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  • The Evolving Real Estate Industry in the Philippines: 5 Ways for Brokers and Sales Agents to Stay Ahead

    “Your income and comfort zone are connected. If you want to earn more, you can’t just do the easy stuff.”

    – Tom Ferry, #1 Real Estate Coach, NY Times Bestselling Author & Speaker

    By Realttorney®

    If you are a licensed real estate broker or an accredited real estate salesperson, you know definitely know how challenging and rewarding this profession can be. You have the opportunity to help people find their dream homes, negotiate the best deals, and earn a substantial income. However, you also face a lot of competition, market fluctuations, and client expectations.

    While traditional roles in the industry such as real estate sales and leasing continue to be important, there are many other opportunities for real estate brokers and salespersons to explore. As real estate service practitioners, brokers, and salespersons should always be on the lookout for ways to improve their business and achieve long-term success. So, how can you stand out from the crowd and achieve lasting success in this industry?

    We have to level up. For accredited real estate salespersons, the level up is to become licensed real estate brokers. For the latter, but not exclusive for them, here are some ways to level up and take advantage of the many opportunities in the Philippines real estate industry beyond sales and leasing:

    1. Property management: Real estate brokers and salespersons can expand their services to include property management. Property management involves the day-to-day operations of a property, including maintenance, rent collection, and tenant relations. With the increasing number of properties in the Philippines, there is a growing demand for property management services.

    2. Be a licensed Real Estate Consultant: Of course, if you have the relevant experience as a real estate broker, you can review and take the licensure examination to become a licensed real estate consultant so provide you can provide a full range of consulting services to clients. Consulting services may include market analysis, feasibility studies, and financial analysis. These services are especially valuable to clients who are up-and-coming, as well as, seasoned real estate investors and developers.

    3. Real estate development: Real estate brokers and salespersons can also become involved in real estate development. Real estate development involves the planning and construction of new properties. Real estate brokers and salespersons can use their knowledge of the market to identify opportunities for development and connect investors with developers. Better still if real estate brokers and/or salespersons can themselves be real estate developers… so long as they know all the pertinent regulatory laws and their rules and regulations.

    4. Real estate finance: Real estate brokers and salespersons can also become involved in real estate finance. Real estate finance involves the financing of real estate projects, including mortgages, loans, and other forms of financing. Real estate brokers and salespersons can use their knowledge of the market to connect investors with lenders and other sources of financing. Better still if real estate brokers and/or salespersons can themselves be “hard money” lenders for real estate developers and/or real estate investors.

    5. Real estate education: Real estate brokers and salespersons can also become involved in real estate education. Real estate education entails the training and development of real estate professionals. Real estate brokers and salespersons can share their knowledge and expertise with others by teaching courses or providing mentorship. It is up to the practitioner if they want to apply for accreditation as a “Speaker/Lecturer for Real Estate Training and Seminars, Continuing Professional Development (CPD) and Career Progression and Specialization (CPS) Programs” with the PRC-PRBRES.

    To conclude, real estate brokers and salespersons in the Philippines have many opportunities to expand their services beyond traditional roles in the industry such as real estate sales and leasing. By exploring opportunities in property management, real estate consulting, real estate development, real estate finance, and real estate education, real estate brokers and sales agents can level up and take advantage of the many opportunities in the Philippines’ real estate industry.

    Of course, it takes a lot of planning, and saving up financial resources in order to take the next step and level up to a more profitable career for those real estate service practitioners who are willing to brave it and step out of their comfort zone.

    Image source: https://www.leveluprealtors.com/ [I love this website and it is a source of inspiration for me as a licensed real estate broker.]

    ——-

    Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs in Real Estate. He is a Chartered Trust and Estate Planning (CTEP®) professional who is committed to educating Filipinos about the value and importance of having an estate plan in their lives.

  • THE FINAL STEP: PREPARE A BUSINESS PLAN

    “Plan carefully and you will have plenty; if you act too quickly, you will never have enough.”

