The real estate market in the Philippines continues to thrive, creating opportunities for many individuals to participate in property transactions. However, a concerning practice persists in the industry: unlicensed individuals acting as real estate agents and collecting commissions.
This comprehensive guide explores the legal framework governing real estate practice in the Philippines, the implications of unlicensed agent commissions, and what both consumers and aspiring agents need to know to navigate this complex landscape lawfully.
The Legal Framework: RESA Law of the Philippines
The Real Estate Service Act (RESA) of 2009, officially known as Republic Act No. 9646, is the primary legislation governing real estate practice in the Philippines. This landmark law was implemented to professionalize the real estate service sector and protect consumers from fraudulent practices.
Under RESA, real estate service practitioners are categorized into:
- Real Estate Brokers: Licensed professionals who can independently facilitate real estate transactions
- Real Estate Appraisers: Licensed to conduct property valuations
- Real Estate Consultants: Licensed to provide professional advice on real estate matters
- Real Estate Salespersons: Working under licensed brokers with proper accreditation
The Professional Regulation Commission (PRC) serves as the government body responsible for issuing these licenses after candidates meet specific educational requirements and pass the necessary examinations.
Key Provisions of RESA Law
Section 28 of RESA explicitly prohibits unauthorized practice, stating that no person shall practice or offer to practice real estate service in the Philippines without a valid Certificate of Registration and Professional Identification Card from the PRC. The law specifically mentions that only licensed real estate brokers may “sell, solicit, advertise, list, or deal in real estate” and collect professional fees or commissions for such services.
Understanding Licensed vs. Unlicensed Real Estate Practice
To fully grasp the implications of unlicensed agent commissions, it’s essential to understand the distinction between licensed and unlicensed practitioners in the Philippine context.
Licensed Real Estate Professionals
A licensed real estate broker in the Philippines has:
- Completed a bachelor’s degree in real estate management or any allied course
- Passed the PRC-administered Real Estate Broker Licensure Examination
- Registered with the PRC and obtained a Professional Identification Card
- Complied with continuing professional development requirements
A real estate salesperson, while not licensed by the PRC, must be:
- Accredited by a licensed broker who takes responsibility for their actions
- Registered with the appropriate regulatory bodies
- Working exclusively under the supervision of their sponsoring broker
Unlicensed Real Estate Practitioners
Unlicensed practitioners typically fall into several categories:
- Informal agents: Individuals with no formal training who connect buyers and sellers
- “Runners”: People who find properties or buyers and connect them to licensed agents
- Property owners acting as their own agents: Property owners who bypass licensed professionals
- Unaccredited salespersons: Those working without proper broker sponsorship
Licensed vs. Unlicensed Real Estate Practitioners in the Philippines
Licensed Real Estate Broker
Legal & CompliantLegal Status
- Fully authorized under RESA Law (RA 9646)
- Can legally collect commissions for real estate transactions
- Protected by law in case of disputes
- Can represent clients in legal documentation
Requirements
- Bachelor’s degree in real estate or allied courses
- Passed the PRC licensure examination
- Registered with PRC with a valid ID card
- Compliant with continuing professional development
- Membership in professional organizations (e.g., PAREB)
Capabilities & Benefits
- Can independently facilitate all real estate transactions
- Can advertise services publicly
- Can sponsor and supervise salespersons
- Higher earning potential (full commission)
- Professional network access and industry resources
- Enhanced credibility with clients and developers
Unlicensed Practitioner
Illegal & RiskyLegal Status
- Illegal under RESA Law (RA 9646)
- Cannot legally collect commissions for real estate services
- Subject to penalties (PHP 100,000 to 1,000,000 fine)
- May face imprisonment (up to 6 years for repeat offenses)
Common Types
- “Informal agents” with no formal training
- “Runners” who connect buyers/sellers to agents
- Unaccredited salespersons working without broker supervision
- Self-proclaimed “referral agents”
- Unregistered in-house marketing personnel
Risks & Limitations
- Contracts may be deemed invalid or unenforceable
- Limited legal protection for clients in case of disputes
- Cannot independently advertise real estate services
- Limited earning potential (only “referral fees”)
- No access to professional organizations or resources
- Risk of legal action against both agent and clients
Commission Structures in Philippine Real Estate
Understanding the standard commission structure provides context for why unlicensed practice persists despite legal prohibitions.
