Desperate Bid By Housing Agencies To Salvage Plummeting Fees

[zirhk3355 1]

Pls note in this article, the term 'experts' refer to their agencies' bosses themselves...bahh~

--------------------

Aug 7, 2008

Housing agent fees: How low can they go?

With guidelines axed next month, rates will come under pressure but big fall unlikely, say experts

By Jessica Cheam

PROPERTY experts expect agents to feel the pinch once fee guidelines are abolished next month, but the big question in the industry is just how low fees can go.

Real estate insiders concede that fees will come under pressure with buyers and sellers free to haggle, but dismiss the notion that rates could plummet to zero.

'In a buyer's market, perhaps, buyers can get away without paying. But agents also need their salaries and ultimately consumers will get the service they pay for,' said PropNex chief executive Mohamed Ismail.

Agents spend about 40 per cent of their commission on the marketing, transport and operational costs of selling a flat. Active agents earn about $5,000 a month, said Mr Ismail, so how low rates go will depend on the individual.

Those who aim for a large turnover of properties might be willing to slash rates but this could be at the cost of service quality, he added.

Mr Eugene Lim, assistant vice-president at ERA Asia Pacific, does not see rates falling drastically as the current rate is one of the lowest in the region.

Fees will be negotiable next month, thanks to a decision by the Competition Commission of Singapore, which told the Institute of Estate Agents to axe its guidelines on commissions.

The 1999 guidelines were based on a 1974 Government Gazette that stipulated a 2 per cent fee payable to agents from sellers. In the past, when Housing Board prices were relatively low, agents began charging buyers a further 1 per cent.

The Consumers Association of Singapore is advising people not to be held to old guidelines and to avoid giving exclusive rights to agents. It also said agents should not collect fees from both buyers and sellers, due to conflict of interest.

The new playing field will offer plenty of scope for buyers, sellers and agents to negotiate, but agency boss Albert Lu of C&H Realty pointed out that the real estate market is 'already very competitive'.

For private property sales, for example, agents are known to cut their commission charges from the recommended 2 per cent to 1 per cent for sellers.

'It's not in the interest of agencies to start price wars, as we end up hurting ourselves,' said Mr Lu. But he suggested that agencies might devise ways to entice buyers and sellers, such as bundling home services.

Industry leaders do not rule out a 'one-stop shop' concept where agencies could offer agent and legal services along with loans, for example.

Analysts believe consumers will be quick to take advantage of the new system and start haggling, but given the slow market, it is unclear who has the upper hand. Prices have eased in favour of buyers but many sellers are not budging, so with volumes down, agents may see an incentive to give discounts.

Homebuyer Vivian Wong, 25, said she will bargain harder while agents vow to fight and justify commissions. HSR Property Group's Mr William Tan, 43, said he was confident of retaining the 2 per cent commission.

'In this new landscape, the better agents will survive because they will offer quality service consumers will pay for.'

jcheam@sph.com.sg

Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access

http://www.straitstimes.com/Singapore/Stor...ory_265321.html

[donut88 1]

Pls note in this article, the term 'experts' refer to their agencies' bosses themselves...bahh~

--------------------

Aug 7, 2008

Housing agent fees: How low can they go?

With guidelines axed next month, rates will come under pressure but big fall unlikely, say experts

By Jessica Cheam

PROPERTY experts expect agents to feel the pinch once fee guidelines are abolished next month, but the big question in the industry is just how low fees can go.

Real estate insiders concede that fees will come under pressure with buyers and sellers free to haggle, but dismiss the notion that rates could plummet to zero.

'In a buyer's market, perhaps, buyers can get away without paying. But agents also need their salaries and ultimately consumers will get the service they pay for,' said PropNex chief executive Mohamed Ismail.

Agents spend about 40 per cent of their commission on the marketing, transport and operational costs of selling a flat. Active agents earn about $5,000 a month, said Mr Ismail, so how low rates go will depend on the individual.

Those who aim for a large turnover of properties might be willing to slash rates but this could be at the cost of service quality, he added.

Mr Eugene Lim, assistant vice-president at ERA Asia Pacific, does not see rates falling drastically as the current rate is one of the lowest in the region.

Fees will be negotiable next month, thanks to a decision by the Competition Commission of Singapore, which told the Institute of Estate Agents to axe its guidelines on commissions.

The 1999 guidelines were based on a 1974 Government Gazette that stipulated a 2 per cent fee payable to agents from sellers. In the past, when Housing Board prices were relatively low, agents began charging buyers a further 1 per cent.

The Consumers Association of Singapore is advising people not to be held to old guidelines and to avoid giving exclusive rights to agents. It also said agents should not collect fees from both buyers and sellers, due to conflict of interest.

The new playing field will offer plenty of scope for buyers, sellers and agents to negotiate, but agency boss Albert Lu of C&H Realty pointed out that the real estate market is 'already very competitive'.

For private property sales, for example, agents are known to cut their commission charges from the recommended 2 per cent to 1 per cent for sellers.

'It's not in the interest of agencies to start price wars, as we end up hurting ourselves,' said Mr Lu. But he suggested that agencies might devise ways to entice buyers and sellers, such as bundling home services.