     – Proverbs 21:5, Good News Bible [Today’s English Version]

    By Ernesto C. Perez II

    You would think that having a creative and distinguished business name as well as an appropriate business vehicle chosen will bring us one step closer to registering our business with DTI and BIR.

    Unfortunately, we still have one more step to go. It is a long process but a necessary step to take. The next step is writing a business plan.

    You may think that preparing a business plan doesn’t apply to you because of the experience you have in the brokerage business. But for those who are still new and inexperienced or those who are engaged full-time because this is the only source of income they have then preparing and having a business plan is essential.

    I am not experienced in preparing business plans. In fact, I have several ventures that have failed mainly because of the lack of such a plan.

    There are numerous websites that guide you through the preparation of a business plan. You can hire a professional to assist you in preparing one. No matter what method you choose the important thing is to make a plan that is thoroughly researched.

    A final note if you will permit me. In the book of Donald Trump and Robert Kiyosaki entitled “Mida’s Touch: Why Some Entrepreneurs Get Rich And Why Most Don’t” they discussed their failures and how they learned from their numerous failures that made them succeed.

    In preparing your business plan, I would suggest that you plan to fail. This is not to say that you have to set small goals for yourself.

    By all means, think big! Plan for your outright success. But temper it with the knowledge that the best laid-out plan does not usually go according to what is written.

    There will be numerous bumps on the road. I am still on the bumpy part. Therefore, plan to make adjustments so that you will not be heavily frustrated when things do not happen as planned.

    Facing disappointments and experiencing failures when you thought you have covered all bases is the worst feeling of all. I am well acquainted with such failures and disappointments.

    You need a business plan that is flexible to give you room to adjust your goals accordingly and know what to do when faced with adversities. Once you have made your business plan you are now ready to register your business.

    I have outlined what requirements are needed when you are ready to register your business with the various agencies of the local and national government. You can read it in my previous post.

    Best of luck to everyone. Kung Hei Fat Choi!!

  • STEP TWO: NAMING YOUR REAL ESTATE BUSINESS

    “What’s in a name? That which we call a rose by any other name would smell as sweet.”

     – William Shakespeare

    By Ernesto C. Perez II

    If real estate brokerage is your passion then what is the next step on how to register your real estate business? You got to determine the name of your business.

    You have to be more deliberate and circumspect when it comes to choosing a business name. Ian Gordon – the Startupdaddy – has this to say about choosing a name for your business:

    “While you don’t have to factor in things like people in your past that had that name, in-laws, and what will happen to your business on the playground, with your child, once you decide that you like the name, you’re done. Not so with your business.

    “With a business you need to go much further. You need to find out if there are other businesses with that name, and if so, if they are in your industry. Is the trademark available? Is the domain name available? Does it mean the same thing to others as it does to you? The list goes on.”

    In short, Mr. Gordon says to choose a name with meaning. But he adds that you want to avoid anything too generic. You need to strike a balance between creative and descriptive, so when people hear the name, they remember it and they have at least a vague idea about what you do.

    It is so easy to name your business using your name or the initials of your name. There is nothing striking with “Juan Dela Cruz Realty Brokerage” or “JDC Realty & Marketing Enterprise.”

    Hence, I do suggest that you be more creative. You have to think of a name that will stand out to your clients but at the same time means something to you as well as what the business does.

    Take the example of the business name “realttorney.” It is a marriage of two professions – licensed real estate broker and lawyer. I am both that is why I came up with such a name.

    I think it’s catchy and at the same time descriptive of what I do as well as the service I provide. Moreover, in my opinion, I think it distinguishes me from my fellow licensed real estate brokers who are not lawyers.

    Finally, it is very bothersome and also costly to change your business name if you don’t get it right the first time. Once, you register the name you chose with the Department of Trade and Industry (DTI) then there should be no turning back.

