking Thai somehow makes her an authority of real estate values? Either that or use her to speak direct with the owner and then cut the agent out. I've seen a few of these where the guy actually paid more than he had to, guess who the commission went to? We definitely do try to keep buyers from meeting owners. Firstly to avoid getting cut out and secondly to prevent buyers negotiating direct with the owner. Why? Because often they are just testing the market and not serious, no signed contract at offer with deposit, then no offers put forward. Saw another girl do an auction between owners (in the days we didn't keep them apart) as to who would pay her the most, she got an amazing 500k. Her husband, yes husband, would have been much better off coming alone. Bring her to approve the choice but keep her out of the negotiating...but, up to you. YES, DIGRESSING AWAY FROM THE CORE POINT OF IMMORAL, FRAUDULENT, RIP-OFF ESTATE AGENTS THOUGH. THANKS FOR THE LARGELY OBVIOUS HEADS UP THAT THAI GF'S ARE NOT PROPERTY EXPERTS, DON'T HELP AND MAY BE ON THE TAKE. THEY WOULD DO WELL TO SET UP ESTATE AGENTS HERE IN PATTAYA - PERHAPS WITH THEIR FORIGNERS MONEY, MANY HAVE .

As I said I don't work in Pattaya, so don't know the general practices. However I sold a condo in Jomtien about a year ago, just paid the commission on the sale, no talk of net price etc.

I assume a sales contract is also required in Pattaya which both parties sign and agree to outlined conditions. Presumably the sale price is mentioned somewhere in there? I gather you are suggesting that they use a bogus sales contract so that you don't know the real sales price. That not only would be risky if there was a dispute but would be blatant fraud. After the contract has been signed there is no reason to keep parties apart.

The point about selling yourself is do so if you so choose.

You do seem to be in a bad mood, couldn't you also add red font with dripping blood so we can really get the point? I don't personally get rip off bonuses, however stereotyping is a simplistic form of abuse.

I metioned the so-called obvious "heads up", as if it was so obvious why it would keep happening? Yes, we did have one girl that was a former Pattaya agent look for a job here, looked like a couple a gyrations around a chrome pole wouldn't have been entirely unfamiliar territory for her, blast, now I'm stereotyping.

I'm pleased to hear the managers, guides, taxi-drivers etc are much more honest in Pattaya than here. That at least reinforces some of my faith in human nature. Seems real estate agents are getting a bad rep, I may have to buy a bar or sell used cars so my kids don't get embarrassed at school.

[twix38]

Gravelrash,

Not a bad mood, so much as rather fed up with all the corruption I see/hear and find this practice a really shady one that is simply outright robbery.

Not tarring you with the same brush, although from your reply and experience you were probably out to paint a better picture for the industry than I have been made aware of in Pattaya, so if we get a balance somewhere inbetween our views then that probably hits the right note.

My Taxi driver etc point was that whatever they do, it's a fraction in money terms to this Estate Agent rip-off, when it is employed. Just a small commission rather than thousands of Baht.

My actual and original point was not to go for a net amount, followed by the unregulated nature of Estate Agents in Thailand and the opportunity to follow the norm into corrupt practices. This still all hold true and I wanted to alert and inform other less aware individuals here.

Couldn't find the "dripping blood font" but i'll keep a look out for it ;-)

[Gravelrash]

Twix,

Real estate is a regulated industry in the west for obvious reasons. This net price thing really does often get requested by Thai owners, we accommodate that and the other Thai agents obviously love the idea. I think like many things here the foreigners think that "when in Rome" is a good idea even if it isn't. Pattaya has always been a bit of a "wild west" town so I guess it is no big surprise if going on. I generally don't have anything to do with the place so really don't know what goes on there. We generally don't even do conjunctions as usually the other agent is trying to just grab the whole deal.

I don't have a moral issue with net price if requested by the owner, however both parties should see clearly what the actual selling price was, and unless venturing into fraud I don't see how that is avaiodable.

