Most often, property owners don’t have a clue on how real estate brokers (REBs) perform their job. Most property owners naturally think of engaging the most number of REBs and get tired or complain dealing with people and having to sign and maintain file of authorities to sell (ATS). One other trouble, when already past the trust qualification that property owners is to maintain a list and notes of REBs and their updates.
It is really best for property owners to keep everything simple from signing (even preparing) ATSs and having a good understanding that the REB has actually started and continuously doing the job is to only engage one REB and let the REB do the actual job. Most property owners also only think that REBs job is very lucrative looking at the absolute peso amount of fee when transaction is successful in the end.
REBs pretty much do a lot of things from the time an engagement is started and first of which is to fully understand the property, documents at hand and narratives the property owners have relayed whether verbal or in writing. REBs need to do the following:
- Trace truthfulness and validity of the title. REBs sometimes need to traceback titles for history. And it’s no joke to spend for cost obtaining 4 or 5 prior titles from the Registry of Deeds. Easily, it’s about minimum of Php350 and depending on where the REB obtains it.
- On top of the property title, a REB may also need to do several validating tasks: obtaining a certified true copy of the tax declaration for the conformity with LGU zoning and fair market value, check if the polygon of a lot is not open by performing a table plotting, verify freshness of BIR Zonal Values, obtain a a subdivision plan from LMB, obtain certificate from PhilVolcs, engineering plan from DPWH, CLUP of LGUs, and etc. My list may not be complete but the property owner should be made aware of some extra tasks that need to be performed.
- Discover the neighborhood to prepare for the advertisement. Think of the gas and time!
- Plant a sign (tarpaulin) which really doesn’t come free to the REB. Plus the cost of the staff or personal time to do it.
- Entertain the calls for the initial shortlisted prospects, this is time.
- The posting of online advertisements and this is time with subscription costs.
- Entertaining, pre-qualifying leads and their needs who may turn out to be truthful or otherwise. Posers or bogus inquires come with tremendous cost!
- Cost to show the property. Again, it’s gas and time!
- Cost to close … drafting of contract to sell and/or deed of absolute sale, and sometimes lease contract. Sometimes a lawyer is engaged to ensure documentation is properly done.
- Coordination with property management office for a condo transaction. Again it’s gas and time.
- In a sale there’s also cost to the buyer’s REB to ensure that title is transferred properly, whether by the REB or engages a staff or a specializing partner.
And property owners sometimes don’t understand the REB’s prior preparation for the professional practice. What exactly are these items?
- Cost of renewing license, surety bonds and LGU professional tax receipt. There’s in addition a time element there!
- Continuing professional development seminars and association fees like NAR, AIPO, PMRB etc
- Costly transportation even if simple motorcycle or car. We know people tend to judge when yo don’t have any.
- Internet subscription + mobile phone + laptop + software and software subscription + electricity bill + gas!
- If REB works with a brokerage company like me at Keller Williams there are costs and expenses to maintain like royalty, office share, monthly subscription not to mention required times to attend office meetings
- A REB like me from Keller Williams Philippines>Makati has a strong desire to build an organization and this is for leveraging time and effort. Naturally there’s cost to maintain the organization whether fixed salaries or compensation based on results!
I, as a REB, am not complaining. However above are the things that we have so that we rationalize on the plans of action if accepting an engagement. And of course, a REB is not a Real Estate Appraiser (REA) even if in actuality one has 2 licenses which for ethical reasons the REB can not act as both, REB & REA, in a particular listing. What I am driving at, is if the property owner is asking for too much to sell or lease a property, then the REB will have to think twice whether to accept or not. So REB should recommend to property owner to engage a REA. On the other hand, if REB feels price is to low compared to obvious market values then the property owner should be encouraged by REB to engage a REA!
There is also this factor that REBs don’t make a sale everyday. There’s a cost to waiting and working on the next sale. So the 5% brokers fee should not be seen as too much. It is not pocketed by the REB alone, there are costs, expenses and sharing. Speaking of sharing, the most common and acceptable practice is to search for a fellow REB who has a requirement to match. And if there’s a match and a final close, it’s but normal that the 5% will be split 50-50 between the two REBs. The 5% is essentially diluted!
So for a common understanding of the REB and the property owner, the scope of service that I do are scheduled depending on the engagement. The engagements are not all treated equal and as an example, treatment and action for a 5% exclusive right listing is being prioritized than a similar exclusive right at 3%, assuming base values are the same. Below are differences of services offered: