Most developers rely on progressive payments from their purchasers to pay real estate negotiators’ commission. If the developer chooses to abandon the project means no progressive payments from purchasers and naturally no commission for the servicing realtors.
However good the appointment letter with collateral clause signed between real estate agency firms with developers is meaningless when a project gets abandoned. Real Estate Negotiators simply will not get paid. Negotiators are also left to service their furious clients even knowing they will not be getting their commission.
There are many causes for new projects to be abandoned by developers. Popular reasons are as follows.
- Poor sales
- Cash flows issues
- Increase in construction cost
- Overcommitment to buyers
- Legislative compliance issues
- Bankruptcy
- Run away with deposits
Real estate negotiators have to choose which new launches to work on to avoid time wasting (not getting paid). Be very careful of new projects with the following characteristics.
- Inexperienced developers.
- Bad reputation development shareholders.
- Offering guarantee returns, cash back, zero down-payment, etc to buyers because good products do not need all these gimmicks to mark-up selling price.
- Unrealistic selling price way above market value
- Unattractive product to the market
- Potential legal complications
- Commercial or industrial title properties (they are usually governed by no laws and have bias laws to buyers and realtors)
