Who pays the broker?

[Stefanix]

We are in the process of selling our house. Besides potential buyers, brokers call as well.

There is no formal contract (and not even an informal one), so the question is: who has to pay them?

Just now there is a potential buyer, and we had an appointment with the broker for today. But on Friday (3 days ago), someone dropped in announced with reference to our sign outside. As it turns out, this was the client who should have come today together with the broker. Todays appointement was cancelled.

Is it possible that actually the client would have to pay the broker, but tries to bypass him?

After raising this issue with the broker, he said that we are free to negotiate the price with the client, but we have to 3% to him.

Is this the usual practise? In my opinion the party requesting explicitly broker services has to pay the broker.

How does this work? Would we have to pay the broker? We have no contract. He only called and asked if he may offer our house, not mentioning any conditions.

[richard_smith237]

What happens when you have your property advertised with a handful of brokers and someone walks in off the street (without seeing any broker) ?

Do all Brokers try and claim their 3% ???

IF one buyer comes from a Broker, then I imagine the Seller pays the 3% fee.

IF one buys comes off the street I cant see how a Broker can prove they have earned their 3%.

Edited November 18, 2013 by richard_smith237

[Stefanix]

As this is not properly regulated (?), I can imagine all kinds of strange deals. E.g. I want to buy a house and see it advertised by the owner. Instead of contacting the owner directly, I involve a broker, or a friend who claims to be one. Now the seller has to pay a commision to the broker, who shares this with me, the buyer. It's an involuntary discount.

In the Internet age, a broker is of very limited use. And why should he get 200,000+ THB for a few phone calls? If someone is too lazy to do the research, needs help to understand good locations and quality of offers, he might the assistance of a broker. But then, I think, he as a buyer also has to pay for this service.

Anyway, any experience? How is this handled usually? How can a broker claim his commission without any contract? Who pays usually?

[Khun Jean]

Using a broker often slows things down a lot because most are as lazy as can be.

Advertise it yourself on some of the better known websites. (This is what you did, if i understand correctly)

The buyer can use a broker if they need someone to hold their hand, their cost. (This seems to be the case here)

You can use a broker to finalize the deal (i would not) and just pay them an hourly fee.

If someone walks in and says they saw your advertisement or your sign then that is what got them interested.

If they somehow went around the broker then that is not of your concern.

Only pay a commission when the broker makes the sale and is hired by you. A broker who sees your advertisement and might know someone who want to buy it does not mean he gets 3% from you. That requires a contract. He probably charges 3% to the buyer also as a finders fee.

The potential buyer probably did not want to use the broker because the broker was too slow and did not do what they wanted.

Making an appointment in 3-4 days is slow. A broker who wants to bring a client will invite them to their office first, if the broker told them the exact address the broker took the risk.

In these days with the use of internet, the only worth of a broker is that he handles everything! From visits (they have to accompany the visitor!!), to contracts all the way to the final transfer.

If they only put your house picture on internet and wait until the phone rings or an e-mail arrives, then it is just an advertisement agency worth a few hundred baht at most.

Edited November 18, 2013 by Khun Jean

[Stefanix]

Thanks, Khun Jean, this sounds reasonable!

We advertise ourselves and never requested the help of a broker. They just call and ask if they may help to find a buyer.

Just wonder how they can get any money at all. Should be impossible without a real contract. Maybe the buyer does have a contract and tries to bypass the broker fee now. As a result, the broker is asking us to pay the 3%. Just guessing.

Once the contact between buyer and seller is established, there should not be any way for him to enforce his fees, unless the buyer really signed a contract.

[KittenKong]

If you havent made a contract (even a verbal one) with the broker then you owe him nothing no matter what he does.

What normally happens is that the vendor engages the broker to find him a buyer and if he does so the vendor pays the agreed commission, which would commonly be a percentage of the sale price. The buyer would not normally have a contract with a broker even though ultimately all the money does come out of his pocket. Even if this buyer does have a contract with the broker and owes him something, that's none of your business or concern.

[LeCharivari]

3% .... in Pattaya FIVE % is the norm!

[KittenKong]

3% .... in Pattaya FIVE % is the norm!

Actually negotiation is the norm. Only a fool would pay the full price.

