# How commission works on an off-plan or pre-construction deal How agent commission is paid on off-plan and pre-construction property, why staged buyer payments complicate the payout, and how it settles. --- ## How commission works on an off-plan or pre-construction deal Off-plan and pre-construction transactions create a commission problem that resale deals simply do not have: the buyer does not pay the full price at signing. They pay in installments — sometimes over months, sometimes over years — pegged to construction milestones that no one can predict with perfect precision. The agent did the work at the front end, brought the qualified buyer, and got the contract signed. But the money doesn't land the same way it does when a funded buyer closes on a finished unit. Understanding where commission sits in that payment timeline — who owes it, when it becomes payable, and how it actually flows out — is the operational question every broker, agent, and closing professional on a pre-construction deal has to answer correctly before signing anything. ## Who pays the commission, and on what basis The first thing to get straight is the payer. In a standard resale transaction, commission is funded from the proceeds held at closing — it comes out of what the seller receives and is disbursed through the settlement statement. The commission is generally paid at closing by the seller. Off-plan flips this structure in a meaningful way. For off-plan properties, developers often pay the commission directly to the agents, and buyers do not pay commission when purchasing an off-plan property. The developer builds commission into the project's overall sales and marketing budget — it is a cost of selling units, not a cost passed explicitly to the buyer at settlement. The builder or developer often pre-determines the commission rate for new construction homes, which usually falls between 2% and 3% of the home's sale price, and builders advertise this commission rate to real estate agents to attract them to bring buyers to the development. That baseline, however, understates how aggressively developers use commission as a lever. A builder may offer a higher commission instead of the standard rate for homes sold within the first months of a new development, or agents may receive a cash bonus for selling a unit during a particular promotion — incentives that help drive sales, particularly in the early stages of development or when the market is more competitive. In markets like Dubai, commissions can go up to 8% of the sales value on off-plan properties, which encourages agents to market and sell their properties more aggressively. The practical consequence: in an off-plan deal, the developer — not a closing statement drawn from buyer proceeds — is the commission obligor. That changes the enforcement dynamic, the timing, and the disbursement mechanics entirely. ## The staged payment structure and what it means for commission Off-plan means purchasing before completion, preferably when a developer launches a project. Buyers pay a down payment, typically 10–20%, and installments linked to construction stages, which makes it easier to break down the payment over the life of the build. These transactions exchange months or years before completion, and consequently stage payments have become industry standard, serving as a demonstration of buyers' commitment to the purchase during the construction period. The staged payment process typically involves a pre-agreed schedule of payments, specifying the percentage of the total contract price to be paid upon reaching each milestone. As the project progresses and reaches the specified stages, payments are made accordingly. From the buyer's perspective, this is a cash flow management tool. From the developer's perspective, it is project financing. From the agent's perspective, it is the central question of when the money hits. ### When commission is earned versus when it is paid There is a critical distinction in real estate commission law that becomes acutely relevant in off-plan transactions: the moment a commission is *earned* and the moment a commission is *payable* are not always the same. The confusion arises in understanding when a commission is "earned" versus when a commission is "payable," or due to be paid. The law recognizes that, unless the agreement specifies otherwise, the commission is earned at the time the buyer enters into the purchase and sale agreement — or in some cases sooner when a willing and able buyer is presented — and thus must be paid regardless of whether the transaction closes. This is the "procuring cause" standard: the agent who produces the ready, willing, and able buyer has earned the fee at contract execution. But that is a legal position; the practical reality of *when money moves* is governed by what the commission agreement with the developer actually says. Developers write their commission payment terms into the co-brokerage or selling agent agreement, and those terms vary considerably across markets and projects. The most common structures are: **Full commission at contract:** The developer pays the agent's full commission when the buyer signs the purchase and sale agreement and the initial deposit clears. The agent gets paid upfront, the developer carries the exposure through construction. This model is cleanest for the agent but less common on larger or longer-duration projects. **Commission tied to the buyer's first installment:** The developer releases the commission — or a large portion of it — when the buyer's first meaningful payment clears. On a project with a 20% deposit at signing and 80% due at handover, the agent might receive their full fee when that 20% is confirmed. The logic is sound: