'Agent's' commision 'deal' on sale - fair or not?

[xylophone]

I sold two houses here in Patong and made a profit on both, so I can speak from experience.

I too had the "intermediaries" asking me if they could pocket the difference between what I wanted for the property and what they could get for it, however I refused that because I wanted a straightforward negotiation with the potential purchaser, not having to deal through an intermediary because the price they were asking was going to be different to that which I was willing to negotiate – – it would make things too difficult.

In the end I marketed them myself and offered anyone who provided me with a successful lead/purchaser the sum of 3% of the sale price.

As for price, you need to look around at similar properties and other sales and set your price. Now here is the thing which you need to get clear in your own mind, first of all you need to understand what your lowest price would be, even including paying out the 3% commission, and don't tell anyone about it.

Then try and pitch the advertised price somewhere lower than similar properties, and a little higher than your lowest price, so you have some negotiating leeway.

As a matter of interest, I can see where IMHO is coming from with his post, because he is simply stating that if you can get the price you want, why bother worrying about what other people can make out of it. It's a bit like me selling my old car for a fairly low price because I just wanted it out of the way, and then someone buying it and on-selling it and making a profit out of it......good on them and no problem for me. However with the houses it was different and difficult because there will be three way conversations and different prices, this especially if I have advertised them at a certain price.

I did post the process I went through in selling the houses on another thread, and I can find it for you if you like and send it to you via a PM.

[Katipo]

The problem here seems to be your g/f, not the property.

Get rid of her, and you'll be free to sort everything else out in your own way and time.

[trogers]

I sold two houses here in Patong and made a profit on both, so I can speak from experience.

I too had the "intermediaries" asking me if they could pocket the difference between what I wanted for the property and what they could get for it, however I refused that because I wanted a straightforward negotiation with the potential purchaser, not having to deal through an intermediary because the price they were asking was going to be different to that which I was willing to negotiate it would make things too difficult.

In the end I marketed them myself and offered anyone who provided me with a successful lead/purchaser the sum of 3% of the sale price.

As for price, you need to look around at similar properties and other sales and set your price. Now here is the thing which you need to get clear in your own mind, first of all you need to understand what your lowest price would be, even including paying out the 3% commission, and don't tell anyone about it.

Then try and pitch the advertised price somewhere lower than similar properties, and a little higher than your lowest price, so you have some negotiating leeway.

As a matter of interest, I can see where IMHO is coming from with his post, because he is simply stating that if you can get the price you want, why bother worrying about what other people can make out of it. It's a bit like me selling my old car for a fairly low price because I just wanted it out of the way, and then someone buying it and on-selling it and making a profit out of it......good on them and no problem for me. However with the houses it was different and difficult because there will be three way conversations and different prices, this especially if I have advertised them at a certain price.

I did post the process I went through in selling the houses on another thread, and I can find it for you if you like and send it to you via a PM.

Anyone who wants to pocket the difference between his higher selling price compared to mine is welcome, but not as an agent, but as a speculator.

Just pay me in full the price I asked, and the speculator can take his/her time to find a buyer at the higher price. Do not waste or use my time.

Edited November 3, 2014 by trogers

[Bosse137]

Amongst other problems with "agents" are,that they will yank up the price to a level,where sombody,who would have bought at a price you would be ok with,walks away! They do not loose,because they can aford to wait or introduce the prospected buyer to some other sale. I tell all these luck-seekers,that I can pay them a fixed sum,not so high btw,and all they have to do is to find the client;i take over from there.Usually,I never hear from them again...

[rayinkrabi]

Nice one Xylophone, great response and v well put, thanks, and yes, I appreciate I made a big mistake by telling my 'bottom low price' to any one which is where I believe IMHO is coming from. And Thanks also to Trogers, who put it exactly into words, thx mate. Cheers, ray.

[rayinkrabi]

a person who acts for or represents another: Just to point out (as this is a big point of this thread), this is the Cambridge online Dictionary definition of Agent!

[KittenKong]

a person who acts for or represents another: Just to point out (as this is a big point of this thread), this is the Cambridge online Dictionary definition of Agent!

I think in Thailand the definition of an agent is someone who looks after himself first and, if he has any time or energy left, may give some minimal consideration to the needs of the vendor and buyer.

