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How to Sidestep the Commission When Buying a Condo
19 āļ.āļ. 2021
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When buying or selling condos through real estate representatives, the commission is generally an obligation which the seller has towards the real estate agency. In many instances, the seller merges the commission he needs to pay into the purchase price. For a buyer who may want to avoid the commission charge forming a part of the price, the methods for doing so are laid down in this article.
Method 1 - Buy directly from the developer
For people looking to avoid the commission being added onto the purchase price, the most obvious option is to buy directly from the developer. This way, the buyer is able to bypass the commission as no middlemen are involved in the direct transaction between the seller (developer) and the buyer.
Even if a âmiddlemanâ agent is involved (this could be an individual or a company employed or authorised by the developer) in a coordinator role, the commission/compensation due would fall on the developer and not the buyer.
This first method allows the buyer to rest assured that no commission or compensation needs to be produced for any middleman.
However, buying directly from the developer comes with an important disadvantage which the buyer needs to be thoroughly aware of. Generally, opportunities to buy directly from the developer exist only during the pre-sale period or when the project is undergoing construction (or is yet to be constructed, even).
During this time, the buyer is not able to see the finished building and the real rooms nor can he/she assess the work of the condo juristic person, the characteristics of the co-owners and other factors that can otherwise be appraised if construction has been completed. Said factors are important determinants of whether a property project suits the buyer.
âQualityâ development projects or ones with desirable location, such as those which are adjacent to a rapid transit station, usually becomes sold out in the pre-sale phase. Potential buyers who do not make the purchase during this phase have almost no opportunity to buy directly from the developer afterwards.
Even if an opportunity comes up, it would be unlikely for well-positioned units to be available for selecting. But buying during the pre-sale phase entails anxiety about the reality of the finished condo, the administrative work of the juristic person, and the living behaviour of next door neighbours â all of which are crucial factors for consideration.
It also goes without saying that buying during the pre-sale phase is certainly not an option for anyone looking to buy a ready-to-move-in condo.
PLUS+ Tips
Method 2 - Buy directly from the sellerâĒ A condo project of quality employs a competent real estate agency to help oversee the development project from the start of sales all the way to the establishment of the juristic person. To evaluate the quality of a condo project during the pre-sale phase, the buyer might initially base the assessment on the track record and reputation of the agency hired by the project (such as Plus Property) in tandem with those of the property developer (such as Sansiri).
Similar to buying directly from the developer, purchasing directly from the seller or room owner allows the buyer to do away with having a commission added onto the purchase price. In executing this method, it is important for the buyer to be proficient with or have experience in buying secondhand condos.
The buyer should know how to inspect the contract and the title deed, and be able to process relevant documents and negotiate various aspects.
A buyer who does not have proficiency run a risk of dealing with swindlers who may attempt to fraudulently sell a room. Important documents could be forged to put the buyer in a bad position. The buyerâs deposit might be confiscated when the mortgage application does not receive approval (as a remedy has not been reached in advance with the seller). A slew of lesser problems may also take shape.
Method 3 - Buy from real estate agency that distinctly separates the commission from the purchase price
For this last method or âtechniqueâ, the buyer does not avoid a middleman and does not buy directly from the seller. On the contrary, the buyer talks to and coordinates all affairs with the real estate brokerage. Keep away from having the commission added onto the purchase price by frankly asking the agent the following:
1) What is the selling price?
2) What is the rate for commission?
3) Will this rate make up a part of the purchase price?
Most experienced real estate agents understand that buyers do not want the purchase price to be topped with a commission, because adding the commission means the purchase price is raised.
If the agent is able to agree with the seller on separating the purchase price from the commission, the agent will usually make this known to the buyer so as to allow for the latterâs ease of mind and increased enthusiasm to close the deal.
Success at this point primarily rests on the sellerâs preparedness to pay the commission (letâs not forget that at this point, the entire burden of the commission or at least 80-90% of it falls solely on the seller). For example, a seller who does not have an issue with paying commission or one that wants to quickly close the deal would usually set a purchase price that is more reasonable for the buyer.
Summary
â The buyer can avoid having a purchase price that is topped with a commission via 3 principal methods. These include buying directly from the developer, buying directly from the seller, and buying through an agent who can negotiate the separation of the commission from the purchase price with the seller.
â Buying directly from the developer has the disadvantage of being limited to the pre-sale period when the buyer is unable to see the real building and environment, making this unsuitable for someone looking to buy a condo that is ready to move in.
â Buying directly from the seller has the disadvantage of running a risk of encounters with fraudsters and a slew of lesser problems.
â Buying through an agency that openly disclose details to the buyer is the best option to efficiently avoid a commission. On top of sidestepping the commission, the buyer will be able to take heart in the sellerâs credibility and the convenience in processing paperwork.
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