    I promise you the time you spent on thinking things thoroughly on this step will pay off big dividends in the future as you grow and nurture your business. Try it out.

  • REMINDERS AS 2012 ROLLS IN

    “By the taxes he pays, a citizen has every right to demand for a good and honest government.”

    – Franklin D. Roosevelt

    By Ernesto C. Perez II

    I wish all licensed real estate service practitioners – brokers, appraisers, consultants and government assessors – a prosperous and abundant 2012. If we are to believe the prognostications made last year, the real estate industry will continue its boom this year.

    This is good for us who can expect more business to come our way this year. As we start a new year, I wish to outline some reminders that need to be performed by all licensed real estate professionals pursuant to Republic Act No 9646 and its Implementing Rules and Regulations (IRR).

    First, in Section 28, Rule IV of the IRR “Real estate service practitioners shall be required to indicate the certificate of registration, professional identification car, Privilege Tax Receipt (PTR) number, AIPO membership and/or receipt number.”

    Therefore, all licensed real estate service practitioners should get a PTR. It cost around P300.00 and you can get this at your City Hall. Just say that you will get a PTR at the Office of the Treasurer. The Privilege Tax Receipt mentioned in the IRR is the same as the Professional Tax Receipt mentioned in the Local Government Code.

    Second, if you are already registered with the Bureau of Internal Revenue (BIR) then you should pay your annual registration fee of P500.00 using the BIR Form 0605. You can remit the payment at the BIR Revenue District Office (RDO) that you registered in or at the Authorized Agent Banks of the concerned RDO.

    Now, if you are still not registered with the BIR then you must do so in order not to be in trouble with the Bureau as they are stepping up their efforts to collect taxes and plug the budget deficit of the country. The BIR has its eye on the professionals this 2012.

    On 27 December 2011, the headline in the article in Philippine Star bannered “BIR targets 15% hike in income tax collection.” The news item said that the Bureau expects more self-employed professionals to comply with the tax rules in 2012.

    Citing data from the Professional Regulation Commission, the BIR said there are some 3 million registered professionals in the country – that it includes licensed real estate service practitioners. The BIR said “the average annual income tax payments of professionals, however, average less than the monthly minimum wage of P8,500.”

    As licensed real estate service practitioners, we should take this as a warning that the BIR means business. In response to this, we should make the necessary steps to be above board and follow the letter of the law, as we swore to during our oath taking as licensed professionals. Sundin natin ang matuwid na daan.

    I will quickly outline below, the steps to register with BIR as a self-employed individual (professional):

    STEP 1: Secure and fill up BIR Form 1901 – Application for Registration for Self-Employed and Mixed Income Individuals, Estates/Trusts.

    STEP 2: Submit the same with the following documentary requirements to the RDO having jurisdiction over the place where you hold office – it could be a home office or a commercial office space.

    Documentary Requirements:

    1. Birth certificate (Original and photocopy);
    2. Marriage certificate (Original and photocopy); and
    3. Birth certificate of children (Original and photocopy);

    Other documents for submission, if requested:

    1. Mayor’s Permit (Original and photocopy);
    2. Contract of Lease (if renting);
    3. Title/Tax Declaration & SPA/Affidavit of Consent if the location is not owned by applicant (if not renting); and
    4. Sketch of location.

    STEP 3: Pay the Annual Registration Fee (P500.00) at the Authorized Agent Banks of the concerned RDO.

    STEP 4: Pay Documentary Stamp Tax (DST) [loose DST / BIR Form 2000 for DST on Contract of Lease, etc.). Present proofs of payment upon submission of the documentary requirements.

    STEP 5: Submit requirements for Authority to Print (ATP) and registration of books of accounts.

     Documentary Requirements:

    1. Accomplished BIR Form 1906;
    2. Job order from the printer;
    3. Final and clear sample of receipt and invoices (machine printed);
    4. Photocopy of Taxpayer Identification Number Card; and
    5. Photocopy of BIR Form 0605 (payment of registration fee).