the developer has meaningful buyer commitment and can fund the commission from real dollars received. **Staged commission mirroring the buyer's payment plan:** On larger and more complex projects — particularly tower developments in markets like the UAE, Southeast Asia, and parts of Latin America — the developer disburses commission in tranches that track the buyer's payment milestones. The agent receives a portion when the buyer pays the deposit, another portion when the buyer pays the first construction milestone, and the remainder at handover. For off-plan properties, the commission may vary depending on the project, developer, and brokerage agreement, with the range typically between 2% to 8%. The tranche percentages and triggers are negotiated and documented in the developer's selling agent agreement before any units are sold. **Commission at handover only:** Some developers — usually on projects with very long timelines or in markets with higher buyer default risk — hold the entire commission until the property transfers to the buyer at practical completion. This is the most conservative model from the developer's standpoint and the most cash-flow-punishing from the agent's. ## The mechanics of how the money actually flows Understanding the structure is one thing; tracking how money physically leaves the developer and reaches the agent — and the people who split the commission — is where the operational friction lives. On a standard resale, the settlement agent or closing attorney draws on funded proceeds, executes a Commission Disbursement Authorization, and cuts checks to each party according to the instructions provided. A commission disbursement authorization (CDA) is a document that can be sent to an escrow company, title company, attorney, or whoever is handling the closing, and most state real estate boards allow the CDA to be presented to the closing entity to disburse the funds. Commission disbursement authorization forms provide instructions on how the commission should be paid, acting as a payment request to the closing company. Off-plan complicates this because there often is no single closing event at which all money pools. Each staged payment is an independent transaction between the buyer and the developer. There is no neutral third party holding proceeds during construction — the developer collects the payment, confirms it, and then has a contractual obligation to disburse the agent's commission tranche. The developer's accounts payable department effectively becomes the disbursement mechanism, not a neutral settlement agent. This creates practical exposure for the agent that doesn't exist in a resale deal. In a resale, the money is at closing, the CDA is executed, and the agent walks out with a check or wire. In a staged off-plan commission, the agent is a creditor of the developer for each unreleased tranche, dependent on the developer confirming that a buyer's payment has cleared before releasing the next commission installment. ### The co-broke and split layer Most off-plan transactions involve more than one professional. There is the agent who registered and brought the buyer, the supervising broker under whom that agent holds their license, and potentially a referring broker who sourced the client and is owed a referral fee out of the earned commission. Disagreements over how commissions should be split between brokers or agents often lead to disputes, which can be especially contentious in situations involving co-brokering, referral fees, or when multiple agents are involved in a single transaction. Typical commission splits include 50/50, where the broker and real estate agent receive equal sums of money from a commission split, but they can also use 60/40 or 70/30 split options. In the off-plan context, those internal splits have to be documented before the transaction registers with the developer, because once the developer's records reflect one recipient for the commission, getting the money re-routed to additional parties requires coordination that developers rarely volunteer to handle. When a commission split agreement is vague, inconsistently applied, or misaligned with how the firm actually operates, it creates the conditions for a dispute. The most common pressure points in split agreement litigation include referral and co-broke splits that were agreed on verbally and never documented. The answer to this problem is documentation before the deal is registered. The moment the buyer signs the purchase contract and the developer's selling agent agreement is confirmed, the internal split agreement among all professional parties needs to be in writing and specific: who gets what percentage, from which payment tranche, on what date. Verbal agreements about commission splits on staged payouts are how professionals end up in disputes that take months to resolve. ## When the buyer's payment plan runs long A construction timeline that stretches longer than projected — which is common — means every milestone-linked commission tranche is deferred along with it. A buyer who was supposed to make their second installment payment in month eighteen might not make it until month twenty-four because the developer pushed the structural completion date. The agent's commission tranche tied to that milestone moves with it. This deferral risk is asymmetric. The agent did all their work at the front end: sourcing the buyer, conducting due diligence on the project, negotiating the purchase terms, managing the client relationship through contract signing. The economic reward for that work is stretched across a payment schedule they do not control. It is one of the defining cash flow characteristics of working off-plan, and it is why experienced agents