[IMHO]

Nice one Xylophone, great response and v well put, thanks, and yes, I appreciate I made a big mistake by telling my 'bottom low price' to any one which is where I believe IMHO is coming from. And Thanks also to Trogers, who put it exactly into words, thx mate. Cheers, ray.

I had assumed your bottom price was the one you'd say, advertise at, not the one you'd cave into at the bitter end. Apologies for the tone of my posts.

[IMHO]

a person who acts for or represents another: Just to point out (as this is a big point of this thread), this is the Cambridge online Dictionary definition of Agent!

I think in Thailand the definition of an agent is someone who looks after himself first and, if he has any time or energy left, may give some minimal consideration to the needs of the vendor and buyer.

When it comes to any situation where an agent stands to make profit, the agent is always looking after themselves first, period. The only time an agent might actually try to increase your gains is when it increases theirs too

[rayinkrabi]

"The only time an agent might actually try to increase your gains is when it increases theirs"

Agreed of course, no agent is acting for free and this is where the 3% comes in. The ones I'm talking about stand to make another 30k on each million they try to raise the price (against my express wish/instruction) and therefore most likely scare a potential purchaser away.

I've already 'tested the water' for a long time and have decided to be realistic, the biggest hurdle was convincing the gf to go along with it.

[RKASA]

I still can't see the logic in your comments. Of course I start with an 'asking price' and when asked by the 'agent' what is your 'bottom line price' I reply 'as much as I can get' but confide in them how low I would be willing to go in a serious negotiation.

Are you suggesting this is then viewed as my asking price and it's fair for the 'agent' to pocket the difference if they can get more??

Set the sale price the agent must use -allow they can get more if they can means they have all the time in the world waiting for their suckers at your time and expense and not selling the property.

If they think the property is flippable then they should just buy it themselves in the first place. They must bring all offers to you for consideration. You can take lower offers but the agent gets a % of the final selling price (higher or lower) only and this should be based on the agreement. They only get paid at closing when funds are distributed. Any % split they have is between them and the one they bring in not you, you pay the listing agent only.

Any listing agent that can't accept this is not an agent at all just another slimy con. They ether know how to move listed properties or they don't - give them 90 days listing not endless - this means you can change the listing or hire a new agent every ninety days - they sell it or lose the listing.

The listing agreement sets only the offer to sell price and has nothing to do with value, cost or appraised values. The only thing in the end that matters is the price a willing buyer and willing seller agree on and that is the fair market value as defined by GAPP at the point of sale.

I once turned down a larger then list offer - reason - the higher offer was so I could pay all closing for them and a little more on top for offering to pay those cost in the closing instructions - in other words they would have locked the home up in pending for 2 months waiting to be turned down by the bank.

Don't let an agent tell you if they offer more you have to take it - a modification to the list is just that a counter offer even if higher and can be turned down also. I told them to come back pre approved with their share of the closing cost and sold the home the next day for cash at list price - an offer I would have lost waiting for a few bucks more that would have had a chance in hell of ever happening had I accepted their non cash deposit an earnest agreement to forfeit some sum of money if they didn't close - those can be hard if not impossible to collect on, but worth taking if the buyers offer looks strong enough.

KISS I think you know what that means and it works.

[KittenKong]

I think in Thailand the definition of an agent is someone who looks after himself first and, if he has any time or energy left, may give some minimal consideration to the needs of the vendor and buyer.

When it comes to any situation where an agent stands to make profit, the agent is always looking after themselves first, period.

This is basically what is wrong with the entire real estate agent commission system here, which I think is intrinsically flawed.

When I sourced materials and services for clients my only concern was getting them the best value possible. To my mind any other way of doing it would have been dishonest.

[Pacificperson]

For most agents. a bird in hand is worth two in the bush. Their primary concern is to get their buyer to sign and lock in their commission. If you let them know your lowest acceptable price, then it is likely all you will get.

As for an agent keeping the overage, I would wonder if your girlfriend was getting a cut.

[ldnguy]

So you've had this on the market for some time, you've reduced the asking price twice, but still haven't sold it, and now you're concerned that someone might actually be able to get you the money you want?

Up to you.

If you truly want a quick sale, and you're happy with the fixed price, I can't see why you would spite yourself just because the facilitator is making a profit.

How does it differ from someone just offering your asking price?

I agree. Suppose you want 5 million for your house and have been unable to sell for years. Also, suppose an agent finds a buyer willing to pay 7 million, so wants 2 million commission. Result is you get your 5 million sale, so you should be happy. Agent gets hos big commission so is also happy. Alternative seem to be that it stays unsold or you end up finding a buyer for 3-4 million.

