Land brokers are offered huge commissions

Distributing more than 100 project plots in Dong Nai, Kim Phat Company was promised by the investor to pay a commission of up to 12% of the product value while previously this fee was only 10%.

The Gold Hill project invested by Long Kim Phat Company (under Dat Xanh Group) is also known as Trang Bom Residential Area, with a scale of 1,264 plots. Kim Phat is the sales broker. During the project distribution process, Kim Phat was accused by customers of rushing to collect money, delaying buyers from signing contracts, and selling at prices 1.7-1.8 times higher than the real value. Many opinions say that the brokerage fee for this project is up to 12%, which is quite high. On average, each plot of land has an original price of 400 million VND, the commission fee for brokers is 48 million VND per plot.

Long Kim Phat's representative, General Director Tran Cong Luan, admitted that the 12% fee was indeed higher than previous sales (only 10%). The reason the company offered a higher brokerage commission to Kim Phat was because this was the final stage of selling off goods. Mr. Luan said that in Dong Nai, this was a high commission but not the highest.

A corner of the Gold Hill project has been promoted by Dat Xanh Group on its website since 2013.

Receiving the Gold Hill project distribution fee of 12%, Kim Phat sold 105 plots of land but this unit said that the investor had not paid the brokerage fee. On October 18, a group of people believed to be employees of Kim Phat Real Estate Joint Stock Company hung banners at the headquarters of Dat Xanh Group, No. 27 Dinh Bo Linh, Ward 24, Binh Thanh District to collect debt. The banners read: "We request that Long Kim Phat Company, a company under Dat Xanh Group, pay us the brokerage fee."

Kim Phat Company believes that the investor has delayed the payment of project brokerage fees and deposits as agreed, causing difficulties for the company, so they protested to collect debt.

The project distribution unit said that as of September 30, 2016, the company had successfully brokered 105 products out of a total of 133 plots of land for the investor, Long Kim Phat Company. However, the project investor has given unreasonable reasons and has not fulfilled its obligation to pay the brokerage fee, a total amount of more than 6.3 billion VND. Of which, the deposit is 1.05 billion VND. The project service fee in August 2016 was 2.78 billion VND, in September it was 1.74 billion VND and the entire brokerage fee has been successfully paid but has not been reconciled and invoiced, equivalent to 763.65 million VND.

Previously, when the real estate market was in crisis, in Ho Chi Minh City and many neighboring provinces, there were cases where real estate brokers sold real estate but the investors delayed paying commissions. Even during the real estate recovery period, in 2014-2015, many large investors reduced broker commissions and only paid them in installments, not in full at once.

According to a survey by PV, sales commissions applied to real estate brokers in the real estate market have many different levels. Land projects in Dong Nai offered for sale in the past 3 quarters have the lowest commission fee of 8% and the highest up to 13% of the product value.

Completely different from land plots, pre-built townhouses in the suburbs of Long An, Binh Duong, Dong Nai (bordering Ho Chi Minh City) only offer commission fees of about 6% of the property value. Particularly for apartments in Ho Chi Minh City, brokerage fees have dropped significantly, the lowest is 1-2% and the highest is no more than 5%, depending on the affordable, mid-range or high-end segment.

The deputy general director of a real estate company specializing in selling land and pre-built townhouses in the suburbs said that a commission fee of 10-13% of the product value is enough to support sales campaigns for projects located outside of Ho Chi Minh City. Because of this 10-13%, the brokerage unit must spend 2-3% on searching and picking up customers; 2% on marketing costs. The remaining 5-8% is used to pay salaries, remuneration for employees and develop the business apparatus.

"The project distribution unit needs costs to serve the advertising, sales and system maintenance process. Therefore, the commission fee for suburban land is often up to 40-50 million VND per product, even in remote projects, the brokerage fee reaches 60 million VND per product," he revealed.

According to VNE