Real Estate Agents Why Is The Commission So High Here ?

[PattayaPhom]

Few thousand baht.... You really think that's all it costs to list, market and sell a property,,,employ and train staff, host website and server, vehicle maintenance and running costs, utilities, taxes, etc etc etc

Not much more. If the agent has 100 listings then the costs are shared. The real estate company he works for usually has many agents not just 1, their costs are shared also as are the commissions. Renumeration is mostly commission - training they can get from any bar girl on how to empty a farang wallet and leave him smiling!!!

They are not supplying a labor intensive service or supplies like a builder or tradesman and their costs are minimal. As long as people like you accept and justify that 5% is the cost of selling a house with a bit of profit included real estate sellers will be very happy. I am sure they thank you for your support.

Gerry, you really dont have any understanding of the industry and what costs are involved with running an agency. You say costs are minimal.....Its not just about taking a few photos and sticking them on a free website......Why do you assume its mostly foreign customers by way of your comment about emptying wallets, over 50% of our customers are Thai. The agent and company are one, the agent being employed by the company not as you believe the agent working freelance. And lets just say with some of the idiot foreign customers we get, it can be a very labour intensive service

[PattayaPhom]

do you really need an agent to sell anything here, we have many websites including TV, once you have and interested buyer then involve a solicitor to do the paperwork, do the money exchange yourself - never allow a solicitor or 3rd party to hold your dosh - it might disappear and will be very hard to get back

I've used these so caled free websites and the quality of replies is amazing. Car for sale at 580.000 Baht and getting emails 'give ya 200,000 mate'......bike at 98,000 and again emails offering 40k....never a call just ponsy emails from dreamers.

[sotsira]

Also I've never seen 1% in the UK it's nearer 2-2.5 depending on location and value. They will also tie you into a sole agency agreement.

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That's not exactly true, especially at the moment with a slow market in the UK.

Agents are offering 1% as sole agents and 1.5- 2% as multi agents.

They are desperate for business as there are few buyers and sellers around.

[sotsira]

do you really need an agent to sell anything here, we have many websites including TV, once you have and interested buyer then involve a solicitor to do the paperwork, do the money exchange yourself - never allow a solicitor or 3rd party to hold your dosh - it might disappear and will be very hard to get back

Totally agree, and you don't even need a solicitor either if you know how easy it is to just go to the land office

with the buyer and do the transfer within a couple of hours.

Lawyers just make the whole process more complicated to justify their fees, complete waste of time and money.

I've sold a few properties here by just putting up signs, if the price is right they sell quite easily.

[BlackPuddingBertha]

We pay our agents 8% (for our neighborhood projects) and 10% (if they are selling our condos). The profit margins make it possible.

A very eloquent explanation as to why property in Pattaya is not a good thing to buy. There is far too much commission in the prices.

[BlackPuddingBertha]

Example at 1% Nirun condo 500,000 Baht equates 5,000 commission, For that is at least 2 viewings for the buyer, contracts for deposit, trip to land office not to mention marketing, staff etc etc etc. Do the maths yourself.

You make an excellent case for fixed price charging rather than percentage commission, though I doubt that's what you are angling for.

It probably costs you no more to sell a 5MB condo than it does to sell a 500KB condo, but with a percentage pricing structure the extra you earn on a larger sale covers the loss you make on the smaller ones. And it was your choice to work on percentage rather than fixed rate, no one else's.

[craigt3365]

fees for realtors in the U.S. of A. 7%, in Germany and Switzerland 5%.

I just sold a house in the US and negotiated a 5% rate. It was a great deal as she had a buyer "in hand", with cash, and got the deal closed in less than 30 days. Finicky buyer and she was on the phone with him almost daily. Had to escort him to the escrow office to get the papers singed. You get what you pay for sometimes...

[BlackPuddingBertha]

5% is also the norm in Spain unless it's over a million euros then it's usually about 3%

The price is negotiable in Spain, just like in France and indeed everywhere else on the planet. More fool the vendor who just accepts the rate quoted to him without discussion. From personal experience I can assure you that 3% is common for properties worth much less than 1M EUR in both Spain and France, though agents in both countries like to quote figures of anything up to 8%.

