DATE: August 12, 2022
Two Percent Commission
The Real Estate Agents Licensing Board (REALB) is urging real estate agents to work on newly regulated two percent commission when engaged in selling residential properties valued at $500K or less.
This policy is based on the provisions set out in Legal Notice No. 76, Real Estate Agents (Fees, Forms and Appeals) (Amendment) Regulations 2022, that came into force on Thursday, May 26th, 2022.
Commission rates can be mutually agreed between a vendor and real estate agent if the property value is more than $500,000. However, for residential properties that are valued $500,000 or below, commission rates should not exceed 2 percent of the sale price.
When selling properties valued at $500k or less, all commission payable is subject to all statutory deductions. The marketing costs and disbursements must be mutually agreed by both parties and listed in the listing agreement.
A disbursement can be classified as an out-of-pocket expense by the real estate agent or a payment that is directly linked to the sale of a property. The real estate agent can recover this cost from the vendor as part of the arrangement for selling the property.
The Real Estate Agents (Amendment) Act 2022 provides an avenue for the public to lodge complaints to the Board. The Board has powers to investigate and take necessary actions.
If a vendor disputes or believes that he/she has been overcharged by a real estate agent the property owner has rights to lodge a complaint with the Board in writing, specifying the grounds and the submission of evidence in relation to the allegations;
The Board will carry out an investigation and, as part of the investigation, will demand additional supporting documents;
The Board will in the first instance, work on an early resolution mediation, based on the evidence submitted; and
In cases whereby the mediation ends in a deadlock, parties will be able to present their case before the Board in an inquiry under Part 9 of the Act;
Dispute on Commission and Appeal
The party aggrieved by the Board decision, shall have the right to appeal to the Minister within 28 days of the date on which the appellant was notified of the decision.
For the past recent months, in addition to engaged in bringing awareness regarding two percent commission and real estate activity disbursements, REALB has been focusing on the National Property Sales Database (NATPRO) and Portal program. Effort has been made as to how the Board could best address complaints raised by members of the public and agents.
These were done through Talanoa sessions conducted in the Central, and Western Division and virtual session in the North. Other forums include attending refresher course programs and workshops organised by various real estate agents’ businesses and engaged on our normal day to day inspections.
Recently REALB has introduced spot checks to help and monitor the activities of agents and to ensure that they comply with the provisions of the Act in their daily business.