[pitchag]

I was looking for a condo in a complex my friends own one in I asked the girls in the office if any were for sale they gave me the keys to one on the 4th floor, did not come up with me or even talk about the condo i contacted the owner myself and negotiated a price 2,000,000 Bt we did all the dealing between the owner and myself, after the sale went through the woman in the office demanded 300,000 Bt commission from the seller just for handing me the keys to view the condo. I think he bought her a basket of fruit and told her to piss off

[Orac]

It appears that in Thailand, if someone has provided an introduction to a buyer they will expect their cut from the seller, be that a broker or an individual. Just had an interesting experience buying a house where we went through a broker who was adverrising on a board at the house we wanted to buy. My wife made the appointment to view and everything went through smoothly with the broker providing an excellent service - I assume the seller paid any commissions to the broker as we had nothing to do with it. Yesterday my wife gave me some cash which was 1% of the house value which turned out to be commission because, rather than ringing the broker direct, she had got a friend to ring and make an introduction who passed their commission for the intro back to us.

[johnlandy]

If you have accepted the agents (the brokers) participation in finding potential purchasers you are up for the 3% on a successful sale.

Who do you think is obliged to pay

[Alwyn]

Hi Stefan

This is how it works. If you engage a broker/agent and he delivers a client who then purchases, you pay the broker. Full stop. Sometimes brokers charge a fee to buyers (as well as the sellers fee) but that is between buyer and agent. If the broker found this client and then the client tries to go around the back of the broker and take him out of the loop, theorteticlly, you pay the fee. If the broker had no hand in finding the client it's none of his business and he certainly has no claim for a sales commission/fee. If your brother/sister/friend bought would you expect to pay the broker (unless they had come to him in the first place. Some exclusivity agreements might expect payment but that would not be difficult to contest.

Hope this helps

[LivinLOS]

I disagree with the bulk of people here in that paying a commission 3% isnt unusual (but negotiation is) is very much the norm in Thai on Thai deals also.. I have seen it plenty of times where a sale is assisted in the lightest sense between Thais and the seller paid the introducer the fee. Even just the local noodle shop woman sending someone a potential buyer on expects a (small) bung and they are hardly offering traditional brokerage service.

If you had a broker call you, and ask to represent the property.. and that broker sent the client along.. The broker will be expecting that fee.

If you pay it, fight it, etc etc thats your call.. Its a weak market for contract enforcement and possibly why brokers do so little of the sort of level of work we expect. I suspect this is why so many operate without a contract as contracts here are so hard to enforce, why bother, people either pay up or dont.

Now if the client specifically saw your advert first, then went to the broker (hard to prove or know) then the issue is a bit different.. Who contacted first, the buyer or broker ??

[KittenKong]

If you have accepted the agents (the brokers) participation in finding potential purchasers you are up for the 3% on a successful sale.

Not without some sort of contractual agreement, albeit verbal.

[catweazle]

I'm in real estate, construction and project management in Thailand since 2003.

Usual "rules" in Thailand:

1) The seller has to pay the broker, usually 3% but many ask more like 5% or even above. With a 3% offer you are one of hundreds of lists in a broker's portfolio and be down at the bottom, and his motivation to sell your house will remain there too (at the bottom). If you want to sell quick, adjust the price so you can offer your broker a commission that motivates him enough to put your property at the top of his pile. Keep in mind that the broker has to pay taxes on the commission, profit tax, VAT, his staff, office rent, social benefits for his staff, work permit, visa, car, gas, etc.

Said should be here that it is very difficult for a broker to get rich on commission alone. A broker in Thailand who has no own projects in his portfolio that generate a huge profit from time to time when one is sold (thus having to survive on mere commissions) most likely will be belly up in about three years. See the broker as your friend and not as your enemy and treat him accordingly.

2) Quick one on transfer fees and taxes: There are no fixed rules on who has to pay taxes and transfer fees, but usually the transfer fee is the seller's duty or shared 50/50 seller/buyer. Specific business tax and stamp duty usually are the seller's duty. Witholding tax is seller's duty.

3) I never accept properties of clients who have their own "for sale" signs erected in front of their property. You see for yourself the problems it creates when you have your own sign up while having brokers assigned. You have to chose if you want a broker to sell the property for you or if you want to take matters in your own hands. You can't do both and having your private contact details displayed at your house right into the face of the potential buyer, he will in 90% of the cases try to circumvent the broker. There are too many Cheap Charlies out there and the temptation to circumvent the broker too big. In my opinion, having your own sign there while assigning a broker to find buyers for you is an insult. Think about it.

4) Price negotiations should be done when the broker is present, so he can help you to get out the most out of your sale by assuring the buyer that the property is sound and the price is justified.

5) Instead of having many brokers assigned I suggest you to chose just the one that you like as a person and of whom you think that he is a good salesman. Looking at a broker's success rates is also a good idea, but they can be fiddled to suit your expectations, so I wouldn't bother. Offer this broker a real good commission and ask him what you can do in addition to boost the sale. Let him erect HIS sign in front of your property and keep a good relationship with him. Much better than trying to cook five meals at the same time if you know what I mean.

