IPA Payment rates and Plans15th March 2016

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Table of ContentsI. IntroductionII. IPA rates and payment plan at CytonnIII. Case Studies IV. Conclusion and recommendation

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I. Introduction

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IntroductionIPAs are not considered as employees of a specific real estate company

• An Independent property Agent (IPA) is a person or business that arranges the selling, renting or

management of property

• An independent property agent receives commissions for the property that he or she sells, and is not

considered an employee of a specific real estate company

• Independent property agents are thought to be able to provide their clients with a wider array of services when it comes

to property, for example marketing, liaison and follow up with potential purchasers

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II. IPA Rates and Payment Plan at Cytonn

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IPA rates and payment plan at CytonnCytonn IPAs feel they are not paid well

• Cytonn Real Estate finds, evaluates, structures and deliver world class real estate investment products for

its investors, depending on the client's needs

The IPA payment plan is as follows:

• IPAs are paid a commission of 2% of the selling price

• 50% of the commission is paid upon signing of the sales agreement, after the client has paid a deposit of

10%

• The remaining 50% is staggered throughout the construction period

The IPAs are only tasked with selling Cytonn property

Problem statement

• Less pay compared to other real estate agencies

• Lengthy payment process

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III. Case Studies

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Lloyd Masika Lloyd Masika Limited is a Registered Valuation and Estate Agency firm

• Lloyd Masika is a renown premium real estate firm offering property valuation, letting of both commercial and residential

properties and property management services established in 1979

• The agency department responsible for sale of property is the Agency (Letting and Sales) Department

• The department has been involved in the letting of landmark shopping malls and office buildings in

Nairobi which include Telposta Towers, Crossroad Mall, Sarit Centre

• In commercial sales, one of the projects is the sale of Delta Centre in Nairobi's Upperhill to the World Bank

and International Finance Corporation which was one of the largest single sales transaction in East African

region

• In residential sales, one of the remarkable projects is the sale of KCB plots in Runda, Runda Mimosa and

Runda Mumwe

• In Rentals, the department is involved in letting projects which include Nanu Apartments off Chaka Road,

Longonot Apartments, Norfolk Towers among others

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• Llyod Masika charge a commission of 3.3% of the value of the property sold

• The 3.3% applies to both the residential and the commercial property

• The amount is paid after the deposit has been made

• They deal in completed projects

Lloyd Masika Llyod Masika charge commission of 3.3%

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Ebony Estates

• Ebony Estates Ltd is a Valuation and Estate Management firm of long standing and since its inception and incorporation

in June 1982

• It offers top of the range professional services in the fields of valuation, estate management and estate agency. The firm

is duly registered under the provisions of the Company’s Act (Cap. 486) and is a limited liability company.

• The company has property on sale in Hatheru Road in Lavington, Golden Home in Westlands, Town House convent

Road in Lanington among others.

• Some of there service include:

• Property Agency: assessment of the current market value/rent of the property

• Property Valuation: the company undertakes valuation of all types of fixed and moveable properties

• For sale commissions, they charge 3% of the sale price

• They expect 50% of the commission to be paid upfront  and the balance the sale is completed

• The payment plan is negotiable between parties involved

For sale commissions, they charge 3% of the sale price

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• Kings Developers Limited (KDL) is a fully Kenyan-owned real estate development company that was

founded as part of the Royal Group of Companies. Since its inception in 2009, Kings Developers Limited

has become synonymous with the development of ultra-high commercial, residential, retail, hospitality and

mixed-use properties, making it the premier quality homes developer in the East African property market

• Kings Developers ltd is highly ranked and has received several award in the real estate industry

• In meeting the demand for quality, luxurious home solutions in the property market, King’s Developers Limited has

undertaken to professionally provide the following specialized services under her roof:

• Engineering services – these include civil, structural, mechanical and electrical designs.

• Project consultancy, legal advisory, project advisory, and project facilitation.

• All design services including architectural, interior, landscape and quantity survey services for small, medium and

large property projects.

• Real estate planning, management, and marketing which includes position targeting, promotion and sales.

Kings Developers Limited Kings Developers Limited

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Kings Developers Limited

• Kings Developers pay their IPAs 2% of the value of the property sold as commission

• The amount paid is paid after the signing of sale agreement and once the total cost of the amount has

been paid

• They do not negotiate with the IPAs

Kings Developers pay their IPAs 2%

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Ace realtors LimitedAce realtors charge 3% commission

• Ace realtors is a Kenyan real estate company specialized in property search and sales for clients as well as post-sales

services, which includes residential and commercial leasing and property management

• Their sole business is that of identifying able and credible buyers/tenants on behalf of their clients whose properties are

in the market

The IPA payment plan is as follows:

• They charge 3% commission of the selling price

• They are paid 10% when the client pays a deposit, 50% is staggered through the construction period;

