Tag Archives: Agent Commission

Real estate agencies deserve their cut

I REFER to yesterday’s letters by Mr Chua Khim Leng (‘New rules should protect property agents‘) and Mr Jason Sim (‘Zero commission? It’s too good to be true’).

The Institute of Estate Agents was advised by the Competition Commission of Singapore to remove its commission guidelines in June last year. In the commission’s view, the guidelines are ‘harmful to competition, restricting competition in both fee levels and fee structure in the real estate industry, and likely to have the object of appreciably restricting competition among real estate agents in the real estate agency market’.

The commission guidelines were officially removed in September last year. Mr Chua’s suggestion to standardise commission rates is not tenable as it is anti-competitive.

Agencies are at liberty to set their own fee guidelines and compete with each other on value propositions to their clients. This is where agents play a key role in adding value to the services provided. Continue reading

Fix commission for buyer’s agent based on ‘bargaining effort’

MS KOH Siew Buay made a good point yesterday in her Forum Online letter, “How we sold our flats without using property agents“.

The current debate over having one agent represent both seller and buyer has often been overshadowed by the discussion of the potential conflict of interest that can arise.

The point is that any seller or buyer can handle the transaction on his own. The law does not compel anyone to use an agent to sell or buy a house. It is probably more effective for sellers to engage the services of a property agent. This is because agents help facilitate the advertising needs of the seller. And it is best if an agent represents only one party.

If an agent does represent a buyer, however, his commission should not be pegged to a percentage of the sale price. This is because a lower price benefits the buyer, but will result in a lower commission for the agent. Naturally, this does not encourage the agent to seek a lower price for the buyer. This makes it difficult, too, for the agent to demonstrate that he had acted in the best interest of the buyer.

If an agent represents the buyer, his commission should preferably be fixed in a manner that rewards his effort at getting a lower price for his client.

Patrick Sio

Source : Straits Times – 17 Oct 2009