Also I've never seen 1% in the UK it's nearer 2-2.5 depending on location and value. They will also tie you into a sole agency agreement.

This is just plain incorrect. The standard UK rate was commonly under 1% for years and only quite recently has gone above 1%. I've never heard of anyone paying more than 2% in the UK and even at 1% I have never had any property on sole agency.

The real difference between UK agents and those elsewhere who feel the need to charge more is that the UK ones actually sell houses every day, thus assuring themselves an income, whereas the ones elsewhere think they have done well if they make one sale a month.

It's simple if you don't like the process don't use them no need to start a pointless post about it.

Ah, the ultimate witless comment. Well done.

[BlackPuddingBertha]

I think most countries have laws against cartel pricing?

That may be so for goods pricing (though I'm not sure that Thailand has any such law), but services are usually not included in this sort of legislation.

Edited November 22, 2012 by BlackPuddingBertha

[simple1]

Don't know if you could negotiate a stepped commission structure with Pattaya based real estate agents. However, an example the Queensland Government has set the commission for real estate agents at a maximum of 5% of the first $18,000 of the sale price and 2.5% of the balance of the sale price; plus 10% GST (tax).

The real estate agent will also negotiate the cost for a "marketing campaign" i.e. adds in the local press etc, but listing on their website is "free". However you pay extra to keep your property on the first page of the internet search engine listing. Again I don't know if this service is offered in Pattaya, but would be a good idea as when I was looking for a property to buy in Pattaya the agents had sold, lost contact with the seller etc etc They do not keep their internet accessible property database up to date which is very annoying. This was the case with every agent I approached. Eventually gave up & drove around the areas I was interested in & bought off a Thai who had a sign for sale in front of her house.

Edited November 22, 2012 by simple1

[BlackPuddingBertha]

.... when I was looking for a property to buy in Pattaya the agents had sold, lost contact with the seller etc etc They do not keep their internet accessible property database up to date which is very annoying. This was the case with every agent I approached.

The level of incompetence in the Pattaya real estate business is indeed extraordinarily high. They never cease to amaze me.

[PattayaPhom]

.... when I was looking for a property to buy in Pattaya the agents had sold, lost contact with the seller etc etc They do not keep their internet accessible property database up to date which is very annoying. This was the case with every agent I approached.

The level of incompetence in the Pattaya real estate business is indeed extraordinarily high. They never cease to amaze me.

For somebody that recommends not to use them, how come you seem to know so much about so many?..suppose imcompetence attracts incompetence

[ThaiBob]

.... when I was looking for a property to buy in Pattaya the agents had sold, lost contact with the seller etc etc They do not keep their internet accessible property database up to date which is very annoying. This was the case with every agent I approached.

The level of incompetence in the Pattaya real estate business is indeed extraordinarily high. They never cease to amaze me.

I agree. I also believe they do not update their database/website so they can overstate the quantity of properties listed in their portfolio.

[BlackPuddingBertha]

The level of incompetence in the Pattaya real estate business is indeed extraordinarily high. They never cease to amaze me.

For somebody that recommends not to use them, how come you seem to know so much about so many?..suppose imcompetence attracts incompetence

I've had dealings with many over the years. I do look at condos from time to time, both for rent and sale, for myself and for others, and I may well buy one if I find one that I like at the right price. The trouble is that I like very few of the ones I see, and most of them are way overpriced. I have seen two or three that I very nearly did buy, and just one that I regret not having bought as it went for less than 50% of the asking price for identical units in the same building, having been listed at under 75% of the usual asking price.

And I dont recommend not using them; I recommend using them with caution, taking everything they say with a shovel of salt and being prepared to negotiate very hard about everything.

Only for off-plan new builds would I surely never consider buying via an agent.

[BlackPuddingBertha]

I've used these so caled free websites and the quality of replies is amazing. Car for sale at 580.000 Baht and getting emails 'give ya 200,000 mate'......bike at 98,000 and again emails offering 40k....never a call just ponsy emails from dreamers.

These people possibly do a lot less dreaming than you imagine. There are a lot of people in Pattaya trying hard to sell a lot of things, and very few of them get the asking price or anywhere near it. I'm sure that these chancers dont have to make many cheeky low offers before someone will accept in desperation.

Personally I'm just glad to be able to afford to buy new rather than look for used vehicles and TVs etc.

