Sole Selling a Real Estate Project - For Dummies

The Comprehensive IREFD Real Estate Sole Selling Guide 

Before you read this blog post: This is not a happy or funny post. It contains lesser known facts about the real estate industry. Some of those facts are not nice. Thanks.
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This is another blog post at IREFD fueled by demand. There are too many people out there who need this information. How do we know that? We have been getting emails every week from our readers, that somehow revolve around the 'sole selling a real estate project' topic.

Sole Selling a Real Estate Project - The Basics

Keeping it nice and easy, sole selling a real estate project is a process where a project is entrusted for sales to only one real estate agent/ broker/ agency. That chosen broker or agent becomes the Sole Seller (also referred to as the Exclusive Agent) and the project is then sold Solely by the concerned broker.

Also implies that brokerage/ commissions would be payable to the sole selling agent, even if the project developer (helps) sells units in the project.

The entire project sales cycle, right from the application, allotment to all payment collections and final possession/ hand over of the apartments is to be managed by the sole selling agent.

Little Known Facts about Projects available to be sold using a Sole Selling Model

If a builder has indicated that he wants you to market and sell his real estate project as a sole selling agent, there can be only 4 conclusions to this;
  a. You are an established brokerage brand. You can close this page now, thank you.
  b. You are a start up. So is the builder. 50% chances are that the project won't be built. 50% chances are, that the guy who read point #a above and closed this page will sell it 6 months from today!
  c. You are a relative of the builder. Don't worry we understand that whole clan thingy. No hard feelings.
  d. You have a real deal capable of turning your life around! From peaceful to miserable that is.

Revenue Calculation from Sole Selling a Real Estate Project - Outside The Milky Way Galaxy

Number of apartments in Project: 120 Apartments
Average Size of Apartment: 1400 Sq ft Super Built Up
Average Price Committed to Builder: Rs. 3,500 per Sq ft
Total Project Revenue: Rs. 59 Crores Approximately
Car Parking Revenue: 120 x 4 lacs each is Rs. 4.80 Crores
Gross Project Revenue: 63.8 Crores
Total Brokerage Receivable from Sole Selling this Project @2%: Rs. 1.27 Crores!!!
Emotion: Laughing All the Way to the Bank.

Revenue Calculation from Sole Selling a Real Estate Project - In your city(ies) of operations

Number of apartments in Project: 120 Apartments
Average Size of Apartment: 1400 Sq ft Super Built Up
Average Price Committed to Builder: Rs. 3,500 per Sq ft
Total Project Revenue: Rs. 59 Crores Approximately
Car Parking Revenue: 120 x 4 lacs each is Rs. 4.80 Crores
Gross Project Revenue: 63.8 Crores
Total Brokerage Receivable from Sole Selling this Project @2%: Rs. 1.27 Crores!!!

Correction #1- Builder did not pay brokerage/ commission for 30 flats he sold himself. Crook!
Correction #2- Sold 60% flats at distress prices. Average Price Achieved is Rs. 2,900 only!
Correction #3- Halfway through the deal, 2 more brokers came in and Sole Selling suddenly became 'Preferred Selling', with all your preferences gone!
Correction #4- No ad budget, soft launch money vanished. No more sales. Project dead!
Correction #5- All Project approvals not in place yet. Soft launch money vanished. No funds for approvals. Customers at your throat demanding cancellations. Builder not answering call.
Correction #6 - Your senior sales manager started his own brokerage firm and mooched away the project!

Corrected Gross Revenue: Rs. 20 lacs if the Gods are kind.
Emotion: Just got run over by a Tank!

This Blog Post is brought to you by: Mild Stone

Documentation for a Sole Selling Project Marketing and Sales

#1. Spell out the Builder's responsibilities like approvals, construction, on time delivery, quality and just about everything that you expect from a good builder and a great project.
#2. Spell out your responsibilities as the sole selling agent or broker for the project. Write down everything. Down to the last gem clip and eraser.
#3. Functioning and Control at the project site.
#4. Advertisement budgets with strict stages, amounts to be spent and expected results. Ideally about 40% of the total advertisement budget should be spent during the launch and shortly after it.
#5. Brokerage/ Commission and Taxes payments
#6. Commission payment schedule linked to customer payment collection schedule
#7. EXIT Clause if all hell breaks lose. (Hell will break lose, trust us)
#8. Laws of the land
#9. If you need specific inputs, write in to Pillars Support, those guys are playing GTA anyway!

Hope that helps. Someone we trust immensely advised us once that a good lawyer, accountant and doctor are the three friends you need to have a smooth and easy life. Use that advise. Hope that helps.
Cheers!

About the author

Rahul Mishra is a real estate professional who started his life as a salesman, selling homes in the city of Kolkata since 2001. He worked pan India in real estate organisations like MMG Realty, Bengal Shrachi, The Phoenix Mills and The Space Group before helping co found Pillars with a single objective - To make real estate easy!

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