How real estate commission works for marketing companies in Pakistan

Commission is how a real estate marketing company earns its living, and it is also where most disputes begin: with developers about what is owed, and with agents about what they earned and what they were paid. Getting the method clear, and writing it down, solves most of these problems.

Who earns what

• The developer owns the project and receives the price of the unit, minus the marketing company’s commission.
• The marketing company earns a commission from the developer, agreed separately for each project.
• The agent earns a share from the marketing company for the sales they make.

The figures below are only examples to show the method. Every company agrees its own rates.

A simple example

Say a plot sells for Rs 50 lakh. The developer pays your company 8% commission, and your agent’s rate is 2%.

• Your company’s commission: 8% of Rs 50 lakh = Rs 4 lakh
• The agent’s share: 2% of Rs 50 lakh = Rs 1 lakh, paid by your company
• Your company keeps: Rs 4 lakh − Rs 1 lakh = Rs 3 lakh
• The developer’s money: Rs 50 lakh − Rs 4 lakh = Rs 46 lakh

When is commission earned? The down payment question

In practice the buyer does not pay Rs 50 lakh on day one. They pay a down payment, often in parts, and then installments. So the real question is: which money is yours, and when? Companies commonly use one of these methods:

• Commission first: the first money received goes to your commission until it is fully collected; after that, money goes to the developer.
• Proportional: each payment is split in the same ratio as the deal. For example, if your commission is 8% of the price and the down payment is 25%, then about a third of every down-payment rupee is yours.
• Fixed share: an agreed part of each payment is yours until the commission is collected.

Whatever you choose, agree it in writing with each developer, per project. Then apply it the same way to every payment, so your numbers match the developer’s.

Paying agents fairly

Agents are usually paid from commission that has actually been received, not from sales that are still unpaid. Paying from cleared money (not from cheques that might bounce) protects your company. If a booking is cancelled, decide in advance what happens to commission already paid.

Keep the developer’s money separate

The biggest risk is spending the developer’s money by mistake, because it sits in the same bank account. Keep a running figure of how much you hold for each developer, send it on a regular schedule, and give them a statement each time.

How software helps

Doing this by hand for hundreds of payments is where errors creep in. Baalki knows the deal for each project and each agent’s rate, and splits every cleared payment automatically into your commission, the agent’s share and the developer’s money. Agents see their own earnings; the company’s commission stays private.

Common questions

Is commission paid on the full price or after discount?

That depends on your agreement with the developer. Many companies calculate it on the final price after any discount. Write the rule down for each project so everyone uses the same one.

When should an agent be paid?

Most companies pay agents from commission the company has actually received in cleared money. Paying before that means your company carries the risk if the buyer stops paying or a cheque bounces.

What happens to commission if a booking is cancelled?

Agree this in advance with the developer and your agents. A common rule is that commission already collected is not refunded to the buyer, but every company should put its own rule in writing.