Good luck with your sale!

Edited November 19, 2013 by catweazle

[personchester]

If you want to engage the broker as an agent, then say "yes" and you have to pay him the 3% after he provides a buyer.

In addition, in order to get the house sold more quickly engage several agents, but you only pay the 3% to the agent that provided the house buyer, there is nothing due to pay to the other agents, just inform them that the sale in completed.

Moreover, should you find a buyer yourself, or a buyer approaches you independently for the purchase, then you have to pay nothing to any of the agents, just inform all of them that the sale is completed.

Nevertheless, should an agent provide a buyer with whom he visited your house, and you have in the meantime decided to stop selling he house without informing him, then the agent is entitled to receive the 3% payment from you.

[SeabagsFull]

I contracted with a local Realtor in 2010 to help me sell my house in Udon Thani.

His fee was 3% of the final sales price. There was a contracted stipulation, however, that if I found someone on my own, then I would only be liable for 1.5%. Since the Realtor put up a For Sale sign in front of my house, however, anyone dropping by as a result of seeing the sign would be considered Realtor-assisted.

Worked for me. The Realtor, an American, did a fantastic job, netting me over 2M baht profit.

[lensta]

If the broker introduces a client and there is a successful sale the seller is responsible for paying the broker.

If the buyer walks in off the street then you do not have to pay a brokers fee unless you have an exclusive

agreement with them.

[oneday]

As much as we all hate paying what seems to be high commissions; it's a part of doing business. In the US I just do sale-by-owner and was fortunate neither buyer on the two houses I sold had a broker and so I paid no commission.

If you DO NOT want to pay any commissions then advertise for-sale-by-owner and explicitly state "No Brokers". However, if you accept a broker bringing in a client then in fairness you owe the broker at least half the commission.

In the US the seller is responsible for all commissions at 6% (average). Yes, in the US we list with only one broker and they get at least half the commission unless they find the buyer than they get it all.

Thailand does seem to have a haphazard way of listing and selling homes so it is a bit confusing. I would imagine if you agree to have your house listed with one or more brokers and one of them brings a client then you would owe them the whole commission.

And commission, no matter how it works out is always negotiable even in the US.

Edited November 19, 2013 by oneday

[slipperylobster]

If you havent made a contract (even a verbal one) with the broker then you owe him nothing no matter what he does.

What normally happens is that the vendor engages the broker to find him a buyer and if he does so the vendor pays the agreed commission, which would commonly be a percentage of the sale price. The buyer would not normally have a contract with a broker even though ultimately all the money does come out of his pocket. Even if this buyer does have a contract with the broker and owes him something, that's none of your business or concern.

Absolutely. A good broker should draw up a contract and you will need to have it translated. Be professional about it, review the contract, add to it and have it signed and notarized. Hire an attorney and file a copy with him. You are the one receiving the cash, but your attorney should be the one paying the broker (Your money of course). I think that would cover it.

This is all in hindsight for you, but good for the next person.

[rhino533]

My wife's been buying land/houses then reselling it for quite a while now. Pretty much this is how it works out here (Rayong). Anyone who introduces someone to any of my wife's properties she has for sale will receive 3%. That's usually brought up right away to people who seem interested to avoid problems. She sometimes can negotiate the buyer has to pay the 3%. This usually happens when there are more than one person interested in the property or they just really want it. I would say 90% of the time when someone introduces someone to her property she ends up paying the 3%. Brokers can be a pain in the butt and sometimes threatening if they don't get there way. If they call you talk for 1 second then the buyer bypasses the broker. Even if you didn't realize it was a broker you talked with they sometimes try and demand 3 or even 5% (even if they aren't entitled to it.). A lot of time my wife won't pay them if that's the case. She gets so many short useless calls from people about property she has for sale. The 3% commission never gets brought up so the 3% really doesn't have to be paid. There was no verbal agreement. I must say there are a lot of good brokers out there but a ton of cheats/bad brokers too.

[PhuketIslandProperty]

If your broker didn't register the client with you (ex..name etc.), and the client found out by himself you wanted do sell your property and contacted you...well this is a broker's mistake. and you dont have to pay him any commission unless he can prove to you the client was informed and addressed to you by him, but again....no agency contract...everything stay on trust...nothing legal.

www.phuket-island-property.com

Edited November 19, 2013 by PhuketIslandProperty

[wayned]

It depends on whether you have signed a contract with the broker. If you have signed an "exclusive listing" contract with the broker, the agent stands to gain a commission if a property sells within a specified number of months, no matter how a buyer is found. If a broker other than the one that you have listed your property with sells the property they normally split the commission. If a walk in buys you are liable to pay the commission to the listing broker.

