Real estate agents selling under construction properties off plan usually is easier compared to selling secondary market real estates. Often a real estate negotiator can sell multiple off-the-plan units a day.Â
Not Getting Paid Problem
However there is a problem. Real estate agents often get their commission late as developers usually release payment base on construction stages. There have been situation where developers decide to call off the development. This result in real estate negotiators not getting paid for work done earlier. Real estate negotiators were forced to handle frustrated buyers without getting paid. This uncertainty discourages real estate negotiators to risk going all out selling. This risk result in many real estate agency firms having real estate negotiators shortage selling under construction properties. Real estate negotiator prefer to sell secondary market real estates because commission is more secure.
Fast Commission As The Solution
The fast commission concept is introduced by real estate agencies to undertake the risk for real estate negotiators. The advance commission will be released to real estate negotiators once a sales contract has been signed by the agency. The agency then follow up with the developer for commission payment. Fast commission payout does help recruit more estate agents to sell under construction properties.
Advance Commission Risk Mitigation
The main fast commission drawback is for agencies to absorb the cash in advance interest cost. Agency also has to risk having cash flow problems when developers are not releasing payment. To mitigate the risk, agency firms nowadays have included strict collateral terms in their appointment letter with developers .
Some agency firms offer lower commission amount to the closer if a fast commission is requested. They usually incorporate an interest of 5% to 10% to the total commission amount. For example if the commission receivable by the closer is RM10,000. Assume the closer wants fast commission. The agency may charge an interest of 10% deduction for risk. Therefore the negotiator will receive only RM9,000. Surprisingly many negotiators accept the terms.
