Why are real estate agents commissions so high in Thailand compared to Europe?

[sam neuts]

I would be interested to know why it is so expensive to sell/buy a house or condo in Thailand.

 

With most real estate agents charging a massive 5% of the selling price in Thailand compared to 1 - 2% in UK.

 

https://hoa.org.uk/advice/guides-for-homeowners/i-am-selling/how-much-should-i-pay-the-estate-agent/

 

5% seems unreasonable for both seller and buyer, to me.

 

Obviously there are local classifieds in Thailand to advertise your property for sale and social media marketing which may bring results, and are cheaper options.

 

But, sureły a well established agent charging similar rates to Europe providing professional valuations, and marketing would do well in the marketplace.

 

I have no interest in doing this as a business and am only asking after having a conversation with a friend.

 

He was buying a house for 6 million THB until he realised the agent had increased the asking price by 300,000 from 5.7 (aparently for negotiation purposes) and was then charging 5% commission (300,000), for him looking in the window of the agent and them driving him to see 4 houses.

 

The Owner was actualy selling for 5.7 million THB

 

My friend was paying 6 million THB

 

The owner of the house was going to receive 5.4 million THB

 

The agent would have got 600,000 THB in commission.

 

Seems shocking to me.

 

 

 

 

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[KittenKong]

Why are commissions so high here? Why are most things overpriced here?

 

Too many lazy agents all trying to exist on one sale a month. They think the world owes them a living, and they dont like the idea of actually working or putting in any effort.

 

That said, commission rates are entirely negotiable.

[blackcab]

Because some people will pay.

 

I work for a company that buys land and other property in Thailand, and we do not pay agents. If the seller wants to pay, that's up to them.

 

In general, however, we contact the seller direct without any use of their agent. We then ask for the commission they would have paid to be deducted from the asking price.

[BEVUP]

In Auss it's roughly 4 %

 

The thing that gets me here is that the purchaser of the property is hit up for 50% of the Taxes / Fees, even though most of them are related to the Seller

[KittenKong]

8 hours ago, BEVUP said:

The thing that gets me here is that the purchaser of the property is hit up for 50% of the Taxes / Fees, even though most of them are related to the Seller

That is entirely negotiable. Vendors and agents often mention 50/50 as though it was "normal", but in fact it is up to the buyer to negotiate it, just as it is up to the buyer to offer less than the asking price if he wishes.

 

Anyone who just pays the asking price here, or who accepts the tax/fees conditions without question, is a bit of a twit.

[Pattaya46]

On ‎8‎/‎19‎/‎2018 at 2:43 PM, BEVUP said:

The thing that gets me here is that the purchaser of the property is hit up for 50% of the Taxes / Fees, even though most of them are related to the Seller

Not exact. The land office will produce a bill where very clearly the different taxes are separated. What should go to the buyer on the left, on the seller on the right, and the total at the bottom.

It's current at Pattaya Land office to see the total amount cut 50/50 but, as said above, it's part of the negotiation.

 

Now keep in mind you are talking about very small amounts. In my case (I sold my condo in May) the buyer part should have been 37% and the seller part 63% of the total. The difference between 37% and 50% is 13% of a total tax about 3% of the declared price, so 0.4% of the price... or about 4'000 baht (only) per million. 

 

Edited August 23, 2018 by Pattaya46

[Henryford]

As a buyer i would never pay any commission and only pay the seller what the house is worth. If he wants to give away 5%, up to him.

[baansgr]

Maybe that 1.5% of a house in the UK would give the agent £5.000 whereas 1.5% of a small condo here would equate to only  20.000 baht. 

[hurni77]

As a buyer i would never pay any commission and only pay the seller what the house is worth. If he wants to give away 5%, up to him.

... what the house is worth? Impossible to say. What somebody is willing to pay for it, that is the only thing possible to define, but only if it is sold at some time. With or without commission is not really the point, is it? All perception ... (see: anchoring, behavioral finance)



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[KittenKong]

1 hour ago, baansgr said:

Maybe that 1.5% of a house in the UK would give the agent £5.000 whereas 1.5% of a small condo here would equate to only  20.000 baht. 

There are houses in parts of the UK that sell for no more than a decent condo here (ie around 3-4-5MB), and there are plenty of condos here that sell for 10-20-30MB or more, which is far more than the average cost of a UK house. 5% of either seems ridiculous to me and always will.

