3/29/2012

Commission of In-House vs External Broker - Joint Supervision Agreement

QUESTION: Sir John, I am a licensed Broker. Me and my agents/salespersons work exclusively as an external broker for a marketing division of a Developer. My girlfriend is also a Broker and she works as in-house of the same developer. My question is, is itfair that the Developer offers the same/equal commission rate for the inhouse and external?

ANSWER: The Developer subsidizes the office-rent, utilities, and overhead expenses of the in-house Broker because the in-house principal place of business MUST be inside the corporate facility of the developer. The external Broker spends for his own office rent, utilities, and overhead. The external Broker must have a bigger commission rate compared to the in-house Broker. A Developer has zero financial risk on external Brokers because it doesn't spend for office space, utilities, and overhead for external Brokers who does'nt perform.

The BIGGEST problem with external Brokers is they don't perform for the following reasons:

(1) In terms of Security of Tenure, the external broker is self-reliant and is not pressured the same way as the in-house broker.

(2) In terms of Direct Supervision, the external Broker is independent and the Developer cannot monitor his activities because the office is remote.

(3) In terms of Reach-Out Capacity, most traditional external Brokers don't have much sales agents for "many reasons", that is why they don't make so much contact with potential buyers.

SOLUTION

The solution to most of these non-performance issues on external brokers is a JOINT SUPERVISION AGREEMENT. The Developer provides the (so much number of) Salespersons to the external Broker that will be managed JOINTLY by and between the marketing experts of the Developer and the external Broker.




The Natural Corrective Mechanism of the Joint Supervision Agreement

The Joint Supervision Agreement (JSA) has a fair way of determining who's to blame for the non-performance. If the Salesperson will not perform, the Broker and the Developer can attest to the absenteesm or habitual tardiness (for example). Given a max-20 salesperson policy, we have to weed out the lousy agents to open up doors for the new promising ones.

If the Broker will not perform (say, for alcoholism), the Developer can transfer the Salesperson to other Broker. Profession yang pagka Broker, hindi dapat pagsayangan ng oras ang mga Brokers na hindi seryoso mag trabaho (kasi retirado na pala ang edad hehehe).

If the Developer is unfair to the Salesperson (say, sexual harassment or favoritism), the Broker can reassign the Salesperson to another Developer. Tsismis among Brokers ay mabilis kumalat -- Developers who doesn't pay commission in a timely manner should be put out of business.




QUESTION: Sir John, paano po kung ang Developer mabilis mag bayad ng commission sa Broker, pero ang problema eh ang Broker ay mabagal magbayad ng commission sa Salesperson?

ANSWER: IN the Joint Supervision Agreement (JSA), the Developer will release two checks for commission. Split Payment yan, so the Broker and Salesperson should be getting it at the same time either by check or direct deposit.




QUESTION: Sir John, paano po ang ratio ng commission sharing between Broker and Salesperson?


ANSWER: Hindi pwede na pa-iba-iba ang sharing kasi maglilipatan ang mga salespersons and Brokers, gagamitin yang ratio sa competition magiging magulo. A industry standard will be set and published. Pag-uusapan yan ng mga IPORESP Directors for Policy ng IPORESP Brokers and Salespersons Society. Gagamitan nila yan ng SCIENTIFIC approach para maging fair.




QUESTION: Sir John, kung ikaw masusunod, ano ang initial sharing between Broker and Salesperson?

ANSWER: Make the commission 10% at 50/50 sharing. Maganda ang real estate sector kasi hindi regulated ng government ang prices ng real estate commodities. Hindi dapat pagtalohan yang commission sharing kasi napaka-flexible yan, pwede yan itaas anytime, pero dapat moderated din kasi hindi rin pwede masyadong greedy.

Napaka simple ang rationale nyan. RESA is an UPGRADE OF SERVICE, so the industry has all the right to charge it on the price of properties. We spend for training and licensed to upgrade our services, the consumer is willing to pay for it.

Meralco nga, konting upgrade lang ng service, magtataas agad ang presyo. LTO nag computerize, ngayon merong nang computerization fee sa resibo natin. Ganun din sa real estate, we upgrade our people, we computerize the Philipine National Listing Service (PNLS) Program of IPORESP, we have all the right to charge the COST OF IMPROVEMENT to the consumers in form of increase of commission rate and other mechanism.

6 comments:

ferdz said...

Sir John,
do you have a draft of Joint Supervision Agreement?
Thanks

Ferdie

JOHN ODONNELL R. PETALCORIN said...

if you will apply it, pwede ka naman mag customize to satisfy the needs of the tri-party deal. Kailagan umupo sa negotiation ang (1) Salesperson, (2) Broker, and (3) Marketing Manager ng Developer to craft their JSA. Tripartite Agreement yan. Pag gumawa kayo nyan, do it the best way you can without external intervention. But kung merong part na hindi kayo mag agree, pwede naman ako tanungin para hindi kayo matuluyan sa deadlock. Libre naman ang mga sagot ko.

Pranayama said...

The external Broker must have a bigger commission rate compared to the in-house Broker.

I agree with this. Both are subject to different issues and should weigh accordingly. This could have been an issue even in Davao house and lot real estate.

MsKatchick said...

Sir John tanong ko lang po kung magkanu kaya ang makukuha kung komisyon pag nka pag benta ng bahay worth 3.7M kc may kakilala po ako na external broker then wala xang agent s kanya na ako nag direct mag reffer ng buyer and hndi rin po ako agent. Gusto ko lng po sana malaman magkanu ang matatanggap kong pera s Halagang yun. Salamat po.

JOHN ODONNELL R. PETALCORIN said...

Dear MsKatchick, thank you for your question. Pag 3.7M normally ang commission nyan ay 5%. So, around P185,000 ang gross commission. Bawasan mo pa ng 40% automatic declaration of expenses, so ang net income nyan mga P111,000, then you minus 30% Income Tax and minus 3% percentage tax, ang naiwan PhP74,370. Ang Broker maari siyang magbigay ng gratuity pay sa mga tao na nakatulong pag refer and pag close ng deal. Sa akin, kung ganyan ang net commission, lahat na tumulong merong meron akong pang gratuity na P14,874 which is 20% (same rate sa tip ng waiter).

MsKatchick said...

Thanks for you response sir, nakausap ko n po yung broker sabi nya po bibigyan nya ako ng 1.5% tapos ibabawas daw po yung 10% tax. Bali magkanu po sir yung marereceive ko n amount of money? Thanks po.