I suppose the bottom line is that they will put in a huge effort to sell if they can get a big commission. If they can only get a small commission then they won't make much effort because it's not really worth their effort.

[bkkjames]

So you've had this on the market for some time, you've reduced the asking price twice, but still haven't sold it, and now you're concerned that someone might actually be able to get you the money you want?

Up to you.

If you truly want a quick sale, and you're happy with the fixed price, I can't see why you would spite yourself just because the facilitator is making a profit.

How does it differ from someone just offering your asking price?

I agree. Suppose you want 5 million for your house and have been unable to sell for years. Also, suppose an agent finds a buyer willing to pay 7 million, so wants 2 million commission. Result is you get your 5 million sale, so you should be happy. Agent gets hos big commission so is also happy. Alternative seem to be that it stays unsold or you end up finding a buyer for 3-4 million.

I suppose the bottom line is that they will put in a huge effort to sell if they can get a big commission. If they can only get a small commission then they won't make much effort because it's not really worth their effort.

What you describe sounds like a reserved auction... lol

[KittenKong]

I agree. Suppose you want 5 million for your house and have been unable to sell for years. Also, suppose an agent finds a buyer willing to pay 7 million, so wants 2 million commission. Result is you get your 5 million sale, so you should be happy. Agent gets hos big commission so is also happy. Alternative seem to be that it stays unsold or you end up finding a buyer for 3-4 million.

But this assumes that the agent will find a buyer at 7m (or even 5.1m), which in my view is unlikely.

If the house has been unsold for years at 5m it's probably because it's only worth 4m or 3m or less. Anyone seriously wanting to sell it should just reduce the price to a level that attracts some interest, rather than wait for some dodgy agent to find a fool who lets himself be talking into paying way over the odds, and who then becomes just another victim who, a few years down the line, will also be bemoaning the fact that his house is not worth what he paid for it and can't be sold.

There's already far too much dishonesty and deceit in Thailand and anything that increases it is bad news.

[Robert2006]

Thanks for your thoughts, except kony who is well out of order but we all know there are a few like him/her on this forum. I only mentioned that part of my background to stress how silly my gf's comment was, but there again, she did make the point that they 'do it differently' in Thailand.

Over the years I've had quite a few Thai and Europeans marketing this place, all with the agreement of between 2 & 3%. Yet another fellow countryman rubbed his hands together and with a big smile asked me if I "mind that he takes the extra" (as well as commission) on top of my bottom line price that I had confided in him. I obviously told him where to go and to my knowledge he never sold a single property in all the years he was masquerading as a Real Estate Agent.

All have insisted on asking way too much, I went along with them at the time as I was in no hurry and interested to 'test the water' as it's not easy to get a benchmark figure here. I would have been delighted to he proved wrong but enough is enough.

It seems to me you are undergoing the classic real estate conundrum, what really is the market value of your property. Accurately appraising the value of a piece of real estate is fundamentally the most important step in selling a property; it is the foundation of a successful selling campaign.

A real estate property appraisal is an “opinion of value” it is not an exact science. There are three primary methods to appraising real estate, the comparable sales approach, the replacement cost approach and the economic approach to value. There is also the narrative approach which is used when there is something unusual that has an effect on the value. These methods are all very helpful tools to establish an accurate valuation.

In residential sales the most weight is usually given to the comparable sales approach; you can use similar properties in your area that have sold and are currently being marketed in competition with your home for buyers to help reveal the current market value of your property. There is an old saying in real estate, “buyers make the market; competition sets the price”.

[KittenKong]

In residential sales the most weight is usually given to the comparable sales approach; you can use similar properties in your area that have sold and are currently being marketed in competition with your home for buyers to help reveal the current market value of your property.

This is fine in a country like the UK where real selling prices are public record and can be searched online on a house by house or street by street basis.

But it's pretty useless in Thailand where no one (apart from the buyer and seller) know how much was actually paid for a property. The best you can know in Thailand is other asking prices, and those are mostly fantasy plucked from thin air.

[cocopops]

Your wife is correct. It makes no difference to you how much the agent collects, so long as you get your asking price. I put it to you that you feel you will lose face if the agent makes out like a bandit. Am I wrong?

