One oft misused word by unlicensed real estate brokers is “option”. To them, an “option” is the authority given them by the landowner to sell the owner’s property.
This use of the word "option", not only is wrong, it is a good indicator that you should not be dealing with the broker.
An "option" in the Real Estate Industry, refers to an "option to buy." Separate from the contract of sale, it refers to another contract between a potential buyer and the seller of property which gives the potential buyer the exclusive right to purchase the property within a specified period.
For example, were I interested in your land, but still unsure if it would fit my needs, I might pay you a small amount, say P10,000.00, to keep you from selling the property to other persons for, say, a couple of weeks. The seller is thus prohibited from selling the property to third parties for two weeks while I am free to consider other real estate (or raise enough money to pay the purchase price). Since I paid you the amount of P10,000.00 to keep you from selling the property, it does not form part of the purchase price should I eventually decide to buy your land.
The "option to buy" is very different from "earnest money" which effectively is a downpayment for the land.
Law students and licensed brokers are taught the difference, which is why, if you deal with a person who represents himself to be a real estate broker asks you for the "option", you should be on your guard as to whether or not he is legit. You have no obligation, nor any right, to pay unlicensed brokers any commission. To do so is a criminal offense.
The best way to find out if you are dealing with a licensed broker is to check his business cards and even stationary, for a licensed broker is required by law to have his License Number printed in any written communication he has with clients or even potential clients. When in doubt, you can always call the Department of Trade and Industry and verify with them if the broker is legit.
Licensed brokers, on the other hand, will ask you for either, in plain English, the "Authority to Sell", or in broker's parlance, the "LISTING". The contract that gives the broker the authority to sell is properly called the "LISTING CONTRACT."
Thus, you may correctly inquire of a broker if he has a "LISTING" for a three bedroom house with a large garden, e.g. "Do you have a LISTING for a three bedroom house with a large garden?" Or you could ask, if the seller Mr. A refers you to his broker, "Do you have Mr. A's property LISTED?" or "Do you have the LISTING for Mr. A's house?"
Which brings us to the term REALTOR. Unknown to the general public, not all Real Estate Brokers, even licensed ones, are REALTORS. A Realtor is a Licensed Real Estate Broker who has joined the National Association of Realtors (based in the United States) or one of its affiliated Real Estate Boards. In the Philippines, the authorized affiliate is the Philippine Association of Real Estate Boards, or PAREB. Thus, all REALTORS are licensed real estate brokers, but not all brokers are REALTORS. REALTORS are bound to respect their own Code of Ethics and Standards, thus assuring that all transactions you have with a REALTOR will be above board. A REALTOR who has violated the Code, may be removed from membership. Licensed Real Estate Brokers who have not joined the NAR or its affiliates are not allowed to use the term REALTOR. One way to determine if the "realtor" is really a realtor is if he has the registered mark after the term in his business cards, i.e. REALTOR®.
In the Philippines, Real Estate Brokers are governed or regulated by the Department of Trade and Industry, so you have administrative recourse, aside from resort to the Courts, against your broker if you feel he has engaged in unethical or illegal practices. This should be a good enough reason, apart from the better service they offer, for you to deal with only Licensed Brokers and REALTORS.