New Business Idea In Pattaya/jomtien ?

[KhunTao]

Set up a new real estate agency ! Number 161 in fact ….

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OK, this is where you laugh manically and move your cursor to the return prompt … however give me the benefit of doubt for a moment and hear me out ….

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Real estate agencies in the Pattaya/Jomtien area now charge sellers 5% on a success basis. This used to be 3%, however it has inexplicably gone up by a mere 2% over the last year or so … If the punter (alias wise investor), is brought to the selling agent by a different agency, the fee will typically be split.

In other countries, percentages around 1,50% are more common (the UK comes to mind, for example). When asked why the wide pricing difference is justified, Pattaya/Jomtien real estate agencies will usually state that they have to charge more as they spend an inordinate amount of time showing punters (alias shrewd calculated risk-takers) pokey little condos in the Bt. 1-2 million range. If the handholding leads to an actual sale, the broker can look forward to a grand remuneration of between Bt. 50,000 and Bt. 100,000, usually split with the buyer´s agent. So, net net, after splitting, a possible success fee of between EUR500.00 and EUR1,000.00 equivaent for their bread and butter category. Occasionally, the broker gets lucky, facilitates the sale of a Bt. 20 million property and still seeks to charge 5%.

I actually buy this argument. Indeed the average sale price in the Pattaya/Jomtien area is a lot lower than in OECD countries and therefore one cannot expect the same pricing. You could argue that overheads are a lot lower as well, in terms of salary and office costs, however I think that by and large the need for a somewhat higher pricing is justified.

On the other hand, doesn´t this present an opportunity for launching a new real estate agency (working name "Prestige Lifestyle in Tropical Splendor") that will solely focus on more exclusive properties, say Bt. 5 million and up and charge 1,50% to sellers instead of 5,00% ? In theory, such new real estate agency (new working name "Exclusive Expressions in Elaborately Exotic Environments") would capture a decent chunk of the Bt. 5 million plus category as sellers would flock to it. At a minimum, such high end real estate agency would foster price competition in the higher value segment.

What do you think ?

[CGW]

Got to agree with you - But for the 5% or 1% you need customers? where will you get them from..........

[tattoodrob]

agreed......1 percent of nothing is.......let me get my calculator,ermm hold on...........errr......it says nothing.

cost of setting up shop,key money,staff,rent,advertising,work permit etc ,ermmm hold on,get me calculator ermmmmmmmm it says a lot more than nothing.

why do u think they all put there price up to 5 percent because if they get a sale then they want more, just coz its real hard at the mo to get a buyer,so seller has to pay for this....so seller puts price up to cover this and then buyers arent interested as overpriced!!!!

wait for some sort of improvement in the market before you open,then another 50 will open at same time and undercut you.

still keen?? goodluck

[LennyW]

I would let you market my properties at 1.5% commission to you, if you ever get the idea off the ground let me know!

[Naam]

In theory, such new real estate agency (new working name "Exclusive Expressions in Elaborately Exotic Environments") would capture a decent chunk of the Bt. 5 million plus category as sellers would flock to it. At a minimum, such high end real estate agency would foster price competition in the higher value segment.

What do you think ?

[Gary A]

I think a new Go Go bar on Walking Street is a similar "GOOD" idea.

[Guderian]

It will work if you can market it effectively.

A new European restaurant has recently opened up in the condo where I live. They've done a beautiful job of it, atmospheric lighting, smartly dressed staff, crisp linen tablecloths and napkins, giant paintings of the Eiffel Tower and Coliseum on the walls, an extensive and reasonably-priced menu... but whenever I go past it is empty. Why? Because they haven't got the first idea about marketing. There's no sign on the road outside the condo to indicate that this restaurant exists, there's no menu at the door that prospective customers can browse through, and they have done no advertising at all that I have seen. No marketing = no customers.

So for your idea to take off you would need a very aggressive advertising campaign. Get interviews in all the local rags to explain your business model (and not just the English ones). Pay for nice adverts as a way of getting these interviews. Put adverts in a bunch of Baht buses. Find out where to advertise to reach the Russians. Build a nice website and keep it up to date (unlike most of the estate agents here). I'm sure you can think of many other ways of promoting your agency. It will take time to get it rolling, but once your low fees become well known, you won't be short of customers.

Good luck!

[NanLaew]

It will work if you can market it effectively.

Find out where to advertise to reach the Russians. Build a nice website and keep it up to date (unlike most of the estate agents here). I'm sure you can think of many other ways of promoting your agency. It will take time to get it rolling, but once your low fees become well known, you won't be short of customers.

Good luck!

Russians really like to deal with fellow Russians so you need to hire some Russians and not just some Russian speakers. An English/Russian web site is a must.

A friend of mine in the oil patch had a wife who was an air hostess for 12 years. She got bored, quit, took some real-estate classes and set herself up in the Houston exclusive 'River Oaks' and 'Inner Loop Memorial' neighborhoods. She banked well over a million bucks within the first year of business and on their wedding anniversary, she bought her husband a fully loaded Corvette, cash! Unfortunately they had a messy divorce (the bitch took the 'vette back) but aiming for the top percentile of the market certainly paid off for her. I don't know if it's a fat enough market here in Pattaya (diluted with cookie-cutter studio condos, poor utilities, infrastructure and facilities) but there's more exclusive construction in Phuket, Krabi and Samui that may be more promising and more visible. There's a brand new 99 million baht mountain top extravaganza up for grabs on Samui right now. I just forked out 40 million for a Phuket villa so can't manage that Samui pleasuredome right now.

[foxxx]

Yeah it's not a new idea, 1% is low, and there's agents doing it already and they are making little money and have no money to market with.

it's hard to market for customers when your income is only covering expenses. even with a fair few sales. until you hit a critical mass of properties on the books your profits after taxes are all going on expenses.

there's a much higher percentage of properties under 3-4m than there is above, so expect that high percentage of your sales being in those numbers, 3-4m, so your 1% on that is 40k, with 5-10k on marketing that property, 2-10% commission to the sales person + time spent with every enquiry and viewing, and % of the revenue to cover other overheads - your left with very little.

i think most of the agents are raising their commissions due to the number of agencies out there, and the fact that most of the properties are so cheap the commissions are so low.

the agencies are having to do lots of marketing to get out there through all the other agencies, there really is a LOT of agencies around town. Another thing to remember is a lot of these property developments with apartments or houses don't put them through agencies, they are big enough that people know them and come to them direct. so even though there's lots of new development around, you wont be selling it.

not killing the idea, just adding my perspective / thoughts into the mix.

[PattayaParent]

Thai economics 101, I'm not doing any bsuiness so I'll raise my prices.

The estate agents I've spoken to said they had to raise their commission because there's so much competition now that they're not selling as many units as they used to so are making less money.

The couple that are still charging 3% are not complaining though.

[DonTron]

In a marked like Pattaya with 160 realtors, I think it depends MUCH more on the service buyer and seller gets from the realtor than if you pay 3% or 5%.

Personally I enjoy paying my realtors well and if a deal goes thru smooth and painless with everyone smiling at the end (also buyer), the I don’t mind paying the higher percentage.

I have dealt with some of those "cheap-cheap" types, and it is NOT worth saving the 2%-3%. Many of them will put you thru hel_l, screw you on the deals and not even honor their own contracts.

I would focus on 3 things when it comes to properties... location, location, location - price is secondary

I would focus on 3 things when it comes to a realtor... reputation, credibility, service - price is secondary