in high-volume off-plan markets — particularly in the Gulf and Southeast Asia — track their receivables from developers with the same rigor a contractor tracks progress payment requests. Most developers will insist on at least a further 10% to be paid between exchange and completion, if not more. That intermediate payment is often the trigger for the second commission tranche, so any delay in buyer compliance cascades directly to the agent's pocketbook. When buyers miss installment deadlines — whether due to financing gaps, personal circumstances, or changes of heart — the commission tranche tied to that installment hangs until it resolves. ### Buyer default and what happens to commission The scenario that sharpens this risk most dramatically is buyer default. If a buyer signs the contract, pays the first installment, and then fails to meet a subsequent payment obligation, the developer typically has contractual remedies: notice periods, penalty interest, and ultimately the right to terminate the purchase agreement and retain portions of the deposit paid. The question of what actually happens in the event the buyer fails to complete is critical. A deposit which constitutes an unreasonable sum may be deemed an unlawful penalty. For the agent, the question is whether a commission tranche tied to a buyer installment that was never made is still owed. The answer is almost entirely contract-specific. If the co-brokerage agreement ties each commission tranche explicitly to the buyer's payment of the corresponding installment, and the buyer never makes that installment, most agreements will treat the corresponding commission tranche as non-payable — the triggering event simply did not occur. If, however, the developer terminates the agreement and retains the buyer's deposit, some agreements provide for a partial commission against retained funds. The agent must read their agreement before assuming either outcome. This is not a theoretical scenario. Developments with multi-year timelines see meaningful buyer attrition. Agents who work exclusively in off-plan should understand precisely how their commission agreement handles mid-stream defaults, and they should negotiate protective language — particularly around commissions already disbursed for early tranches — so that no previously paid commission is subject to clawback if the buyer later exits. ## The referral fee layer on off-plan deals A significant portion of off-plan sales involve an introducing party — a wealth advisor, a relocation specialist, an agent in another city or country, a network referral — who brought the client to the selling agent but will not be present at any commission disbursement event. That party is owed a referral fee out of the earned commission, and managing that obligation across a staged payment schedule adds another coordination layer. The consultant income model occurs when a brokerage firm in one location refers a client to another brokerage firm in an area where they plan to purchase a property. The brokerage firm the client gets referred to receives the majority of the commission as they help find and purchase the property, and because the first brokerage firm referred the client, the other firm gives them a percentage of the commission as a thank-you. The problem in an off-plan context is that the referring party is waiting on a payment that depends on a series of events they have no ability to influence or even track: whether the buyer pays their installment on time, whether the developer processes the commission tranche promptly, whether the agent's brokerage disbursed correctly. In a simple resale, this is resolved at closing. In a staged off-plan deal, the referring party may be owed money across multiple payment events spanning years. Documenting the referral fee as a defined percentage of each released commission tranche — rather than a lump sum at some undefined point — is the only structure that actually works. It makes the obligation clear at every stage and prevents disputes about whether the referring party is owed the full fee when only partial commission has been paid. ## How disbursement happens when multiple parties are owed simultaneously The cleanest version of a staged off-plan commission disbursement looks like this: the developer releases the commission tranche to the registered selling brokerage or agent, and that party then distributes the internal splits according to the pre-agreed allocation. Each payment event triggers a downstream waterfall: the developer pays the brokerage, the brokerage pays the agent, the agent or brokerage pays the referral fee recipient. In practice, this multi-step waterfall introduces delay at every link. The developer may process commission payments on a monthly cycle, not instantaneously on the day the buyer's installment clears. The brokerage may have its own payment cycle for agent disbursements. The referral party is at the end of the chain and receives the money last. On a staged deal, this can mean weeks of float between when the buyer's payment confirms and when everyone downstream actually receives their money. This is where having the disbursement architecture locked in before any commission is released matters enormously. When the commission split, the referral allocation, and the timing of each payment are set in writing and acknowledged by all parties, the only work left at each stage is confirming the trigger event occurred — the buyer paid, the developer released — and executing the transfer. When those terms are ambiguous or verbal, every payment event reopens negotiation, introduces conflict, and slows everything down. For professionals handling the disbursement of multi-party commissions on off-plan deals, the