Standard Commission Rates
In the Philippines, real estate commissions typically follow these patterns:
| Transaction Type | Standard Commission Rate |
|---|---|
| Property Sale | 3-5% of selling price |
| Property Rental | One month’s rent for annual contracts |
| Commercial Property | 3-7% depending on property value |
These rates are not legally mandated but have become industry standards through practice. The substantial commissions, particularly for high-value properties, create a strong incentive for participation in real estate transactions—even for those without proper licensing.
Commission Distribution Model
In legitimate real estate transactions, the commission flow follows a structured hierarchy:
- The property seller/developer pays the commission to the licensed broker
- The broker distributes shares to accredited salespersons as per their agreement
- The broker remains legally responsible for the transaction
Real Estate Commission Flow in the Philippines
Compare the legitimate pathway of real estate commissions with illegal arrangements involving unlicensed practitioners under RESA Law (RA 9646)
Property Owner or Developer
Initiates the sale and agrees to pay commission
Licensed Real Estate Broker
Legally authorized to receive commission (3-5% of property value)
Accredited Salesperson
Receives share of commission through broker as per agreement
Key Points: Legitimate Commission Flow
- The property owner or developer pays the commission directly to a licensed real estate broker
- The licensed broker is registered with the PRC and legally authorized to collect commissions
- If a salesperson is involved, they must be properly accredited and working under the broker’s supervision
- The broker shares the commission with their accredited salesperson based on their agreement
- All transactions are documented and comply with RESA Law requirements
Property Owner or Developer
Initiates the sale and agrees to pay commission
Unlicensed Agent
Directly collects commission illegally
Licensed Broker
Receives commission but facilitates illegal arrangement
Unaccredited “Referral Agent”
Receives “referral fee” (disguised commission) illegally
Warning: Illegal Commission Arrangements
- Direct payment to unlicensed “agents” is prohibited under RESA Law
- Using a licensed broker to funnel commission to unlicensed “referral agents” is still illegal
- Penalties include fines of PHP 100,000 to 1,000,000 and possible imprisonment
- Property transactions facilitated this way may be deemed unenforceable in court
- Both the unlicensed practitioner AND those who knowingly engage them may face legal consequences
Legal Implications and Penalties for Unlicensed Practice
The collection of commissions by unlicensed individuals is not merely a regulatory concern—it constitutes a violation of Philippine law with significant consequences.
Penalties Under RESA Law
Section 39 of RESA Law outlines the penalties for unauthorized practice:
- First offense: Fine of PHP 100,000 to PHP 300,000
- Second offense: Fine of PHP 300,000 to PHP 500,000
- Third offense: Fine of PHP 500,000 to PHP 1,000,000 and imprisonment of up to six (6) years
These penalties apply not only to the unlicensed practitioners themselves but potentially to those who knowingly employ or cooperate with them.
Risks for Property Buyers and Sellers
Beyond the penalties faced by unlicensed agents, consumers who engage with them face significant risks:
- Transaction validity: Contracts facilitated by unlicensed agents may be deemed invalid or voidable
- Legal recourse limitations: Limited protection if fraud, misrepresentation, or negligence occurs
- Documentation problems: Improper handling of critical property documents
- Escrow issues: Improper handling of deposits and payments
- Tax compliance concerns: Potential tax evasion or improper reporting
As ruled by the Supreme Court of the Philippines in several cases, including the landmark Goyanko Jr. v. United Coconut Planters Bank decision, contracts involving unlicensed brokers may be deemed unenforceable, leaving parties with limited legal protection.
The Hidden Costs of Working with Unlicensed Real Estate Agents
When you engage with unlicensed real estate practitioners in the Philippines, you expose yourself to significant legal, financial, and property risks. This visualization breaks down the potential consequences and quantifies the hidden costs you might face.
Legal Risks Assessment
Unenforceable Contracts
Contracts facilitated by unlicensed practitioners may be deemed void or unenforceable by Philippine courts, as established in landmark cases like Goyanko Jr. v. United Coconut Planters Bank. This means you could lose your entire investment with no legal remedy.
