On Saturday, Oct 6, 2012, I was having a business meeting with a 62-year-old slim man who was introduced to me by an old acquaintance realtor. This businessman had this offer of a S$150,000 rental commission per year from an oil rig company sending expatriates to Singapore. As he is not a licensed Singapore realtor, he could not handle this "lucrative" account. S$150,000 is a large source of revenue for a small-time realty.
My acquaintance said I needed only to pay 15% of the commissions to this man and to house the expats in serviced apartments. I agreed to meet him.
During the meeting, he said the 15% would go to the American who would give him the exclusive deal. "I will get 40% of the commissions from you," he said. "This is a $150,000 yearly income. Both sides will sign an agreement to pay a penalty of 10% if they don't fulfill their obligations. However, you and I have to pay this American $6,000 upfront, otherwise, he will not give us the deal. You foot $3,000. This $3,000 is deductable from the 15% of the commissions you get. I give you 2 days to consider before I contact my other agents."
So, I was to pay $3,000 to somebody I don't know. I have to pay this American 15% and then 40% of the commissions to this broker. The expat arrivals would live in long term housing which means I have to co-broke with other agents at 50:50.
Assuming $150,000 commissions per year and 2/3 of it is due to co-broking as the other agent represents the Landlord. The gross income from co-broking will be 50:50 and this equals to 2/3x$150,000/2 = $100,000. 50% is given to the co-broker. So, the balance will be $50,000 for me. 15% goes to the American. The balance for me is $42,500. 40% goes to this man. I get $25,500.
Assume 1/3 of $150,000 is full commission to me. Following the above formula, I get $25,500. The estimated income per year is $50,000. This assumes that there is $150,000 worth of business. I would have to provide 24-hour services to pick up the expat on arrival in Singapore at any hour of the day and give advices on education and provide after-sales services.
The man gets $50,000 for introducing this expat to me. He wants the $3,000 upfront and 2 days to decide.
Suddenly a thin balding man with a worried look passed by. I knew him as an industrial park tenant and as a Landlord of a cluster bungalow in Punggol for many years. He had come to my Surgery 3 weeks ago to complain that the dogs were barking and depriving him of sleep. Now he brought up the same topic that I was not feeding the dogs and that was why they barked all day long.
"Please have a seat," I said to him. He did not want to sit.
"Why are you confrontational?" I asked him. "You came suddenly to complain about the dogs barking as they did not get fed some 3 weeks ago. I invited you into my Surgery to see the dogs. You saw the feed bowls were filled with dog food. Water bowls were full. "
"Your dogs are still barking today. They are not fed."
I was patient with him as I understood he had some loss in his business in this extremely competitive world where China is the world's factory, leaving little for the small-time businessman or manufacturer.