[sirineou]

21 hours ago, baansgr said:

Maybe that 1.5% of a house in the UK would give the agent £5.000 whereas 1.5% of a small condo here would equate to only  20.000 baht. 

well said

in the US  4 to 6% is  normal, for an average priced property. I recently sold a property in NY where I offered 6%. Usually there are  two sides in the transaction , the selling agent and the buying agent. So that's a 3% split . both agent work for an office  and the office will also get a cut , so in the end the selling agent might end up getting less than 2% same for the buying agent. 

You want a healthy commision to get maximum exposure, and command a higher selling price.

If I was an agent and   had a buyer and I see a house advertised at 4% I will skip it.If I was an agent and had a listing at 4% I would certainly not spend a lot in marketing.

  End result less Buyers see your property,  

I can't believe  in the UK anyone would take a listing ( unless it was a multi million property) for 1.5% thats a .75% split , on a $200,000 property that's $1500. I would not get out of bed for $1500.

[BEVUP]

3 hours ago, sirineou said:

You want a healthy commision to get maximum exposure, and command a higher selling price.

Maximum exposure you can get on the internet site

Agents are crooks you do nothing but show people houses (in AUSS any way )

The seller has to pay for everything - Advertising , checks ect ect 

 

Now for the higher price

I think this is the only reason that people revert to agents (as it seems people rely on an institute to set prices ) & that most couldn't be bothered organizing a lawyer 

[KittenKong]

3 hours ago, sirineou said:

well said

in the US  4 to 6% is  normal, for an average priced property. I recently sold a property in NY where I offered 6%. Usually there are  two sides in the transaction , the selling agent and the buying agent. So that's a 3% split . both agent work for an office  and the office will also get a cut , so in the end the selling agent might end up getting less than 2% same for the buying agent. 

You want a healthy commision to get maximum exposure, and command a higher selling price.

If I was an agent and   had a buyer and I see a house advertised at 4% I will skip it.If I was an agent and had a listing at 4% I would certainly not spend a lot in marketing.

  End result less Buyers see your property,  

I can't believe  in the UK anyone would take a listing ( unless it was a multi million property) for 1.5% thats a .75% split , on a $200,000 property that's $1500. I would not get out of bed for $1500.

The 6% in the US is even more daft than the 5% here. In Europe you would struggle to find a country in which more than 3% is common, and even then the percentage would normally be negotiable for larger properties.

Believe what you like: 1-1.5% is the norm in the UK. There is no "split" and the one agents keeps the lot. The difference in the UK is that the market is real and properties sell in days rather than months or years. So they make a lot of sales.

 

Buying and selling agents? What for? In most countries one agent does the whole job and one agent gets paid for it.

 

Agents in the UK and elsewhere seem to have no trouble spending time and money on marketing, even at 1-3% commission.

 

As for not getting out of bed for 1500USD, for many that's a month's wages. Selling may be a skill but it requires no training or intelligence or qualifications (yes, I know that the US is unusual in that agents there do have licences and follow some training, but in most countries they dont), and if salesmen on commission want to earn more they should just do more selling. That's how it works.

 

[sirineou]

On 8/25/2018 at 8:12 AM, KittenKong said:

The 6% in the US is even more daft than the 5% here. In Europe you would struggle to find a country in which more than 3% is common, and even then the percentage would normally be negotiable for larger properties.

Believe what you like: 1-1.5% is the norm in the UK. There is no "split" and the one agents keeps the lot. The difference in the UK is that the market is real and properties sell in days rather than months or years. So they make a lot of sales.

 

Buying and selling agents? What for? In most countries one agent does the whole job and one agent gets paid for it.

 

Agents in the UK and elsewhere seem to have no trouble spending time and money on marketing, even at 1-3% commission.

 

As for not getting out of bed for 1500USD, for many that's a month's wages. Selling may be a skill but it requires no training or intelligence or qualifications (yes, I know that the US is unusual in that agents there do have licences and follow some training, but in most countries they dont), and if salesmen on commission want to earn more they should just do more selling. That's how it works.

 

 Not daft simply different dynamics for Thailand, US, UK and elsewhere. I am not prepared to talk about the UK real estate market since I know litle about it, other than say that 1,5% seems very low to me for the reasons I stated in my description of the US market. If  given the dynamics of the market 1.5% is adequate then that's good for you, but those dynamics do not exist in the US and in Thailand. 