Edited November 19, 2013 by wayned

[Loles]

Man, you gave an order to broker to find buyer for you. How can you think this service fee/commission have to pay by buyer?

This system works every where in the word. The buyer has to pay the name-changing service fee for government or for lawyer if it necessary by country legal rules.

[DrTuner]

I've seen the same house on the internet for less than on the broker's list. Covers the commission, I suppose. When we bought our house, I just went and googled a place we saw at a brokers window and made the deal directly with the owner.

Only reason why a broker might be useful I can think about is that they could help with bank loans to the buyer in some cases.

[salapau]

I used a broker to sell some of my land. It was taking a while advertising on the internet. Only had a few calls and viewers all of whom were time wasters trying to reduce the asking price.

The broker had good cotacts and we made the sale at full asking price. Happy to pay the 3%.

[bander]

Thanks, Khun Jean, this sounds reasonable!

We advertise ourselves and never requested the help of a broker. They just call and ask if they may help to find a buyer.

Just wonder how they can get any money at all. Should be impossible without a real contract. Maybe the buyer does have a contract and tries to bypass the broker fee now. As a result, the broker is asking us to pay the 3%. Just guessing.

Once the contact between buyer and seller is established, there should not be any way for him to enforce his fees, unless the buyer really signed a contract.

The broker trying to rip you you off since he was to lazy to make a contract with buyer in the first place, don't fall for his BS, and don't pay him anything, I would like to see how he can claim 3 % from you without any kind of contact

[bander]

I'm in real estate, construction and project management in Thailand since 2003.

Usual "rules" in Thailand:

1) The seller has to pay the broker, usually 3% but many ask more like 5% or even above. With a 3% offer you are one of hundreds of lists in a broker's portfolio and be down at the bottom, and his motivation to sell your house will remain there too (at the bottom). If you want to sell quick, adjust the price so you can offer your broker a commission that motivates him enough to put your property at the top of his pile. Keep in mind that the broker has to pay taxes on the commission, profit tax, VAT, his staff, office rent, social benefits for his staff, work permit, visa, car, gas, etc.

Said should be here that it is very difficult for a broker to get rich on commission alone. A broker in Thailand who has no own projects in his portfolio that generate a huge profit from time to time when one is sold (thus having to survive on mere commissions) most likely will be belly up in about three years. See the broker as your friend and not as your enemy and treat him accordingly.

2) Quick one on transfer fees and taxes: There are no fixed rules on who has to pay taxes and transfer fees, but usually the transfer fee is the seller's duty or shared 50/50 seller/buyer. Specific business tax and stamp duty usually are the seller's duty. Witholding tax is seller's duty.

3) I never accept properties of clients who have their own "for sale" signs erected in front of their property. You see for yourself the problems it creates when you have your own sign up while having brokers assigned. You have to chose if you want a broker to sell the property for you or if you want to take matters in your own hands. You can't do both and having your private contact details displayed at your house right into the face of the potential buyer, he will in 90% of the cases try to circumvent the broker. There are too many Cheap Charlies out there and the temptation to circumvent the broker too big. In my opinion, having your own sign there while assigning a broker to find buyers for you is an insult. Think about it.

4) Price negotiations should be done when the broker is present, so he can help you to get out the most out of your sale by assuring the buyer that the property is sound and the price is justified.

5) Instead of having many brokers assigned I suggest you to chose just the one that you like as a person and of whom you think that he is a good salesman. Looking at a broker's success rates is also a good idea, but they can be fiddled to suit your expectations, so I wouldn't bother. Offer this broker a real good commission and ask him what you can do in addition to boost the sale. Let him erect HIS sign in front of your property and keep a good relationship with him. Much better than trying to cook five meals at the same time if you know what I mean.

Good luck with your sale!

You didn't need to tell that you work in real estate, easy to understand that all the bs you write here is only because you want to get more customer and at the same time make a bad picture of whoever try to sell property without the use of an agent.

I don't trust any foreign real estate agent, and certainly not a thai agent, that leaves me and many others to advertise and sell by my own.

[bander]

I'm in real estate, construction and project management in Thailand since 2003.

Usual "rules" in Thailand:

1) The seller has to pay the broker, usually 3% but many ask more like 5% or even above. With a 3% offer you are one of hundreds of lists in a broker's portfolio and be down at the bottom, and his motivation to sell your house will remain there too (at the bottom). If you want to sell quick, adjust the price so you can offer your broker a commission that motivates him enough to put your property at the top of his pile. Keep in mind that the broker has to pay taxes on the commission, profit tax, VAT, his staff, office rent, social benefits for his staff, work permit, visa, car, gas, etc.