• The remaining 40% is paid upon completion of the payment

Other services offered inclusive in the 3% include:

• Preparation of sales and marketing strategy

NB: The payment plan is negotiable

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Halifax Estate Agency LimitedHalifax estate agency pays commission after full sale

• Halifax Estate Agency Limited is a Kenyan real estate company duly incorporated under the companies

Act Cap 486 and started its operation in 1999

• Halifax Estate Agency Limited has made its presence felt in the Kenyan property and real estate industry

offering a full range of agency, property management, valuation, professional and consultancy services

The IPA payment plan is as follows:

• They charge a commission of 3% of the selling price

• The commission is payable after full sale/ full amount has been paid by the client

Other services they offer inclusive in the 3% commission are:

• Marketing of property

• Preparation of marketing plans

• Preparation of marketing budget

NB: The payment plan is negotiable

Source: Inquiry

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Villa Care KenyaThey charge a commission of 3%

Villa Care Limited offers a wide range of fully integrated real estate services through both commercial and residential

properties to a diverse clientele

The payment plan is as follows:

• They charge a commission of 3% of the selling price

• They are paid 20% when the client pays the deposits, the remaining 80% is paid upon sale of the property

Other services they offer inclusive in the 3% commission include

• Assisting in marketing of property at expos

• Preparation of marketing plan

• Preparation of marketing budget

NB: The payment plan is negotiable

Source: Inquiry

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Hass Consult Real EstateThe commission is paid once

Hass Consult Real Estate are Agents offering Possession, Land, Sale, Let, property Development, Valuation & Management ServicesThe payment plan is as follows:• They charge 3% commission of the selling price• The commission is paid once. When a purchaser wants to book a unit, they pay a deposit to Hass. When

the sale agreement is signed by all parties, the developer send Hass a photocopy of the signed agreement and Hass releases the deposit to the developer (in accordance with the sale agreement) less

their commissions.Other services they offer inclusive in the 3% are:• Creation and review of a project marketing plan • Preparation of production and media budgets • Creation and art direction of all project related branding exercises• Co-ordination and implementation of all marketing works • Direct marketing to database of clientele • Target marketing to identified groups of potential purchasers• Liaison and follow-up with potential purchasers • Collection of initial buyer deposits Scheduled sales reporting &Maintaining communication with buyers

through to sale agreement signing

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Bahati Ridge Development Ltd

• They are the developers of Bahati Ridge, a middle income integrated development in Thika on 95 acres of

land

• They focus on holistic, wholesome lifestyle that combines residences, shopping, recreational and office

facilities

• For independent property agents, they pay 2% of the unit price as commission

• The whole amount of the commission is paid after the sales documents have been signed

Bahati Ridge website

The payment is one off

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Tysons Limited

• The company undertakes Real Estate Consultancy services including valuation of property, property and

facility management, agency, feasibility study and project management, in Kenya and other countries in

the East African Region

• Typically, for their agency services they get 3% commission of the unit price

• The 3% is paid out as follows:

• 50% on signing of papers and payment of deposit

• The other 50% is paid out throughout the payment period of the client

• The payment mode therefore is similar to Cytonn’s, only varying on the rate

Tysons Limited website

They take 3% commission that is negotiable

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Kwetu Realtors

• They offer a wide scope of real estate services more so specializing in rental, management and sale of up-

market residential properties and a variety of commercial properties in Nairobi, Nakuru and Mombasa

• They charge a 3% commission for their agency services. The commission is paid out as follows:

• 1% of the unit price is paid on payment of the 10% deposit by the buyer to the developer

• The remaining 2% is paid once the transaction is complete – once the unit is fully paid for

• The rates and payment plan are negotiable

Source: Kwetu Realtors website

1% of the unit price is paid on payment of the 10% deposit

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SummaryOutline of IPA payments

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Summary

From the table:

• Ebony Estates, Ace Realtors, Villa Care, Tysons Ltd and Kwetu Realtors (5/10) pay/are paid their

commission in installments up to the completion of payment by the client

• Lloyd Masika, Hass Consult and Bahati Ridge Development Ltd (3/10) pay/are paid their commission in full

once the clients pay the deposit

• Halifax and Kings Developers (2/10) pay/are paid their commission once the client completes payment of

the unit

Source: Kwetu Realtors website

Half of the sample pay in installments

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IV. Conclusion and Recommendation

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Conclusion and RecommendationThe rates paid by Cytonn to its IPAs is fair

• The rates paid by Cytonn to its IPAs is fair considering they do not offer Cytonn additional services such as

branding and preparation of marketing plans.

• Cytonn IPAs also use Cytonn material such as banners when advertising hence they do not incur that coat.

• Cytonn should maintain the rate at which it pays its IPAs and make the payment process negotiable

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Q&A