Edited November 22, 2012 by BlackPuddingBertha

[besth]

When I was still considering the option of buying a condo, I did ask directly one agent I got to kind of "trust" (as in not counting my fingers after shaking his hand, not beyond that) how much commission did he get if I were to buy a property.

Clear answer was 5%. I said I thought it was high and he made a point that I didn't quite agree with but wasn't completely unreasonable. It is a matter of setting a price and if you are happy buying, where the money goes is not really so important.

As one of the "prefer to throw money away in rentals than buying in Thailand" group members, my opinion doesn't count for so much on this, but the bit about the final price deal seems to make sense.

[bender92]

The Thai agents I talked to charge 3%, but I sold my room myself.

[PattayaPhom]

When I was still considering the option of buying a condo, I did ask directly one agent I got to kind of "trust" (as in not counting my fingers after shaking his hand, not beyond that) how much commission did he get if I were to buy a property.

Clear answer was 5%. I said I thought it was high and he made a point that I didn't quite agree with but wasn't completely unreasonable. It is a matter of setting a price and if you are happy buying, where the money goes is not really so important.

As one of the "prefer to throw money away in rentals than buying in Thailand" group members, my opinion doesn't count for so much on this, but the bit about the final price deal seems to make sense.

The vendor pays the commission...NOT the buyer so why worry......and its only a myth that the vendor is asking more to cover commission....It seems so hypocritical to moan and whinge about agents but then use them when it suits.....no morals some people.

[BlackPuddingBertha]

...... how much commission did he get if I were to buy a property.

Clear answer was 5%. I said I thought it was high and he made a point that I didn't quite agree with but wasn't completely unreasonable. It is a matter of setting a price and if you are happy buying, where the money goes is not really so important.

Typical agent-speak, and total nonsense as far as I'm concerned.

I wonder if they would say the same about a post office worker charging them 50B for a 25B stamp "because they are happy to buy it"? Probably not.

[BlackPuddingBertha]

The vendor pays the commission...NOT the buyer so why worry......

Not that old chestnut, please. In any transaction involving a vendor, a buyer and an agent, only one person is spending money. And he is the one paying for everything, no matter how much spin you might want to put on it.

[gmac]

...... how much commission did he get if I were to buy a property.

Clear answer was 5%. I said I thought it was high and he made a point that I didn't quite agree with but wasn't completely unreasonable. It is a matter of setting a price and if you are happy buying, where the money goes is not really so important.

Typical agent-speak, and total nonsense as far as I'm concerned.

I wonder if they would say the same about a post office worker charging them 50B for a 25B stamp "because they are happy to buy it"? Probably not.

That's what all the unofficial postal shops round town do isn't it?

[monty]

...... how much commission did he get if I were to buy a property.

Clear answer was 5%. I said I thought it was high and he made a point that I didn't quite agree with but wasn't completely unreasonable. It is a matter of setting a price and if you are happy buying, where the money goes is not really so important.

Typical agent-speak, and total nonsense as far as I'm concerned.

I wonder if they would say the same about a post office worker charging them 50B for a 25B stamp "because they are happy to buy it"? Probably not.

That's what all the unofficial postal shops round town do isn't it?

Exactly. Many can't be bothered to go to the postal office to get official price.

The petrol sold in bottles is the same story. Double or more compared to a regular petrol station...

Called capitalism I guess.

[monty]

I see the comparison is made with UK real estate agencies, which is a skewed comparison at best.

A bit research saw following numbers, for January 2012:

Average commission: 1.8%

Highest commission: 2.5%

Lowest commission: 1% (15% of the agencies).

The following are the average residential prices in the UK (based on actual sales between July and September 2012, as registered by Land Registry of England and Wales, Crown copyright:

Detached: £343,105

Semi Detached: £209,098

Terrace : £209,808

Flat: £245,533

So this brings the average commission pulled in by your average real estate agency at between 3,750 UK Pounds and 6,200 UK Pounds

.

Or between 187,500 and 325,000 Baht.

Guess what they are doing wrong in Thailand is using fixed percentages.

At least they could use some sliding scale based on property price.

5% on a 12 million Baht property is way over the top and 1,8% on a 600,000 Baht property would be way too low...