Limited Legal Protection
If an unlicensed agent misrepresents property details or mishandles your transaction, you have significantly limited legal recourse. Courts may refuse to hear cases involving unlicensed practitioners.
Potential Legal Costs
Resolving legal issues arising from transactions with unlicensed agents typically requires specialized legal counsel, with attorney fees ranging from PHP 50,000 to PHP 250,000 depending on case complexity.
Potential Loss: PHP 50,000 – 250,000Financial Risk Assessment
Mishandled Deposits & Payments
Unlicensed agents often lack proper escrow procedures and financial accountability. Reservation fees, down payments, and other funds may disappear with no recourse for recovery.
Potential Loss: Up to 100% of payment (PHP 50,000 – 5,000,000+)Property Valuation Fraud
Without the ethical and professional standards required of licensed agents, unlicensed practitioners may significantly inflate property values. Studies show average overvaluation of 15-30% in such cases.
Potential Loss: 15-30% of property value (PHP 300,000 – 3,000,000+)Improper Documentation & Tax Penalties
Improper handling of transaction documents may result in tax compliance issues, leading to penalties from Bureau of Internal Revenue for capital gains tax, documentary stamp tax, or transfer tax violations.
Potential Loss: PHP 25,000 – 100,000 in penaltiesProperty & Title Risk Assessment
Title Fraud & Ownership Issues
Unlicensed agents often lack the knowledge or willingness to conduct proper title verification. You may purchase property with existing liens, encumbrances, or even from someone who isn’t the rightful owner.
Potential Loss: Entire property value (PHP 1,500,000 – 50,000,000+)Incomplete Title Transfer
Proper title transfer requires specific legal procedures. Unlicensed agents often fail to complete all necessary steps, leaving ownership unclear or contested.
Potential Loss: PHP 100,000 – 500,000 in legal remediationHidden Property Issues
Licensed professionals are required to disclose known property defects. Unlicensed agents may conceal serious structural issues, flooding problems, or boundary disputes to secure a sale.
Potential Loss: PHP 200,000 – 2,000,000 in repairs/remediationProtecting Your Investment
How to Verify a Licensed Real Estate Professional
- Ask to see their PRC identification card with license number
- Verify the license through the PRC online verification system (https://online.prc.gov.ph)
- Check their membership with professional organizations like PAREB (Philippine Association of Real Estate Boards)
- For salespersons, request written proof of their accreditation with a licensed broker
- Review their professional digital presence (website, social media) for legitimate credentials
Essential Documentation Safeguards
- Ensure all agreements are in writing with the broker’s PRC license number included
- Use official receipts for all financial transactions
- Consider engaging a real estate attorney for high-value transactions
- Conduct independent title verification through the Registry of Deeds
- Require property disclosure statements signed by the seller
- Use secure escrow services for payments rather than direct payments to agents
Red Flags That Suggest Unlicensed Practice
- Reluctance or refusal to provide license information when requested
- Pressure to make quick decisions or payments without proper documentation
- Requests for cash payments or payments to personal accounts
- Lack of formal office space or professional communication channels
- Unwillingness to involve the property owner or broker in discussions
- Using terms like “referral agent” or “property consultant” instead of broker or accredited salesperson
Key Risk Takeaways
- Transactions involving unlicensed agents may be legally void or unenforceable under Philippine law.
- Financial losses can range from small commission amounts to the entire property value in extreme cases.
- Title and property ownership issues are the most severe risks, potentially resulting in complete investment loss.
- Legal remediation costs can add significant expense to an already problematic transaction.
- Both buyers and sellers face substantial risks when engaging with unlicensed practitioners.
Average Financial Risk When Working With Unlicensed Agents
Based on typical property values in the Philippines, average reported losses from legal remediation costs, disputed transactions, and title issues in cases involving unlicensed real estate practitioners.
Common Arrangements Involving Unlicensed Agents
Despite the clear legal prohibitions, several common arrangements persist in the Philippine real estate market involving unlicensed individuals and commission payments.