Edited November 6, 2014 by cocopops

[xylophone]

Your wife is correct. It makes no difference to you how much the agent collects, so long as you get your asking price. I put it to you that you feel you will lose face if the agent makes out like a bandit. Am I wrong?

There is a school of thought which says that why bother what the agent/intermediary makes, as long as you get your price, and I alluded to this in my post, however there is another side to it which should be considered, as it was in my case anyway.

Let's say that the seller puts advertisements out online, in newspapers, in flyers and through friends, with a description of the house priced at 5 million baht. Then the seller is approached by someone who says, "well if I can sell it for 6 million baht, can I pocket the difference?".

IMO this is where the problem starts because should this "someone" bring along a possible purchaser, who looks over the property and then twigs that this is the same house that they recently saw advertised at 5 million baht, so what the hell is going on........they could have lost a purchaser who may well have bought, but not now when seemingly shady practices are in play.

That's the problem I had as I did not want to enter into negotiations with potential purchaser whereby I would have to inflate my original asking price, only to know that at any time before or even after the purchase, this person could confront me with questions about the sale and purchase, and as I live and intend to stay here for a while, I really didn't want the hassle on the one hand, and on the other I thought it was dishonest and it is not how I normally conduct business.

I think that's key to several posters saying that they wouldn't do it, because most of the time the asking price is already out in the marketplace and to try and inflate that so that someone else can make more (other than the 3% fee) profit, thereby charging the purchaser more than they needed to pay for the property, doesn't seem ethical.

[rayinkrabi]

Sry, double posted

Edited November 7, 2014 by rayinkrabi

[rayinkrabi]

Thanks Xylophone, v well put yet again, I think the key word was the very last one you typed, Ethical!

I've had enough of the idiots who have suggested I don't have balls or am being 'greedy' or am afraid of losing face (why the hell do these ******* make these assumptions based on my OP???) The issue is simply "do you agree with this practice" and clearly the majority do not, for ethical reasons.

[cocopops]

Your wife is correct. It makes no difference to you how much the agent collects, so long as you get your asking price. I put it to you that you feel you will lose face if the agent makes out like a bandit. Am I wrong?

There is a school of thought which says that why bother what the agent/intermediary makes, as long as you get your price, and I alluded to this in my post, however there is another side to it which should be considered, as it was in my case anyway.

Let's say that the seller puts advertisements out online, in newspapers, in flyers and through friends, with a description of the house priced at 5 million baht. Then the seller is approached by someone who says, "well if I can sell it for 6 million baht, can I pocket the difference?".

IMO this is where the problem starts because should this "someone" bring along a possible purchaser, who looks over the property and then twigs that this is the same house that they recently saw advertised at 5 million baht, so what the hell is going on........they could have lost a purchaser who may well have bought, but not now when seemingly shady practices are in play.

That's the problem I had as I did not want to enter into negotiations with potential purchaser whereby I would have to inflate my original asking price, only to know that at any time before or even after the purchase, this person could confront me with questions about the sale and purchase, and as I live and intend to stay here for a while, I really didn't want the hassle on the one hand, and on the other I thought it was dishonest and it is not how I normally conduct business.

I think that's key to several posters saying that they wouldn't do it, because most of the time the asking price is already out in the marketplace and to try and inflate that so that someone else can make more (other than the 3% fee) profit, thereby charging the purchaser more than they needed to pay for the property, doesn't seem ethical.

Thanks for the explanation. I can see your point about not wanting to put off potential buyers.

I don't really think there is any dishonesty involved though. Everybody trying to buy a house knows that both agent and owner will try to maximize the transfer price. Just as you know any buyer will attempt to minimize it. Who exactly is being deceived?

[KittenKong]

I don't really think there is any dishonesty involved though. Everybody trying to buy a house knows that both agent and owner will try to maximize the transfer price. Just as you know any buyer will attempt to minimize it. Who exactly is being deceived?

Potentially everyone (except the agent).

If the vendor doesnt know that the agent is adding on a large sum then he could be being deceived into waiting much longer for his sale to occur than he might if the price was lower, and of course he is being tricked out of the full value of his property that the buyer is prepared to pay.

The buyer is being deceived because he assumes that the amount he is paying is actually going to the vendor and represents the value of the property, whereas in fact the true value is much less.

Unless of course both the buyer and the vendor are fully aware of the difference between the price the buyer is paying and the amount the vendor is getting, which seems unlikely. Certainly if I was either the buyer or the vendor in this situation I would tell the agent exactly where to go, and what to do once he got there.