operational challenge is not accounting — it is execution speed and certainty. A payment link that sets the recipient wallets and split percentages in advance, so that when the developer funds the commission, every party receives their allocation directly and simultaneously, without manual re-routing, is not a luxury on a staged deal. It is the infrastructure that makes the model workable. Shaka is built for exactly this moment: the professional sets the payment terms once, and when the money arrives, it splits and lands without friction or delay. ## The market context: where these dynamics are most acute Different markets have developed different norms for managing off-plan commission disbursement, and the agent working across borders needs to understand how those norms differ. In the UAE — Dubai specifically — off-plan is the dominant product type rather than the exception. For off-plan sales, developers pay commission to agents directly, ranging from 3–8% depending on project and sales velocity. The market has formalized processes: developer selling agent agreements are standardized, brokerage registration with the developer's sales team is a prerequisite for commission entitlement, and the Dubai Land Department provides oversight of brokerage activity. If multiple brokers are working on the same property or listing, the client must sign a contract with each broker, which is registered with the Dubai Land Department (DLD). This is a prerequisite to the agent being entitled to remuneration, and to ensure that an agent receives commission, it is imperative that a contract is signed and registered with the DLD. In North American markets, the off-plan pre-construction condominium and residential community sale follows a different operational structure, but the core dynamic is the same. For example, if the sale price of a new construction home is $500,000, the commission for the buyer's agent could range between $10,000 and $15,000, depending on the percentage the builder offers, and the builder pays this amount and often includes it in its overall marketing and sales strategy. A buyer's agent gets paid a commission on closing day, at which point the construction would have been completed allowing the parties to close on the property. This model — commission in full at handover — is more common in North American residential pre-construction than a staged payout, though it still means the agent waits for the project to complete before receiving anything. The distinction matters: a North American pre-construction agent is typically waiting for a single event (closing/handover) and does not face the staged tranche complexity common in markets with long construction-period payment plans. But they face their own version of the timing risk — a project that takes an extra year to deliver is a year of deferred commission with nothing intermediate. ## Getting your commission terms right before you sell the first unit Everything discussed above resolves to a single operational discipline: the commission agreement must be finalized, in writing, before the agent sells a single unit in the development. Clawback clauses are supposed to protect firms when agents depart before a deal fully closes, when transactions fall through under contested circumstances, or when compensation was advanced before it was fully earned. In practice, clawbacks are often drafted too broadly to be enforceable, or applied inconsistently in ways that expose the firm to a counterclaim rather than a recovery. Reading the clawback language in a developer's co-brokerage agreement before signing is not optional. Agents who accept a developer's standard agreement without reviewing clawback provisions on staged commission have sometimes discovered that an early-stage tranche is subject to full recovery if the buyer defaults months later — a provision that is enforceable if it is in the agreement, regardless of how unfair it may seem. The questions every agent should have answered before listing a pre-construction unit: Which events trigger each commission tranche, precisely? Is it the buyer's payment clearing, a construction milestone, or the developer's own administrative confirmation of both? What happens to unpaid tranches if the buyer defaults before completing the payment plan? Is any commission previously disbursed subject to recovery if the overall transaction does not close? How does the developer handle co-brokerage and referral splits — do they pay multiple parties directly, or do they pay one recipient who is then responsible for distribution? What is the developer's payment processing cycle — how many days after a trigger event does commission actually transfer? Ambiguities in commission agreements can lead to misunderstandings and conflicts, and vague terms or the absence of a written agreement can result in differing interpretations of who is entitled to what portion of the commission. An agent who cannot answer every one of those questions before their first unit goes under contract is operating on assumptions that the commission agreement may not share. Off-plan commission is not more complicated than resale commission in principle. The work is the same: find the buyer, close the deal, get paid. But the staging of buyer payments, the developer's role as direct commission obligor, the extended timelines, and the multi-party split structure mean that the mechanics of getting paid require more upfront precision than a standard transaction ever does. The professionals who handle this best are those who treat the commission agreement with the same rigor they bring to the purchase contract — and who have the disbursement infrastructure in place to move money cleanly the moment each trigger event fires.