The “Referral Agent” System
One widespread practice involves “referral agents” who:
- Identify potential buyers or properties
- Connect these prospects to licensed brokers
- Receive a portion of the commission as a “referral fee”
While this might appear to be a legitimate workaround, RESA Law does not recognize “referral agents” as a valid category of real estate practitioners. The payment of “referral fees” to unlicensed individuals for real estate services still constitutes a violation of the law.
Working Under a Licensed Broker Without Proper Accreditation
Some unlicensed practitioners attempt to legitimize their operations by claiming to work under a licensed broker, yet without completing the proper accreditation process. This arrangement:
- Violates the requirement for salespersons to be properly registered
- Places the broker at risk of penalties for enabling unauthorized practice
- Does not provide consumers with the protections intended by the law
Developer In-House Marketing Personnel
Property developers often employ in-house marketing staff who may not be licensed real estate professionals. While these employees can provide information and facilitate sales, they must:
- Work exclusively on the developer’s own projects
- Be properly employed by the developer
- Not represent themselves as independent real estate professionals
Any commission-based arrangement with unauthorized in-house personnel falls into the same legal gray area as other unlicensed practice.
Is Your Real Estate Arrangement Legal in the Philippines?
Use this interactive decision tree to determine if your real estate transaction complies with RESA Law (RA 9646) requirements. Answer a few simple questions to assess your arrangement’s legality.
Who is facilitating your real estate transaction?
In the Philippines, RESA Law (RA 9646) strictly regulates who can legally engage in real estate service activities. Let’s identify who’s handling your transaction.
Under Philippine law, only licensed real estate brokers and their properly accredited salespersons are legally allowed to facilitate real estate transactions for others and receive commissions for these services.
Verification of Broker’s Credentials
It’s important to verify that your broker is currently licensed. Have you confirmed their credentials through any of these methods?
How to Verify a Broker’s License
Before proceeding with your transaction, it’s crucial to verify your broker’s credentials:
- Ask to see their Professional Regulation Commission (PRC) ID card
- Note their license number
- Verify through the PRC’s online verification portal: https://online.prc.gov.ph
- Check if they are a member of professional organizations like PAREB
After verification, what did you discover?
Salesperson’s Accreditation Status
While salespersons don’t need a PRC license, they must be properly accredited and work exclusively under a licensed broker’s supervision.
Commission Handling
How is the commission or professional fee being handled in this transaction?
Verifying Salesperson Accreditation
A legitimate real estate salesperson should be able to provide:
- Written authorization from their supervising broker
- Their broker’s contact information for verification
- Professional identification showing their broker affiliation
Have you requested this documentation?
Arrangement Structure
You mentioned that the salesperson handles all aspects independently but claims to work under a broker. In a legal arrangement:
- The broker must be actively involved in the transaction
- All commissions must flow through the broker
- The broker is legally responsible for the transaction
Given this information, which best describes your situation?
Understanding “Referral Agents”
Under RESA Law, the term “referral agent” is not a recognized classification. People using this title typically fall into one of these categories:
Compensation for the Referral
How is the person who made the referral being compensated?
Property Owner as Seller
Property owners are allowed to sell or lease their own property without a real estate license. Which best describes your situation?
Owner’s Representative Status
When someone represents a property owner, specific legal requirements apply:
Developer’s In-house Personnel
Developer’s in-house marketing personnel have specific limitations. Which scenario applies to your situation?
Commission Structure
How are commissions handled for this in-house staff member?
Working with a verified, licensed real estate broker is fully compliant with Philippine law. Licensed brokers have met the educational requirements, passed the PRC licensure examination, and are legally authorized to:
- Facilitate real estate transactions
- Advertise properties for sale or lease
- Represent buyers and sellers
- Collect professional fees or commissions
This is the safest and most legally sound arrangement for real estate transactions in the Philippines.
Working with a properly accredited salesperson who operates under a licensed broker’s supervision is legal under Philippine law as long as:
- The salesperson is properly registered with their supervising broker
- All commissions flow through the licensed broker (not directly to the salesperson)
- The broker maintains oversight and responsibility for the transaction
This arrangement provides legal protection for all parties involved while allowing salespersons to legally participate in the real estate industry.