No, it's just another Thai money/property scam to add to the (long) list.

Edited November 8, 2014 by KittenKong

[Robert2006]

Individuals will always be vulnerable to being taken advantage of by unethical people when purchasing or selling property if those people do not know its value. Once you learn the real estate appraisal techniques all these arguments are a mute issue, no one can over charge someone for something when that person knows what its worth.

Real estate values are not such a huge guess that a 5 million baht property can be misjudged by 2 million baht (40%) by anyone that takes the time to learn about appraising. It’s a freaking formula, 2 + 2 + 2 = 6, if you learn and follow the formula there is really not much guesswork; the formula gives you the answer.

Comparable sales + replacement cost + economic value, average and weight each approach accordingly and extrapolate your opinion and you’re going to be very close. Learn this formula, its been used for well over 100 years to value property and this problem is solved for you, forever. It’s not a secret, you don’t have to reinvent the wheel, this information is freely available on the web.

[KittenKong]

Individuals will always be vulnerable to being taken advantage of by unethical people when purchasing or selling property if those people do not know its value. Once you learn the real estate appraisal techniques all these arguments are a mute issue, no one can over charge someone for something when that person knows what its worth.

Real estate values are not such a huge guess that a 5 million baht property can be misjudged by 2 million baht (40%) by anyone that takes the time to learn about appraising. Its a freaking formula, 2 + 2 + 2 = 6, if you learn and follow the formula there is really not much guesswork; the formula gives you the answer.

Comparable sales + replacement cost + economic value, average and weight each approach accordingly and extrapolate your opinion and youre going to be very close. Learn this formula, its been used for well over 100 years to value property and this problem is solved for you, forever. Its not a secret, you dont have to reinvent the wheel, this information is freely available on the web.

You still think you are in Kansas.

There is no real comparable information here because asking prices are generally plucked out of thin air and sales prices are largely unknown and unreported.

[Robert2006]

Not being able to access data to use for a comparable sales approach is a common occurrence in apprising real estate. There are times when the subject property is in a rural area where there are no properties or sales to compare, or the subject may be completely unique with no similar comparable properties or you may live in Thailand where the information is difficult to obtain, everyone is lying about sale prices, and the property currently on the market for sale is not properly valued making the comparable sales data unreliable.

That is not a problem; precisely because of the varying conditions that one can be presented with when attempting to accurately value a piece of real estate an appraisal consists of three approaches, replacement cost, economic value and comparable sales, weighted accordingly. In essence the process is three completely different appraisals with the data gathered merged to form a conclusion of value.

Replacement cost and economic value will bring you very close to value; close enough to be able to support the conclusion. In an actual appraisal by a licensed appraiser he would be required to expand his boundary limits and still include the comparable sales approach data that it produced but in his narrative he would explain why he believes the comparable data is not deemed reliable.

In the absence of accurate comparable sales data your conclusion of value is merely weighted to the deductions produced by the replacement cost and the economic value approaches, the comparable sales data would carry no weight.

[trogers]

Not being able to access data to use for a comparable sales approach is a common occurrence in apprising real estate. There are times when the subject property is in a rural area where there are no properties or sales to compare, or the subject may be completely unique with no similar comparable properties or you may live in Thailand where the information is difficult to obtain, everyone is lying about sale prices, and the property currently on the market for sale is not properly valued making the comparable sales data unreliable.

That is not a problem; precisely because of the varying conditions that one can be presented with when attempting to accurately value a piece of real estate an appraisal consists of three approaches, replacement cost, economic value and comparable sales, weighted accordingly. In essence the process is three completely different appraisals with the data gathered merged to form a conclusion of value.

Replacement cost and economic value will bring you very close to value; close enough to be able to support the conclusion. In an actual appraisal by a licensed appraiser he would be required to expand his boundary limits and still include the comparable sales approach data that it produced but in his narrative he would explain why he believes the comparable data is not deemed reliable.

In the absence of accurate comparable sales data your conclusion of value is merely weighted to the deductions produced by the replacement cost and the economic value approaches, the comparable sales data would carry no weight.

In simple terms, a TV farang with a rural Thai wife would just ask his wife to check on prices of land, and then post a topic in this forum for advice on building cost.

This is the Replacement Cost in property appraisal.

Edited November 9, 2014 by trogers