When you sell or rent your home through an agent, you definitely need to pay a commission fee for the agents services. In the meantime, if you need professional valuation services to valuate your home’s value, you also need to pay an additional fee for this service.
However, in this case, the related Ministry has taken direct measures this month to ensure that real estate operations run smoothly in the market and benefiting both parties - agents and property owners.
This has meant that these fees have now been regulated in Cambodia to exact figures. So if you are a property buyer or a seller, this information relates directly to you!
Below is the necessary information you must know when buying, selling or renting a property through an agent in Cambodia, thanks to realestate.com.kh:
Prakas No. 761: Purpose
On 7 September 2017, the Ministry of Economy and Finance issued a new Prakas on “service and commission fees for valuation and real estate services”. The new Prakas is to educate real estate agents and sellers in Cambodia to:
Ensure the efficiency of management and check of charging commission fee and professional commission fee for offering valuation and real estate service.
Ensure the equity and balance of interest between real estate firm and customers using valuation services.
Maintain order in the real estate market through promoting competition with equality, transparency and fairness in real estate market.
Set the basic fee of charging commission fees and professional commission fee for valuation and real estate services.
Valuation Fees Expectations:
When you sell your property and need a valuation firm to define your property’s value, these are the charges you should expect from your licensed Valuer:
For a property that is valued below $100,000, you need to pay a valuation fee of 0.17% or a minimum of $170;
Property valued between $100,001 and $1,000,000 will be charged to you at 0.10% or a minimum of $900;
Property with value between $1,000,001 and $5,000,000 will be charged to you at 0.050% or a minimum of $2,000 for the valuation report;
Property with a value between $5,000,001 and $10,000,000 will be charged to you at 0.030% or a minimum of $1,500;
And if the property has a value above $10,000,000, you will be charged at 0.025% of property’s value.
However, some special properties such as factories and business properties have no set valuation fee. Instead, it depends on each case and the calculation formula with the pre-agreement between you and valuation firm.
Commission Fee for Property Sale and Rentals:
Agents will act for you on behalf of the sale of your property. In this situation, they will charge you the commission fee at a minimum of 3% of the total property’s value after the deal is completed. However, in some special cases, you can negotiate for a lower commission fee, according to the Prakas.
Renting your property through agents, you also need to pay a commission fee which depends on the leasing term. If the duration of rent is less than one year, the commission fee is negotiable and is defined by an agreement between you and your agent. There is no fixed commission fee in this scenario. But if they rent for one year, you need to pay one month’s rental amount as the commission fee.
And if they rent longer than one year, you need to pay one month commission fee plus 25% of the month rental fee multiple by rental term.
For example: You get a 4 year leasing contract. And your rental fee is $500 per month. Then you can calculate the commission fee by: $500 + ($500 x 25/100) x 4 = $1,000. This one thousand dollars is the fee you need to pay to your agent for finding you a renter.
Real Estate Agent Valuation versus Bank Valuation:
Real estate agents are an independent entity that can offer an objective valuation of your home because they only work for the commission fee - and have no particular loyalty to the seller outside of that.
Recently, a few banks have also established internal valuation teams to evaluate the client’s property if required. This might be a concern for sellers, as there is a danger that the bank might evaluate the client’s property below the market price - as it is concurrently being used as collateral for a loan. This represents a conflict of interest in some cases.
However, this depends on you - the property owner - whether you prefer to seek an independent and professional valuation service - or agree to get a valuation service from the bank for your property. In regard to this, Ministry will also have another meeting in the coming months talking with both real estate agents and banks to further clarify on this issue.