When someone simply introduces you to a licensed real estate professional without receiving financial compensation, this is perfectly legal. This arrangement is a genuine referral rather than unlicensed real estate practice because:
- No real estate services are being provided by the unlicensed person
- No commission or professional fee is being paid for real estate services
- The licensed broker handles all aspects of the transaction
This common arrangement allows friends and associates to help each other without violating RESA Law.
Property owners are legally entitled to sell or lease their own property without a real estate license. This exemption exists because:
- They are not acting as an intermediary for another party
- They are not offering professional real estate services to the public
- They have inherent rights as the property owner
However, if a person regularly engages in selling multiple properties they don’t own, they would need a broker’s license.
A representative with a Special Power of Attorney (SPA) from the property owner is legally authorized to act on the owner’s behalf, provided:
- The SPA is properly executed and notarized
- The representative is not receiving a commission for real estate services
- They are acting specifically within the scope of authority granted by the SPA
This arrangement essentially extends the owner’s legal exemption to their authorized representative.
In-house sales staff of a developer may legally sell properties owned by their employer under these conditions:
- They sell exclusively their employer’s (developer’s) own projects
- They are legitimate employees of the developer
- All payments and documentation go through the developer company
- They don’t represent themselves as independent real estate agents
This arrangement is considered an extension of the developer’s right to sell their own property.
When developer’s in-house staff receive performance incentives from their employer, this is a legal compensation structure because:
- The payments are coming from the property owner (the developer)
- The compensation is part of an employer-employee relationship
- They are not receiving commissions as independent practitioners
This performance-based compensation model is common and legal in developer sales operations.
A person claiming to be a real estate broker without a valid PRC license is practicing illegally. This arrangement violates RESA Law and poses significant risks:
- Contracts facilitated may be deemed unenforceable in court
- You have limited legal protection if issues arise
- The unlicensed person faces severe penalties if reported
- Property ownership transfer may be compromised
This is a high-risk arrangement that could jeopardize your entire transaction and investment.
Even if a salesperson is affiliated with a licensed broker, direct commission payments to the salesperson violate RESA Law requirements. In legal transactions:
- All commissions must be paid to the supervising broker
- The broker then distributes the agreed share to the salesperson
- Bypassing the broker undermines the supervisory relationship required by law
This arrangement circumvents the legal protections and accountability measures established by RESA Law.
A person claiming to be a real estate salesperson without proper broker affiliation documentation is operating illegally. Legitimate salespersons must:
- Have formal, documented affiliation with a licensed broker
- Be able to produce proof of this relationship when requested
- Work exclusively under that broker’s supervision
Without proper documentation, this person is effectively acting as an unlicensed practitioner, which violates RESA Law.
A supposed “salesperson” who acts independently with no actual broker involvement is operating illegally. This common deception is used to create a false appearance of legitimacy when:
- They mention a broker’s name but the broker has no actual involvement
- All communications and transactions are handled solely by the unlicensed person
- The broker may be unaware their name is being used or may be complicit in the arrangement
This violates the supervisory relationship required by RESA Law and constitutes unauthorized practice.
“Referral agents” who actively show properties and facilitate transactions are practicing real estate service without a license. Activities that constitute illegal practice include:
- Showing properties to potential buyers
- Negotiating terms of sale or lease
- Preparing or handling transaction documents
- Marketing properties through listings or advertisements
The term “referral agent” is often used to disguise what is essentially unlicensed brokerage activity.
When an unlicensed person connects buyers and sellers and expects to receive a commission, this constitutes illegal practice under RESA Law:
- The act of connecting parties for compensation is a real estate service activity
- Receiving payment for this service requires a broker’s license
- Calling the payment a “referral fee” or “finder’s fee” doesn’t change its legal nature
This common practice in the Philippine real estate market directly violates RESA Law’s licensing requirements.
When an unlicensed person receives any form of payment for a real estate referral, this violates RESA Law:
- Any compensation for connecting parties in a real estate transaction requires a license
- The payment structure (percentage, flat fee, etc.) doesn’t affect the legal requirement
- Brokers who share commissions with unlicensed referrers are also violating the law
This arrangement places both the unlicensed referrer and the licensed broker who pays them at legal risk.
