Real estate agencies should consider multi-level marketing formula for commissions

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KUALA LUMPUR (March 2): Real estate agencies should consider adopting a multi-level marketing concept to address the disparity between the commission earned by estate agents and negotiators and their agencies, said the Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEP) president Nordin Daharom.

"Real estate agents earn their incomes from commissions, so if you work hard, you can get more commission. But sometimes the estate agent works hard, yet the company earns more," he told the audience at the Malaysian Annual Real Estate Convention 2018 (MAREC ’18) at the Sime Darby Convention Centre, Kuala Lumpur today.

This issue has resulted in some estate agents asking for their agencies to give them a bigger commission percentage, he continued.

"How do you solve this problem? So this [multi-level marketing] is the idea for MIEA (the Malaysian Institute of Estate Agents) to think about, whether multi-level marketing can be introduced in the real estate industry," he told the audience.

However, he emphasised that this is only his personal view and not representative of the view of BOVAEP.

Nordin noted that there is a similarity between multi-level marketing firms and real estate agencies as both are commission-based businesses and there are uplines (real estate agents) and downlines (real estate negotiators) in an agency.

Hence, multi-level marketing can be adopted in real estate segment to enhance the profession, although there is no act or legislation in Malaysia that permits estate agents to operate on such a basis, he said.

He cited the Keller Williams commission structure as one that can be adopted by agencies considering the multi-level marketing business model.

Under the structure, an estate agent will get the full amount of the commission from the sales he/she concluded after the agent had contributed a certain amount of sales to the company.

Nevertheless, he noted that this is only viable if the agency has an effective marketing manager and a responsible owner or manager who plans, organises, directs and controls the firm's activities.

Nordin was one of the speakers in a session entitled “Multi-level marketing in the real estate industry?”

Themed “Embracing changes with innovation”, the two-day event was organised by MIEA. is one of the digital media partners of the event.