Payment Methods for Real Estate Brokerage Remuneration for Practicing Individuals

Payment Methods for Real Estate Brokerage Remuneration for Practicing Individuals by law to ensure transparent economic benefits for parties. Clearly defining the payment mechanism in service contracts helps prevent legal disputes. Long Phan Consulting Company analyzes the current regulations and practical application below.

General principles regarding brokerage fees for individuals practicing real estate brokerage.

Based on Article 63 of the Law on Real Estate Business 2023, remuneration is the legal income individuals deserve upon fulfilling their obligations.

1. Agreement: The level of remuneration and commission is agreed upon by the parties; the law imposes no ceiling or floor.
2. No Direct Receipt: Practicing individuals cannot freely receive remuneration directly from customers. This amount must be paid through the real estate exchange service enterprise or brokerage enterprise where they work to ensure transparency and tax obligations.
3. Payment Method: Can be one-off or in installments. Typically paid upon successful transaction (signing of sales/lease contract), unless agreed otherwise.
4. Independence: Remuneration depends on the agreement between the enterprise and the individual, not on the price of the real estate transaction.

>>> See more at: Professional Real Estate Brokerage Service Benefits

How real estate brokerage fees are calculated.

Various calculation models are applied flexibly depending on the type of real estate and the complexity of the transaction. Currently, the law does not regulate the method of fee payment in real estate brokerage activities; below are four of the most common fee calculation methods in the market today.

Compensation is based on a percentage of the transaction value.

• Formula: Remuneration = Agreed % × Contract Value.
• Rates: Typically 1% – 3% (Sales); 0.5% – 2% (High-value assets); 1-2 months’ rent (Leases).

Note: Contracts must specify whether it is calculated on the listed price or the notarized contract price.

Compensation based on a fixed amount of money.

• A specific figure determined from the start, independent of the final transaction price.
• Used for low-value assets, short-term leases, or specialized tasks (legal paperwork, market surveys).

Compensation based on work stages.

• Used for complex transactions (project transfers, legal issues).
• Stages: Finding customers -> Deposit -> Signing Contract -> Handover.

Combined compensation (Fixed salary and commission)

• Standard model at professional trading floors.
• Income = Fixed Salary (for daily needs) + % Revenue Commission (upon successful closing).

>>> See more at: What is Real Estate Brokerage? Commission Rates for Brokerage Entities

Methods for establishing the form of remuneration

According to Clause 2, Article 61 of the 2023 Law on Real Estate Business, individuals practicing this profession are required to operate within a business providing real estate exchange or brokerage services. Therefore, the form of remuneration must be established through an employment contract or business cooperation contract between the individual and that organization.

This is the highest legal document governing the relationship between the parties, and it is mandatory to specify the following in detail:

• Details regarding specific remuneration, eligibility conditions, payment terms, and tax responsibilities.
• It provides a solid basis for resolving disputes in court or commercial arbitration should a conflict arise.
• The service fee must be clearly stated in the contract signed between the brokerage firm and the client (seller/buyer).

Mechanism for adjusting and distributing remuneration:

• Use contract addendums or supplementary agreements to adjust compensation levels when market conditions fluctuate.
• In cases where multiple brokers are involved, a written agreement on commission distribution should be established before introducing clients. This helps prevent the risk of “cutting corners” and internal conflicts of interest.

Method of payment of remuneration

Brokerage fee payments must strictly adhere to financial and accounting regulations to ensure legality and tax compliance.

Payment via bank transfer (preferred) is the recommended method for professional transactions due to the following legal benefits:

• It helps to record transaction history, creating the strongest evidence in case of disputes regarding the fulfillment of payment obligations.
• Assisting brokerage firms in completing accounting records to facilitate corporate income tax (CIT) settlement.
• Facilitate the withholding of personal income tax (PIT) at source for employees and collaborators as per regulations.

Payment by Cash

• This is often accepted for small-value payments.
• There are potential legal risks regarding transparency. A complete receipt or payment voucher with signatures from both parties is required as proof.

Payment with Other Assets

• The parties may agree to compensation in kind (cars, shares) or other benefits (preferential rights to purchase real estate, etc.).
• The brokerage contract must clearly specify the method for valuing the converted assets to avoid conflicts regarding the actual value received later.

Regardless of the payment method, retaining valid payment documents (invoices, receipts/payment vouchers, payment orders, asset handover records, etc.) is always a mandatory requirement to ensure legal compliance and accountability to tax authorities.

Note regarding the conditions for receiving remuneration for individuals practicing as brokers.

1. Bank Transfer (Prioritized):

• Creates a transaction history (evidence for disputes).
• Facilitates corporate tax finalization (CIT).
• Enables Personal Income Tax (PIT) deduction at source.

2. Cash:

• Accepted for small amounts but carries transparency risks. Must have receipts signed by both parties.

3. Other Assets:

• Payment in kind (cars, shares) or other rights. Must specify valuation methods to avoid value disputes.

Long Phan Consulting offers in-depth real estate brokerage consulting services.

Long Phan Consulting Company provides in-depth legal solutions:

• Regulations: Establishing salary, bonus, and commission regulations compliant with the Law on Real Estate Business 2023.
• Contracts: Drafting and reviewing brokerage and business cooperation contracts.
• Certification: Advising on conditions and procedures for the brokerage practice certificate exam.
• Establishment: Advising on establishing and operating real estate trading floors.
• Dispute Resolution: Representing clients in disputes regarding brokerage fees and commissions.

Some frequently asked questions about the form of compensation for individual real estate brokers.

Below are some questions regarding real estate brokerage fees for individuals practicing as brokers:

Can brokers receive remuneration directly from customers?

No. Practicing individuals receive remuneration/commissions from their enterprise, not directly from customers. (Legal Basis: Clause 1, Article 63, Law on Real Estate Business 2023).

Is there a cap on brokerage remuneration?

No. The level is agreed upon by the parties and does not depend on the transaction price. (Legal Basis: Clause 2, Article 63, Law on Real Estate Business 2023).

Can foreigners practice brokerage in Vietnam?

Yes, if they hold a practice certificate, work at a real estate service enterprise, and comply with Vietnamese labor laws. (Legal Basis: Clause 2, Article 61, Law on Real Estate Business 2023).

Can brokers receive fees from both buyer and seller?

Not prohibited by law, but must be agreed upon in writing by both parties to avoid conflicts of interest. (Legal Basis: Civil Code 2015 and Article 63 Law on Real Estate Business 2023).

Conclusion

Defining the Payment Methods for Real Estate Brokerage Remuneration is key to sustainable cooperation. Clients must strictly comply with regulations on certificates and corporate affiliation. For detailed advice on contracts and remuneration mechanisms, please contact Long Phan Consulting Company via Hotline 1900636389.