A person selling multiple properties they don’t personally own is engaging in brokerage activities without a license:
- The owner exemption only applies to selling one’s own property
- Regularly listing and selling others’ properties constitutes professional real estate service
- This activity requires a broker’s license regardless of the number of transactions
This is a clear case of unauthorized practice of real estate service and carries significant legal penalties.
A representative who receives a commission for selling someone else’s property is practicing real estate brokerage without a license:
- Even with the owner’s authorization, receiving commissions requires a license
- The SPA exemption only covers acting on behalf of the owner, not professional brokerage
- Commission-based compensation is a hallmark of professional real estate service
This arrangement crosses the line from authorized representation to unauthorized real estate practice.
Developer’s staff who sell properties from multiple developers or private sellers are effectively operating as brokers:
- Developer employee exemption only applies to selling their employer’s projects
- Selling properties from multiple sources constitutes independent brokerage
- This activity requires a real estate broker’s license
This common practice exceeds the scope of the developer employee exemption and constitutes unauthorized practice.
Developer staff who request direct personal commission payments are operating outside their legal exemption:
- The developer employee exemption requires transactions to flow through the developer
- Direct personal payments indicate independent practice rather than employee activities
- This arrangement may also violate employment and tax regulations
This practice crosses the line from legitimate employee activity to unauthorized real estate practice.
Before proceeding with this transaction, it’s essential to verify the salesperson’s credentials:
- Request written proof of their accreditation with a licensed broker
- Ask for their broker’s PRC license number and contact information
- Verify the broker’s license through the PRC verification system
- Ensure all documentation and payments will involve the broker
Proceeding without verification could place you in an illegal arrangement with significant legal and financial risks.
When broker involvement is unclear, you may be dealing with an illegal arrangement. Take these steps to clarify:
- Request direct communication with the supervising broker
- Ensure the broker reviews and signs all transaction documents
- Confirm that all payments will be made to the brokerage, not the individual
- Ask for written confirmation of the salesperson’s accreditation
Without clear broker involvement, this arrangement likely violates RESA Law and puts your transaction at risk.
When compensation arrangements are unclear, there may be illegal payments occurring. To protect yourself:
- Ask the broker directly if any referral fees are being paid to unlicensed individuals
- Clarify all commission structures and flows in writing
- Ensure all your payments go only to licensed professionals
- Be wary of arrangements where the source of the referral seems overly involved
Unlicensed referrers receiving compensation for real estate services is a common but illegal practice in the Philippines.
Without proper documentation of authority to represent the owner, this arrangement is questionable. Protect yourself by:
- Requesting a notarized Special Power of Attorney from the property owner
- Verifying the identity of the actual property owner through land records
- Confirming the representative’s authority directly with the owner if possible
- Consulting with a real estate attorney before proceeding
Undocumented representation creates significant risks, including potential fraud or title issues.
Unclear compensation arrangements with developer staff may indicate problematic practices. To ensure compliance:
- Confirm all payments are made directly to the developer company, not individuals
- Request official receipts issued by the developer for all payments
- Clarify the staff member’s employment status with the developer
- Be wary of requests for payments outside official channels
Legitimate developer sales typically involve transparent, company-managed payment processes.
This decision tree is based on Republic Act No. 9646 (Real Estate Service Act of 2009) and related regulations in the Philippines as of 2024. It is provided for educational purposes only and should not be considered legal advice.
While this tool can help assess common arrangements, specific situations may have additional legal considerations. Consult with a qualified real estate attorney for legal advice regarding your specific circumstances.
Protecting Your Interests as a Property Buyer or Seller
Consumers can take several steps to protect themselves from the risks associated with unlicensed real estate practitioners.
Verification of Credentials
Before engaging any real estate professional:
- Ask for their PRC identification card and note the license number
- Verify the license through the PRC online verification system (https://online.prc.gov.ph)
- Confirm their membership with recognized professional organizations such as the Philippine Association of Real Estate Boards (PAREB)
- For salespersons, request proof of accreditation with a licensed broker
Documentation and Agreements
Proper documentation provides essential protection:
- Ensure all agreements regarding property transactions are in writing
- Include the broker’s PRC license number in all contracts
- Specify commission arrangements clearly in written agreements
- Use official receipts for all financial transactions
- Consider engaging a real estate attorney for high-value transactions
Reporting Suspicious Activity
The PRC and the Department of Human Settlements and Urban Development (DHSUD) have established channels for reporting suspected unlicensed practice. Filing a complaint can help protect other consumers and support enforcement of professional standards.