     Book of Accounts:

    1. Cash Receipts;
    2. Cash Disbursement;
    3. Ledger;
    4. Journal;
    5. Subsidiary Sales Journal; and
    6. Subsidiary Purchase Journal [last 2 are additional books for VAT Taxpayer].

     STEP 6: Attend the taxpayer’s initial briefing to be conducted by the RDO concerned for new registrants in order to apprise them of their rights and duties/responsibilities as taxpayers.

     STEP 7: Wait for the RDO to issue the Certificate of Registration (BIR Form 2303) together with the “Ask for Receipt” notice, Authority to Print and Books of Accounts.

    For a more comprehensive discussion on the steps enumerated above including the related revenue issuances promulgated by the BIR and codal references in the National Internal Revenue Code can be found in the BIR website (www.bir.gov.ph).

    A final reminder to all brokers reading this article. The tax code states that “all individuals engaged in trade or business shall accomplish and file the application on or before the commencement of business operation or from the day the first (1st) transaction occurred or within thirty (30) days from the application with the LGU for issuance of Mayor’s Permit/Professional Tax Receipt (PTR), which ever comes earlier.”

    I suggest that all licensed real estate service practitioners – in particular, those brokers, appraisers, and consultants – who have not registered with the BIR to do so. In 2005, Atty. Alexander L. Lacson published his book “12 Little Things Every Filipino Can Do To Help Our Country.” You can buy a copy of his book at his website at www.alexlacson.net.

    “PAY YOUR TAXES” is the 10th Little Thing he listed. I end by quoting some portions of what he wrote in pages 75 – 80, which resonates the same message as if it was written last year:

     “Of the many duties of a citizen under our Constitution, paying taxes is one of the most crucial. Because taxes are the lifeblood of our government, of our nation.

     “It is what we use to buy the basic textbooks for our millions of children in the country, or to build additional classrooms in public schools nationwide…

     “Taxes are what we use to buy the most basic of medicines, often generic and cheap, that our Department of Health officials distribute to 34 million Filipinos nationwide who live below the poverty line.

     “It is what we use to pay all our government employees nationwide – our soldiers, our policemen, our public school teachers, among many others.

     x     x     x

     “Viewed in this light, the taxes that you and I pay are actually not lost or wasted completely. A substantial portion of the taxes we pay is still put to good use. Because there are many public servants – not only a few or some – who still do their jobs properly. There are many of them, these honest and faithful ones, but maybe many of them are just in the rank and file, like you and me.

     “But they are there. Among the silent many who hold the center and keep our government from falling apart. They are the ones who keep our public institutions intact through storms and scandals, notwithstanding the misguided ambitions and corruption of some of their leaders.

     “It is for this reason that we should continue paying our taxes. The good ones in the government are still good reason for us to continue paying our taxes properly. The challenge for us is just how to increase the number of these good ones in government.

    x     x     x

     “In 2003, P83 Billion was collected from individual income taxes. But 91% of this amount came from salaried workers from the government and private sector, people who have no choice since their income taxes are withheld mandatorily. Only P7 Billion of P83 Billion (or 9%) came from businessmen and professionals like doctors, lawyers, accountants, architects, and dentists, among others.

     “But how can this be? Guillermo de Joya, spokesman for Filipino-Chinese Chamber of Commerce & Industry, told the Senate on 12 October 2004 that there are at least 50 Billionaires and 42,500 millionaires in the country who do not pay taxes properly.

     “Can you imagine if our businessmen and professionals pay more income taxes? Or if our government is able to collect 21% this year instead of the 14.1% last year, because we all decided to pay 50% more of taxes this year? This means that our government will have more funds to perform its duties and obligations to the public.

    x     x     x

    “But we have to pay our taxes properly. Because we all live in the same country. Because this government, whether we like it or not, is our government. Its cost is a burden we must all share. The task of building this nation is a task that we all must share. We all must contribute to build this kind of nation we dream for ourselves. Each one of us has a role in it. Each one of us has a responsibility to it.”