For reasons already outlined it is usual to keep owners and buyers apart, however there is no justifiable reason after the contract has been signed. If this is so rampant and parties want to double check then they should be able to meet then to confirm details. Alternatively find out the true market price and set a net figure accordlingly. Interstingly here, owners rarely ask for a comparative market valuation, just state what they want regardless whether feasable. Generally properties sell for what they are worth, unless people there have more money than sense.

[Sunbelt Asia]

Twix,

Real estate is a regulated industry in the west for obvious reasons. This net price thing really does often get requested by Thai owners, we accommodate that and the other Thai agents obviously love the idea. I think like many things here the foreigners think that "when in Rome" is a good idea even if it isn't. Pattaya has always been a bit of a "wild west" town so I guess it is no big surprise if going on. I generally don't have anything to do with the place so really don't know what goes on there. We generally don't even do conjunctions as usually the other agent is trying to just grab the whole deal.

I don't have a moral issue with net price if requested by the owner, however both parties should see clearly what the actual selling price was, and unless venturing into fraud I don't see how that is avaiodable.

For reasons already outlined it is usual to keep owners and buyers apart, however there is no justifiable reason after the contract has been signed. If this is so rampant and parties want to double check then they should be able to meet then to confirm details. Alternatively find out the true market price and set a net figure accordlingly. Interstingly here, owners rarely ask for a comparative market valuation, just state what they want regardless whether feasable. Generally properties sell for what they are worth, unless people there have more money than sense.

Our real estate division and our mergers and acquisition department have been told that the seller would be ok with the net price as well, or an extra bonus if we were involved in getting a transfer done, and we absolutely have refused to accept this in every case. We have always been adamant that the buyer and seller must agree on the price they are happy with. This is their money, not our company’s money.

What our division’s professional fee is, and what the selling price is, are fully disclosed in a sales and purchase agreement signed by the buyer and seller. Even the initial offer to purchase agreement has our fee disclosed to the buyer.

We know that other firms have felt that it’s OK, as others take the net fee, but we feel that this does not make it right. This practice just hurts the real estate industry. Even though the seller signed a contract in reference to the net price, it’s fraud, as the buyer certainly did not sign a contract, disclosing he was paying a much higher price than what the seller wanted.

It’s also fraud because how could you as an agent have your buyer’s best interest at heart? You are not negotiating on behalf of the buyer or even the seller; you are negotiating with yourself as the broker and not the owner or buyer. The ultimate net price is being fixed by the broker. The buyer and seller are just pawns in this scheme.

www.sunbeltasiagroup.com

[quiksilva]

Agreed its a repugnant scam. Over the years I too have been approached by several Thai brokers who wanted to fix prices on some of my prestigous sole agencies and in every instance I have severed all contact with them.

The sooner we can get some licensiing in this industry the better it will be for all of us.

Sunbelt feel free to PM to discuss this matter to see whether our firms can take this further if you wish.

[twix38]

Sunbelt and Quicksilva,

Good.

Clearly Gravelrash is talking his own book and whilst I have no doubt he/she is genuine and does not enter into this scam, I fail to see how when the worst practices are undertaken as per my posts and evidence, he/she can do anything other than call it what it is and accept that the facts confirm it is ongoing. OR is it possible that either Gravelrash has failed to really fully understand and accept it is widespread (still) or that I have misread Gravelrash and he/she is actually trying to defend this practice via the back door!!!!!!!!!

Agreed, the sooner we get this industry regulated, the better. Gravelrash, I don't hear you calling for regulation for the industry, as a responsible, respectable and aware representative certainly should be in the circumstances? Come on, it's the Wild West in Pattaya, as you yorself say, so let's see you take the Bull by the horns, stand up and be counted. Certainly, the Thai Estate Agent business left to self regulation is as corrupt as many other things in this amazing country. Is it any wonder. It is certainly indefensible.

There is clearly only one response to this issue and you guys (Sunbelt and Quicksilva) have my utmost respect.

Gravelash, you are in a monority and bordering on appeasement for fraud and substandard practices!

Edited February 13, 2007 by twix38