Exclusive property listings are becoming more popular in Cambodia as local and international agencies increase their capacity to handle the burdens of exclusivity. But in an unregulated market that lacks clear specialization, they can accrue losses while unlicensed agents reap the awards.
While international companies generally prefer exclusive listings, many local agents still assume that casting a wide net with maximum exposure is the key to finding investors. But in some cases, too many chefs can certainly spoil the broth, explained local experts.
When agencies are granted an exclusive contract, they focus on the listing first and foremost, said Desmond Yap, general manager of Yong Yap Properties.
“Your agent is your salesperson for your property - what they say and how they say has an important role in the success of the sale,” says Yap.
Exclusive listings benefit from access to and control of the latest information concerning a property. Without this, competition can lead to confusion and mistrust among potential buyers and sellers, he explained.
When it comes to exclusive listings, the sale price and time frame to complete the sale must be agreed on before exclusivity is granted, says In Sitha, Vice President of World Trust Estate.
“The agent’s commission is totally protected from outside sellers,” he adds.
Yet, exclusive listings in Cambodia typically include a sharing clause, notes Sitha.
This means that if another non-contracted agent beats the exclusive agent to a sale, they split the commission in half. The average total commission is three per cent of the selling price. Nevertheless, the exclusive agent has carried the burden and cost of marketing the property and drawing up the final contract.
Because the market is unregulated and anybody can become a private agent in attempt to sell, ‘commision cowboys’ do not accept liability if the contract collapses before full payment.
Sellers are tired of ‘fly by the nighters’ like this, believes David Murphy, managing director of IPS. Sellers are increasing looking for agencies that demonstrate integrity, sustainability and a continuing commitment to the client.
“In this respect,” explains Murphy, “exclusivity over their property becomes a partnership.”
While agencies put their reputation at risk to gain exclusivity, Sitha believes that it is not always worth it.
“Most exclusive listings will not bring benefits if an agency is unfit to handle the listing - or if the property is overpriced, or in some other way unsellable,” he says.
An agency must ensure the property is accurately valued, has the correct land title and is safe for buyers, before considering exclusivity, he notes.
Sorn Seap, CEO of Key Real Estate, notes that with only a handful of new development projects looking for exclusive partners, those that do gain the contract usually throw in property management services to sweeten the deal.
Yet, international developers still lack trust in local agencies to meet sales targets and don’t generally offer a marketing budget to the agency.
“Many developers are trying to manage all marketing - yet, these internationals don’t understand the real estate sales market like a local agency does,” says Sorn.
“As our agencies gain the trust of new developers through sales and marketing success with exclusive listings, Cambodian project marketing will soon move to a point when our resources are more efficiently divided,” he says.
“Let the real estate agents sell and manage all marketing, and let the developers build. Let’s grow rice in the land where rice grows best, and grow corn where corn grows best,” concludes Sorn.
To establish trust, Sam Kiers, director of sales and marketing at Elevated Realty, believes that specialization is key. “They must be well engaged with the target market the seller is seeking in order to succeed,” says Kiers.
“If an agency can’t do this, they can’t sustain exclusive listings - and sellers won’t entrust their listing exclusively with them,” says Kiers.
Murphy agrees and adds that by including property management services, agencies can become a one stop shop for the property owner. For an offshore investor who wants their development sold and then managed this is very attractive: “We handle all problems, sell all the units and simply deliver the money to the investor,” remarks Murphy.
Ultimately, it’s a matter of trust and professionalism throughout the industry, believes Sorn, but these are two things growing very quickly in Cambodian real estate.
James Whitehead is Content Director at Realestate.com.kh