Choosing a real estate agent Part 2
If you haven’t read part 1 of our Choosing a real estate agent series then please click below:
Progression of the industry
In part 1 of Choosing a real estate agent we discussed the progression of the real estate agent from what it was before 2014 to what it has become today. Part two concentrates on what to look for and avoid when choosing a real estate agent in Thailand.
As when any industry expands there are positive and negative elements appear, some of the original problems in the industry have almost been eradicated such as the dishonest practice of adding on. Whilst it does still occur; greater transparency with listings being published online has allowed owners to see for themselves what price their agent has listed their property for. Online marketing has also allowed for greater exposure for sellers and more choice for buyers. The days of driving round endlessly looking for signs for sale have thankfully gone.
What to look for when choosing a real estate agent
There are some important factors to consider when choosing a real estate agent that distinguish between the serious and dedicated professional and the person with nothing more than a Facebook account and a telephone who has made little or no effort to study the industry or protect their customers, merely chancing that they can make money without doing much work. Avoiding an agent with nothing to lose is often a good policy.
- A independent website that is properly maintained and up to date with the latest properties and information to guide you through the, sometimes daunting, process.
- A registered Limited Company is a good sign that they are serious and here to stay, not gone tomorrow.
- VAT registration, whilst many view this as an unnecessary additional cost to the customer and complain that other agents aren’t charging VAT. However it does give you peace of mind that you are in fact dealing with a reputable and honest agency who pay taxes. The VAT threshold in Thailand is, at the time of writing, set at 1.8 million baht per annum (150,000 baht per month). Any agent spending any significant money on staff, marketing, rent and other general expenses associated with running an agency should hit the threshold in expenses alone. Look at receipts from any successful company and you will see there is a charge for VAT, if you come across an established agency with several staff and an office that isn’t VAT registered then it is highly likely they are not declaring their income to avoid paying their taxes. The honesty and integrity of such an agency is therefore questionable.
- An office, some may feel it unnecessary for a modern agent to have a proper address and place of business. An agent with an office is far less likely to disappear should something go wrong. There is no legal recourse if you cannot find the agent/agency to take action. If you’re buying an expensive car you expect the car dealer to have proper facilities in the way of a showroom. The same applies to property.
- Proper contracts, when it comes time to sign on the dotted line then you want to know that what you’re signing gives fair and sufficient coverage to protect your investment whether it be a rental, sales or a deposit contract. As a foreigner you should ensure that anything you sign you can read and fully understand. Some customers/sellers do not wish to make a sales agreement with their agent. It’s illegal for an agent to accept to sell a property without a prior written agreement setting out terms and conditions and authorisation from the lawful owner to advertise their property for sale. Should your agent turn up with a standard generic contract bought from a stationary shop (see example below) then they probably haven’t made any effort to make sure the contract is suitable for the particular situation. If your agent comes up with a more lengthy and specific contract, available in English and Thai, then it shows they have made the effort and their contract templates written and approved by a qualified lawyer.
- Full time staff, some agencies employ part time staff. They don’t get paid a salary but receive a percentage of the commissions paid to the agency. The model was popular in Bangkok where many would take a part time job in their spare time as an agent showing properties and finding new listings. These staff tend to come and go quickly as they don’t get paid unless they make sales and any expenses come out of their own pocket. The downside with this model is they don’t have the experience to be able to value a property and lack the legal knowledge to ensure the process and advice is done correctly. Whilst it is good for the agency to dramatically reduce their costs and at the same time they appear on the surface to be a larger company than they actually are. Whilst there is nothing wrong with individuals wanting to earn extra money outside of their main job delivering food or driving a taxi for example to become an accomplished agent who can offer solid advice, local knowledge and understand legal ramifications correctly. The intricacies of the market takes many years to fully understand and therefore some of the quality can be lost by employing this method.
Overall the industry has come a long way since 2014 when Ubon Homes set up the first Western standard real estate agency in Ubon Ratchathani and raised the bar. We are proud of this achievement and pleased to give something back to the city.
This post is also available in: ไทย (Thai)