  • Can a Foreigner Become a Licensed Real Estate Service Practitioner in the Philippines?

    “Foreign real estate service practitioners can only be granted the of practicing this profession if the origin country of the person also allows Filipinos to practice real estate service in their country.”

    – Atty. Ernesto C. Perez II, CTEP, Real Estate Attorney

    This article was first published on August 18, 2009. It is now more than 14 years old and is time to update it because its information is still relevant to this day despite the amendments to the PRC Charter. The updates will be in blue fonts.

    By Realttorney®

    Can foreigners become licensed real estate service practitioners in the Philippines? The categorical answer is YES.

    However, it does not seem apparent when you look at the qualifications listed in Section 14 of Republic Act No. 9646, popularly known as the “Real Estate Service Act” (RESA). The first qualification provided therein states that the candidate for the licensure examination must be “a citizen of the Philippines.”

    Photo by Lukas on Pexels.com

    However, RESA does allow foreigners to have the opportunity to become licensed real estate service practitioners in the country under Section 24 (Foreign Reciprocity).

    The practice of real estate service is very much similar to the practice of medicine and all other professions that are regulated by the Professional Regulatory Commission (PRC), according to its mandate based on Presidential Decree No. 223, now Republic Act No. 8981 – The PRC Modernization Act of 2000.

    RESA grants the right to practice real estate service to a person after he or she passes the licensure examination given by the Professional Regulatory Board of Real Estate Service (See Section 12, RA 9646). If we are to read Sections 12, 14, and 24 side by side, Filipinos and foreigners who want to become licensed real estate service practitioners in the Philippines must first be qualified to take and pass the licensure examination.

    Numerous decisions of the Supreme Court have long recognized as a valid exercise of governmental power the passage of legislation and administrative regulations requiring those who wish to practice certain professions to take and pass licensure examinations. For further reference on this point, you can read the recent case of BOARD OF MEDICINE, ET AL., vs. YASUYUKI OTA (G.R. No. 166097, July 14, 2008).

    It must be stressed that the license to practice real estate service in the country is a privilege or franchise granted by the government. The power to regulate and control the practice of real estate service includes the power to regulate admission to the ranks of those authorized to practice real estate service.

    Now, what does a foreigner have to do to be qualified to take the licensure examination for real estate service? Under Section 24, the foreigner must prove that his country “specifically allows Filipino real estate service practitioners to practice within its territorial limits on the same basis as citizens of such foreign country.”

    How does a foreigner go about proving reciprocity? If you read RESA you cannot find the answer. The answer lies in Section 7 (j) of Rep. Act No. 8981 which defines the extent of the power of PRC to grant licenses.

    The said Section states that the PRC may, upon recommendation of the Professional Regulatory Board, approve the registration of and authorize the issuance of a certificate of registration/license and professional identification card with or without examination to a foreigner who is registered under the laws of his state or country and whose certificate of registration issued therein has not been suspended or revoked.

    It should be emphasized that the requirements for the registration or licensing in said foreign state or country are substantially the same as those required and contemplated by the laws of the Philippines and that the laws of such foreign state or country allow the citizens of the Philippines to practice the profession on the same basis and grant the same privileges as those enjoyed by the subjects or citizens of such foreign state or country.

    This provision means that the PRC is authorized to prescribe additional requirements or grant certain privileges to foreigners seeking registration in the Philippines if the same privileges are granted to or some additional requirements are required of citizens of the Philippines in acquiring the same certificates in the foreign country. 

    In addition, the Commission may, upon recommendation of the Board concerned, authorize the issuance of a certificate of registration/license or a special temporary permit to foreign professionals who desire to practice their professions in the country under reciprocity and other international agreements; consultants in foreign-funded, joint venture or foreign-assisted projects of the government, employees of Philippine or foreign private firms or institutions pursuant to law, or health professionals engaged in humanitarian mission for a limited period of time.