Real Estate Agent Verification Checklist
Use this interactive checklist to verify if your real estate agent is legitimate according to Philippine law and protect yourself from potential fraud.
How to Use This Checklist
Before engaging with a real estate agent in the Philippines, work through this checklist to verify their legitimacy under RESA Law (RA 9646). Click each item after completion. Pay special attention to red flag items which could indicate potential illegal practice.
Verification Progress: 0%
Credential Verification
Requested PRC ID Card
Ask the agent to show their Professional Regulation Commission (PRC) identification card. Note the license number and expiration date.
Verified License through PRC Website
Check the license status on the PRC’s official website to confirm it’s active and valid.
Confirmed Professional Organization Membership
Verify membership in recognized organizations like PAREB (Philippine Association of Real Estate Boards) or similar professional bodies.
Red Flag: Unable to Provide License Information
If the agent is reluctant or unwilling to provide license details, this is a serious warning sign of potential illegal practice.
Broker-Salesperson Relationship
For Brokers: Confirmed Independent Authority
If working with a licensed broker, verify they have authority to independently facilitate transactions and receive commissions directly.
For Salespersons: Verified Broker Affiliation
If working with a salesperson, request written proof of their accreditation with a specific licensed broker, including the broker’s name and license number.
For Salespersons: Confirmed Broker Involvement
Verify that the supervising broker is actively involved in the transaction and will be reviewing all documentation.
Red Flag: “Independent” Salesperson
Be cautious if a salesperson operates with no evident broker oversight or claims to be “independent” while not being a licensed broker.
Documentation & Payments
Confirmed Broker/Agency Contact Information
Obtained and verified the physical office address, official email, and business phone number of the broker or brokerage firm.
Reviewed Written Service Agreement
Obtained a written agreement that includes the broker’s PRC license number, specifies services to be provided, and outlines commission structure.
Verified Proper Payment Channels
Confirmed that all commission payments will be made to the licensed broker or brokerage firm directly, not to individual salespersons or third parties.
Red Flag: Requests for Cash or Personal Payments
Be extremely cautious if an agent requests cash payments or transfers to personal accounts rather than official business accounts.
Professional Conduct Assessment
Evaluated Professional Communication
Assessed whether the agent communicates professionally, provides clear information, and responds to inquiries in a timely manner.
Checked Professional Online Presence
Examined the agent’s professional profiles, website, and social media to verify consistent information about their license status and brokerage affiliation.
Verified Knowledge of Local Market
Confirmed the agent demonstrates proper knowledge of the local real estate market, regulations, and transaction procedures.
Red Flag: Pressure Tactics or Unrealistic Promises
Watch for high-pressure sales tactics, promises of unrealistic returns, or encouragement to act without proper documentation.
The Agent Appears Legitimate
Potential Issues Detected
Based on your verification, this real estate agent appears to be operating legitimately according to RESA Law requirements. They have proper licensing, appropriate broker relationships, and follow legal documentation standards.
Remember that even with legitimate agents, you should still maintain proper documentation and exercise due diligence throughout your transaction.
Pathway to Legitimate Practice: Obtaining a Real Estate License
For those interested in practicing real estate professionally in the Philippines, obtaining the proper license is both a legal requirement and a pathway to greater opportunities.
Requirements for Real Estate Broker Licensure
The basic requirements include:
- Filipino citizenship
- Good moral character
- Bachelor’s degree in real estate management or equivalent
- Completion of specific credit units in real estate courses
- Passing the Real Estate Broker Licensure Examination
Benefits of Becoming Licensed
Beyond legal compliance, becoming licensed offers significant advantages:
- Higher earning potential: Licensed brokers earn full commissions rather than limited “referral fees”
- Legal protection: Operating within the law prevents penalties and legal complications
- Professional network access: Membership in professional organizations
- Enhanced credibility: Greater trust from clients and developers
- Career longevity: Building a sustainable business model based on professionalism
The investment in obtaining a license pays dividends through increased professional opportunities and elimination of legal risk.
