First of all, I would like to state that I am not a property agent and that I am writing this because I find that it's a little unfair if I put myself in the agent's shoes. The subject in contention? Commission for property agents. Yes, now I think you understand why I declared first-hand that I am not a property agent.
Today I was reading the newspaper and someone mentioned that the person in question does not want to pay the agent 1% commission for the property transaction and instead, wishes to pay the agent only 0.5%. I do not know the whole history of the transaction but putting myself in the agent's shoes based on the information I read, I find a 0.5% commission laughable.
Seriously, if I was a property agent and someone offers me a 0.5% commission for doing a property transaction, I will ask that person to "fly kite". Why would a property agent run around and manage the whole transaction, including the necessary paper work and co-ordination for a measely 0.5% commission?? Let's take a simple 4-room HDB flat's value at $300,000. A 0.5% commission is only $1,500! Why would a property agent do so much work for a measely $1,500?
The problem with the market now is that no one is governing the property agents and this will inadvertently introduce rogue agents that will "spoil the market" so as to speak. In the end, both the consumers and agents will lose out because there is a lack of clarity on the rules. You have a association that gives out guidelines on governance. Come on... Unless its mandated my law, human nature will prevail. Or the Singapore nature will.
To resolve this once and for all, governance should be established for the property agents and clear rules communicated to both the agents and the consumers. I find it quite laughable that transactions worth at least 6 digits are not governed. This is taking the free market theory to the extreme.
With greater clarity to the rules, both sides will benefit. The agents will know their scope of work and exactly how much they are paid for the work done and consumers will know what they are paying for and could budget accordingly. Till now, I still have no idea on the "obscure" rules governing property transactions. I only know that the norm for commission is 1% - 2% and that you need to pay stamp duty.
That's clarity for you.
4 comments:
Look at the bigger picture: a $2 mil house will net the property agent $10K at 0.5% commission. And that house is probably one of ten that he's peddling. Assuming a three month cycle to close a deal, he'll net $100K in one quarter, or $400K a year. No wonder property agents drive Merz and leave in landed property.
Oh wait, the present commission is 1-2%, so go figure... Also, imagine if one/two of the properties are GCBs going for $10-20 mil...
I did not look at the big picture on purpose because that's where people will get swayed by the numbers.
That was why I wrote this by putting myself in their shoes. How often do you get to transact a 2 million dollars property? Once every quarter? If the agent can get that amount of business every year, then I think he deserves the commission.
Talk to your friends who are property agents if you know any and you'll find that it's not an easy line. The scenario you painted is very very optimistic, and does not represent a typical agent.
In a rising property market, it is apparently really easy to close deals.
There are many property agents who close deals within a few viewings. What's so difficult about arranging a few viewings? And worst of all, many of them (I'm not saying all) can't seem to be punctual for appointments, and not on the ball, esp after the deal is closed, they pocket their 1% commission, and they just bo chup. Which I think is utterly irresponsible.
And I'm talking about property values that are in millions. Their 1% commission comes up to tens of thousands! What is a few phone calls and turning up for a few appointments on time? And believe it or not, there isn't much paperwork to be done. Those are left to the lawyers.
*shrugs* Like I say, I'm not in the property line. But I believe that if the agent is good, everything will be smooth sailing and its as if the agent is not doing anything.
The problem comes when the agent is not good. You'll find that you have hidden costs here and there, paperwork not done properly, etc.
Apparently, I know some agents that have never got any good deals even in the bull run. It's not as easy as it seems. If one day I switch to the property agent line, most probably I will starve within half a year.
If it is so easy, why is everyone not handling the property sales themselves? Some is even worse. They engage the property agents to advice them and do everything themselves, then deny the agents of their commission (read somewhere in some forum). Free advice? Try doing that to the lawyers and see if you'll get sued.
Obviously there are property agents out there that we feel do not deserve the commission, but if you look at every job, there are always such people around. But they are not the majority. The majority are usually the ones that suffer in silence.
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