    Finally, agencies, organizations, or individuals whether public or private, who secure the services of a foreign professional authorized by law to practice in the Philippines for the reasons aforementioned, shall be responsible for securing a special permit from the Professional Regulation Commission (PRC) and the Department of Labor and Employment (DOLE), according to PRC and DOLE rules.

    Now, must the foreigner demonstrate to the PRC that the requirements of foreign law are practical and attainable by Filipinos? Or must the foreigner prove first that a Filipino has been granted a license and allowed to practice real estate service in said country?

    The case of the Board of Medicine vs. Ota says that “it is enough to prove that the laws in the foreign country permit a Filipino to get license and practice therein.” Hence, a foreigner need not prove first that a Filipino has already been granted a license and is actually practicing in his/ her country to be qualified for the licensure examination or be given a license without examination.

    To be required to do so would be an arbitrary exercise of the powers of the PRC as was held in the Ota case. All the foreigner has to do is to submit “competent and conclusive documentary evidence, confirmed by the Department of Foreign Affairs, showing that his country’s existing laws permit citizens of the Philippines to practice the profession under the rules and regulations governing citizens thereof.”

    Simply put, a foreigner must submit to the PRC a duly notarized English translation of the foreign law that grants him/her the right to practice real estate service in that foreign country, duly authenticated by the Consul General of the Philippine Embassy of the particular country. Now, this requirement is no longer found in Rep. Act No. 8981. And, until the requirements of the Ota case are abandoned by the Supreme Court, it is still considered as part of the law of the land.

    Finally, what about foreigners who are licensed real estate service practitioners in other countries? Can they practice their profession in the Philippines? YES, they can.

    For example, Realtors® from the United States can practice their profession in the country upon the recommendation of the Professional Regulatory Board of Real Estate Service (Board) to the PRC. Only after the PRC has approved the registration as well as authorized the issuance of a certificate of registration with or without examination. [See Section 7 (j), Rep. Act No. 8981]

    If a US Realtor® is issued a certificate of registration with or without examination by the PRC then he/she can practice as a real estate service professional in the country. However, if this does not appeal to the US Realtor® then he/she has a final option.

    It is also provided in RESA that the “upon application and payment of the required fees and subject to the approval of the Commission, the Board may issue special/temporary permit to real estate service practitioners from foreign countries whose services are urgently needed in the absence or unavailability of local real estate service practitioners for the purpose of promoting or enhancing the practice of the profession in the Philippines.” (Section 23)

    Hence, if the US Realtor® is issued a special/temporary permit by the PRC then he/she can probably serve a foreign corporation that would want to lease land or any other real property in the country that foreigners can purchase.

    Moreover, under Section 7 (l), Rep. Act No. 8981, the Commission has the power to supervise professionals who were former citizens of the Philippines and who had been registered and issued a certificate of registration and a professional identification card prior to their naturalization as foreign citizens, who may, while in the country on a visit, sojourn or permanent residence, practice their profession: Provided, That, prior to the practice of their profession they shall have first been issued a special permit and updated professional identification card by the Board concerned subject to approval by the Commission and upon payment of the permit and annual registration fees.

    However, it seems absurd for the PRC to issue a temporary or special permit to a foreign real estate practitioner due to the unavailability of Filipino licensed real estate service practitioners in the country at this time.

    I think with the more than 40,000 licensed real estate practitioners in the country any foreign or local corporation will be able to find a professional to their liking who will serve them with utmost competence, respect, and responsibility as compared to a foreign real estate service practitioner.

    But, should you be able to provide me with a better example of why the PRC will issue a special/temporary permit to a foreign real estate service practitioner then please do inform me.

    ——-

    Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/Speaker for Training Programs in Real Estate. He is committed to helping new and veteran real estate service practitioners be well-informed of the latest laws, rules, regulations, and information relevant to the real estate service sector.