Licensed vs. Unlicensed Real Estate Career Comparison
This interactive chart illustrates the significant differences in earning potential and career stability between licensed real estate brokers and unlicensed practitioners in the Philippines over time. Toggle between different metrics to understand the full impact of proper licensing.
Why Licensed Professionals Outperform Unlicensed Practitioners
Legal Security
Licensed brokers operate with full legal protection under RESA Law, allowing them to build sustainable careers without fear of legal penalties or transaction invalidation. This security enables higher transaction values and client trust.
Professional Network Access
Licensed brokers gain access to professional associations (like PAREB), exclusive listings, referral networks, and continuing education. These resources significantly increase earning potential and transaction quality over time.
Client Trust & Reputation
Licensed professionals build stronger client relationships and referral networks due to their verified credentials and legal accountability. This leads to higher client retention rates and more valuable repeat business over time.
Career Longevity
Unlicensed practitioners face high risk of enforcement actions, limiting their career growth. Licensed brokers enjoy stable, long-term careers with growth opportunities including building their own brokerages or developing specialized expertise.
Data based on PAREB (Philippine Association of Real Estate Boards) statistics, PRC (Professional Regulation Commission) reports, and market research on real estate practitioner earnings in the Philippines from 2018-2024.
Frequently Asked Questions About Unlicensed Real Estate Agent Commission in the Philippines
Is it legal to pay a commission to someone who helped me find a property but isn’t a licensed agent?
No, it is not legal under Philippine law. RESA Law explicitly prohibits unlicensed individuals from engaging in real estate service activities, including receiving commissions for property transactions. Any payment for real estate services must go through licensed professionals.
Can I work as a “referral agent” if I make it clear I’m not a licensed broker?
No, Philippine law does not recognize “referral agents” as a legitimate category of real estate practitioners. Regardless of what title you use, receiving payment for activities that constitute real estate service without a license violates RESA Law.
What happens if I’ve already paid commission to an unlicensed agent?
Transactions involving unlicensed practitioners may be considered legally problematic. You might have limited recourse to recover the payment, but should consult with a legal professional about your specific situation. Consider reporting the incident to the PRC to prevent others from being affected.
Are there any exceptions that allow unlicensed individuals to participate in real estate transactions?
The main exception is for property owners selling or leasing their own property directly without claiming to be real estate professionals. However, once an individual regularly engages in real estate transactions for others or represents themselves as providing real estate services, licensing requirements apply.
How long does it take to become a licensed real estate broker in the Philippines?
The process typically takes several years, including:
- Completing a 4-year bachelor’s degree in real estate or an allied field
- Taking the required specialized courses
- Preparing for and passing the licensure examination
- Processing registration with the PRC
If I’m working with a developer directly, do I need to worry about agent licensing?
Yes, even when working directly with developers, ensure that any sales representatives are either licensed brokers or properly accredited salespersons. Developers must comply with RESA Law for their sales operations, though they may have in-house marketing staff for their own projects.
Conclusion
The issue of unlicensed real estate agent commissions in the Philippines represents a significant challenge for the property market. While the practice remains common, it clearly contradicts the legal framework established by RESA Law and poses substantial risks for all parties involved.
Actionable Steps for Different Stakeholders:
For Property Buyers and Sellers:
- Always verify the credentials of real estate professionals before engagement
- Insist on proper documentation for all transactions
- Report suspected unlicensed practice to regulatory authorities
For Aspiring Real Estate Professionals:
- Invest in proper education and licensing
- Connect with mentors and legitimate brokers for guidance
- Join professional organizations to enhance credibility and networking
For Licensed Brokers:
- Ensure all salespersons working under you are properly accredited
- Maintain clear documentation of commission arrangements
- Consider educating clients about the importance of working with licensed professionals
By understanding and respecting the legal framework governing real estate practice in the Philippines, all stakeholders can contribute to a more professional, transparent, and legally compliant property market.
Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. The laws and regulations discussed are subject to change, and their application may vary based on specific circumstances. Readers are advised to consult with qualified legal professionals before making decisions regarding real estate transactions or professional practice in the Philippines. The authors and publishers of this content are not responsible for any actions taken based on the information provided herein.