Said should be here that it is very difficult for a broker to get rich on commission alone. A broker in Thailand who has no own projects in his portfolio that generate a huge profit from time to time when one is sold (thus having to survive on mere commissions) most likely will be belly up in about three years. See the broker as your friend and not as your enemy and treat him accordingly.

2) Quick one on transfer fees and taxes: There are no fixed rules on who has to pay taxes and transfer fees, but usually the transfer fee is the seller's duty or shared 50/50 seller/buyer. Specific business tax and stamp duty usually are the seller's duty. Witholding tax is seller's duty.

3) I never accept properties of clients who have their own "for sale" signs erected in front of their property. You see for yourself the problems it creates when you have your own sign up while having brokers assigned. You have to chose if you want a broker to sell the property for you or if you want to take matters in your own hands. You can't do both and having your private contact details displayed at your house right into the face of the potential buyer, he will in 90% of the cases try to circumvent the broker. There are too many Cheap Charlies out there and the temptation to circumvent the broker too big. In my opinion, having your own sign there while assigning a broker to find buyers for you is an insult. Think about it.

4) Price negotiations should be done when the broker is present, so he can help you to get out the most out of your sale by assuring the buyer that the property is sound and the price is justified.

5) Instead of having many brokers assigned I suggest you to chose just the one that you like as a person and of whom you think that he is a good salesman. Looking at a broker's success rates is also a good idea, but they can be fiddled to suit your expectations, so I wouldn't bother. Offer this broker a real good commission and ask him what you can do in addition to boost the sale. Let him erect HIS sign in front of your property and keep a good relationship with him. Much better than trying to cook five meals at the same time if you know what I mean.

Good luck with your sale!

You didn't need to tell that you work in real estate, easy to understand that all the bs you write here is only because you want to get more customer and at the same time make a bad picture of whoever try to sell property without the use of an agent.

I don't trust any foreign real estate agent, and certainly not a thai agent, that leaves me and many others to advertise and sell by my own.

[bander]

I'm in real estate, construction and project management in Thailand since 2003.

Usual "rules" in Thailand:

1) The seller has to pay the broker, usually 3% but many ask more like 5% or even above. With a 3% offer you are one of hundreds of lists in a broker's portfolio and be down at the bottom, and his motivation to sell your house will remain there too (at the bottom). If you want to sell quick, adjust the price so you can offer your broker a commission that motivates him enough to put your property at the top of his pile. Keep in mind that the broker has to pay taxes on the commission, profit tax, VAT, his staff, office rent, social benefits for his staff, work permit, visa, car, gas, etc.

Said should be here that it is very difficult for a broker to get rich on commission alone. A broker in Thailand who has no own projects in his portfolio that generate a huge profit from time to time when one is sold (thus having to survive on mere commissions) most likely will be belly up in about three years. See the broker as your friend and not as your enemy and treat him accordingly.

2) Quick one on transfer fees and taxes: There are no fixed rules on who has to pay taxes and transfer fees, but usually the transfer fee is the seller's duty or shared 50/50 seller/buyer. Specific business tax and stamp duty usually are the seller's duty. Witholding tax is seller's duty.

3) I never accept properties of clients who have their own "for sale" signs erected in front of their property. You see for yourself the problems it creates when you have your own sign up while having brokers assigned. You have to chose if you want a broker to sell the property for you or if you want to take matters in your own hands. You can't do both and having your private contact details displayed at your house right into the face of the potential buyer, he will in 90% of the cases try to circumvent the broker. There are too many Cheap Charlies out there and the temptation to circumvent the broker too big. In my opinion, having your own sign there while assigning a broker to find buyers for you is an insult. Think about it.

4) Price negotiations should be done when the broker is present, so he can help you to get out the most out of your sale by assuring the buyer that the property is sound and the price is justified.

5) Instead of having many brokers assigned I suggest you to chose just the one that you like as a person and of whom you think that he is a good salesman. Looking at a broker's success rates is also a good idea, but they can be fiddled to suit your expectations, so I wouldn't bother. Offer this broker a real good commission and ask him what you can do in addition to boost the sale. Let him erect HIS sign in front of your property and keep a good relationship with him. Much better than trying to cook five meals at the same time if you know what I mean.

Good luck with your sale!

You didn't need to tell that you work in real estate, easy to understand that all the bs you write here is only because you want to get more customer and at the same time make a bad picture of whoever try to sell property without the use of an agent.

I don't trust any foreign real estate agent, and certainly not a thai agent, that leaves me and many others to advertise and sell by my own.