[LennyW]

You can argue the toss all you like to try and negotiate a lesser commission rate with any agent and they may accept, BUT, if that agent is listing 2 properties pretty much identical in style, size, location AND PRICE and one is paying 5% and one is paying 2% which property do you think the agent is going to promote?

[BlackPuddingBertha]

I wonder if they would say the same about a post office worker charging them 50B for a 25B stamp "because they are happy to buy it"? Probably not.

That's what all the unofficial postal shops round town do isn't it?

Exactly. Many can't be bothered to go to the postal office to get official price.

The petrol sold in bottles is the same story. Double or more compared to a regular petrol station...

Called capitalism I guess.

Hmm. No accounting for taste, I suppose.

But it will be a cold day in hell before I ever pay over the odds for something just because I cant be bothered to go to the source and pay the proper price.

[BlackPuddingBertha]

You can argue the toss all you like to try and negotiate a lesser commission rate with any agent and they may accept, BUT, if that agent is listing 2 properties pretty much identical in style, size, location AND PRICE and one is paying 5% and one is paying 2% which property do you think the agent is going to promote?

They will promote whichever the buyer is interested in, I'm sure of that. Any sale is a good sale.

And many agents in Pattaya promote the units they own themselves before promoting those owned by other people anyway. I'm certain of that as well, having seen it happen more times than I can remember. Many pigeons people just don't realise quite how crooked a business it often is here.

[monty]

You can argue the toss all you like to try and negotiate a lesser commission rate with any agent and they may accept, BUT, if that agent is listing 2 properties pretty much identical in style, size, location AND PRICE and one is paying 5% and one is paying 2% which property do you think the agent is going to promote?

They will promote whichever the buyer is interested in, I'm sure of that. Any sale is a good sale.

And many agents in Pattaya promote the units they own themselves before promoting those owned by other people anyway. I'm certain of that as well, having seen it happen more times than I can remember. Many pigeons people just don't realise quite how crooked a business it often is here.

It sure is.

But with a bit of due diligence they can be used to your advantage, and in the end they generate a lot of turn over in the real estate world, so in a way they help to keep that part of the economy ticking over!

[dickie58]

It also fair to say lot of the condo deveopers are offering the agents around 10% comm, thats why a lot of them are promoting condo sales so much, a lot of which have not even been started, let alone completed.

I recently sold my house which was on the market for 20m++, it was listed with over a dozen local agents for over 2 years, at the most i had 6 viewings through agents over that period, not 1 sensible offer from there clients. In the end i sold it to Bkk Thai's through my own for sale sign on the gate.

Its your own house put your own for sale sign up or advertise it in local media yourself, so the agents don't like it, but if there not bringing clients, do it yourself & save there fee, at the end of the day its your house/condo & your entitled to sell it anyway you choose?

[Heng]

Even if you go to the 'source' you still might be stuck with going through an agent. Plenty of sole agent contracts out there mean they you are never really dealing developer direct. The developers like it that way (I know we do, so we can focus on building) and the agents certainly like it that way (so much so you can almost see them salivating -because a lot of times, that's the bulk of their investment... LOTS of SALIVA- when a new project goes up).

[englishinsiam]

It also fair to say lot of the condo deveopers are offering the agents around 10% comm, thats why a lot of them are promoting condo sales so much, a lot of which have not even been started, let alone completed.

I recently sold my house which was on the market for 20m++, it was listed with over a dozen local agents for over 2 years, at the most i had 6 viewings through agents over that period, not 1 sensible offer from there clients. In the end i sold it to Bkk Thai's through my own for sale sign on the gate.

Its your own house put your own for sale sign up or advertise it in local media yourself, so the agents don't like it, but if there not bringing clients, do it yourself & save there fee, at the end of the day its your house/condo & your entitled to sell it anyway you choose?

With a 20 million property you only have a very limited market for potential customers.

Those properties don't sell every day whereas a 600I box can be bought by just about everyone looking got a property. Some agents specialise in the larger house but most are genetic and have a mix.

Glad to see someone posted the % for UK agents I knew just 1% was dreamland.

And what agent in Thailand is going to work for 1% of 600k ? That would equate to £120 commission for maybe a weeks work showing that customer around plus liasing with the various parties.

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