     In the US it is a highly organised endeavour with many protections for the consumer, the US is a very large country with a highly mobile population.Often a person at NY will be looking to sell a property there and relocate to , lets say AZ ,a realtor will have to do a Comparative  Market Analysis (CMA) in both markets to ascertain the best possible selling price at NY and paying price in AZ, offers have to be made, negotiated  , contracts become bilateral and taken to closing along with property structural inspections and  title searches.  Both properties are placed in their respective Multiple Listing Services (MLS) for exposure at their respective markets, since these transactions often take place in different states   they are governed by different state laws and regulations and require agents versed and licensed in their states. 

   In Thailand it is the opposite, there is litle structure and regulation and what litle regulation exists it is often not enforced , Evaluations are difficult because there is litle access data concerning listing prices, (wish I could get price)  time in the market,price adjustments, actual sale price. and property information ,to compare different properties so that you are not comparing apples and oranges. (CMA that we talked about earlier) . Also there is no (as far as I know) no accreditation agency regulating the process and its  agents.  

   When you pay litle and you get what you paid for.  Cheap is not good, and good is not cheap.

 

PS: I was a part owner of a C21 franchise, a licensed broker in the state of FL .and know a litle about the subject.

[Number 6]

On 8/23/2018 at 8:36 PM, Henryford said:

As a buyer i would never pay any commission and only pay the seller what the house is worth. If he wants to give away 5%, up to him.

This is my opinion as well. Seller will pay all taxes, I'll pay half the transfer fee.

[ivor bigun]

I love the bullshit that people talk about estate agents,none of them ever having worked in the trade,as i always said advertize it,sell it arrange the mortgage and do all the work yourself if you dont want to use an agent, just dont whine about having to pay losers

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[sirineou]

1 hour ago, Number 6 said:

This is my opinion as well. Seller will pay all taxes, I'll pay half the transfer fee.

Regardless who pays the commission ,in reality both parties are paying the commision because the commision is a component of the transaction and is baked in to the price that the buyer pays or the seller receives. 

[Rc2702]

The rental agents rake it in here. They try to charge 20% on the monthly rent. The 1.5% in uk is ok as the agents normally have a decent salary too.

[baansgr]

On 8/26/2018 at 11:47 AM, Rc2702 said:

The rental agents rake it in here. They try to charge 20% on the monthly rent. The 1.5% in uk is ok as the agents normally have a decent salary too.

 

Never seen an agent here charge 20% a month for rental. UK sales is 1,5%, rentals are usually 12-15% and there are fees on top, VAT, contracts etc.

[KittenKong]

On 8/25/2018 at 5:22 PM, sirineou said:

Not daft simply different dynamics for Thailand, US, UK and elsewhere. I am not prepared to talk about the UK real estate market since I know litle about it, other than say that 1,5% seems very low to me for the reasons I stated in my description of the US market. If  given the dynamics of the market 1.5% is adequate then that's good for you, but those dynamics do not exist in the US and in Thailand. 

That's just agent-speak for what I said: they charge that much because there are too many of them and they prefer to make a fortune from one sale a month rather than a little from one sale a day.

 

It makes no difference whether you know about the UK or not: agents' fees in most countries are far lower than they are either here or in the US.

 

On 8/25/2018 at 5:22 PM, sirineou said:

In the US it is a highly organised endeavour with many protections for the consumer, the US is a very large country with a highly mobile population...........

   In Thailand it is the opposite, there is litle structure and regulation and what litle regulation exists it is often not enforced ,

In that case even if one assumes that 6% is reasonable in the US (and I dont assume that), why should 5% be reasonable here?

For me both are way over the top.

[Delight]

The force that results  with low agent fees or high agent fees is always in control.

It is the  simple(to understand) force of supply and demand –and more precisely which of the 2 is dominant at a particular point in time

More demand than supply –low percentage  fees. Agents compete with each  other.

More supply than demand –high percentage fees. Sellers compete with each other.

It seem to me if a sellers wishes to put him/herself at the bottom of the queue(from the agent’s position ) when supply exceeds demand –then negotiate a low percentage fees.

[ivor bigun]

The problem here in Pattaya is that most sellers want far more than their property is worth,that along with ovesrsupply is the reason agents charge a high fee,half the time propertys cannot be sold ,and by the way most agents charge 3% on a decently priced property. But try telling anything about agency to those not in the trade ,they know it all dont you

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