Industry leaders do not rule out a 'one-stop shop' concept where agencies could offer agent and legal services along with loans, for example.

Analysts believe consumers will be quick to take advantage of the new system and start haggling, but given the slow market, it is unclear who has the upper hand. Prices have eased in favour of buyers but many sellers are not budging, so with volumes down, agents may see an incentive to give discounts.

Homebuyer Vivian Wong, 25, said she will bargain harder while agents vow to fight and justify commissions. HSR Property Group's Mr William Tan, 43, said he was confident of retaining the 2 per cent commission.

'In this new landscape, the better agents will survive because they will offer quality service consumers will pay for.'

jcheam@sph.com.sg

Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access

http://www.straitstimes.com/Singapore/Stor...ory_265321.html

Well, the proerty agents are like leeches with full of crap..... that's how i see them.

[zirhk3355 1]

Well, the proerty agents are like leeches with full of crap..... that's how i see them.

I blame it on the system.

If you put food on the streets filled with hungry people without any restrictions, you cannot blame them for being barbaric, can you??

[666 0]

So for those sellers or buyers w/o agents, do we still need to pay the other party agent?

so many unscrupulous agents these days..at least now i wont have agents telling me 2% for seller, 1% for buyer is the RULE or law...cannot negotiate..

[zirhk3355 1]

So for those sellers or buyers w/o agents, do we still need to pay the other party agent?

so many unscrupulous agents these days..at least now i wont have agents telling me 2% for seller, 1% for buyer is the RULE or law...cannot negotiate..

In the first place as long as the agent is not representing you, you do not need to pay them. But of course there will be cases where the agent might tell you point-blank that s/he will cut you off the deal and close with other people who are willing to pay comm.

But well, its a start lor. Like you said, the agents can no longer tell you that its a rule/law for you to pay comm, although they can still bluff those who does not know. Mind you, there ARE alot of ignorant people on this island for them to bluff...

[papbestdad 0]

In the first place as long as the agent is not representing you, you do not need to pay them. But of course there will be cases where the agent might tell you point-blank that s/he will cut you off the deal and close with other people who are willing to pay comm.

But well, its a start lor. Like you said, the agents can no longer tell you that its a rule/law for you to pay comm, although they can still bluff those who does not know. Mind you, there ARE alot of ignorant people on this island for them to bluff...

In the first place, those who are trying to negotiate on the 2% or 1% will still do it even if there is such a rule. So actually there is no different now.

Maybe the agents out there can be more creative and suggest a 10% commission upfront, then since the seller like to bargain, the agent will give 80% discount, so still charge 2% of the selling price?

[kaylinpickles 1]

Homebuyer Vivian Wong, 25, said she will bargain harder while agents vow to fight and justify commissions. HSR Property Group's Mr William Tan, 43, said he was confident of retaining the 2 per cent commission.

'In this new landscape, the better agents will survive because they will offer quality service consumers will pay for.'

i think the prob now is not whether they can provide good service to justify their commission or not, so as to make us feel more worth it to pay them. more like the market is really bad now, most home owners are not making any profit when they sell their flats, so how to give commission?? take my case for eg. i did a calculation using the HDB's sales proceed calculator, i need to sell my EA for at least $375K to earn a meagre $8K, which is not even enough to cover their commission. so they shd understand that if they want their commission, they shd just try their best to sell my flat as high a price as possible. else, no commission for them. simple as that. no need to talk abt gd or bad service now. if i can earn a profit of $20-$30K from selling my house, maybe i dun really mind paying them. but its not the case lor...

Edited August 8, 2008 by kaylinpickles

[papbestdad 0]

i think the prob now is not whether they can provide good service to justify their commission or not, so as to make us feel more worth it to pay them. more like the market is really bad now, most home owners are not making any profit when they sell their flats, so how to give commission?? take my case for eg. i did a calculation using the HDB's sales proceed calculator, i need to sell my EA for at least $375K to earn a meagre $8K, which is not even enough to cover their commission. so they shd understand that if they want their commission, they shd just try their best to sell my flat as high a price as possible. else, no commission for them. simple as that. no need to talk abt gd or bad service now. if i can earn a profit of $20-$30K from selling my house, maybe i dun really mind paying them. but its not the case lor...

Where do you stay? EA can't fetch 400k now? Must be at some lousy location?

[kaylinpickles 1]

Where do you stay? EA can't fetch 400k now? Must be at some lousy location?

thx for your extremely kind words. i'm staying in sembawang, basically that location is not gd, plus its quite some distance from the MRT, say abt 5-7 mins walk. and i was told by this agent that my floor area (130sqm) is not what ppl r going for. he said if ppl wanna buy EA flat, they normally wanna go for bigger units like 141sqm or so. dunno how true lah.

[zirhk3355 1]

i think the prob now is not whether they can provide good service to justify their commission or not, so as to make us feel more worth it to pay them. more like the market is really bad now, most home owners are not making any profit when they sell their flats, so how to give commission?? take my case for eg. i did a calculation using the HDB's sales proceed calculator, i need to sell my EA for at least $375K to earn a meagre $8K, which is not even enough to cover their commission. so they shd understand that if they want their commission, they shd just try their best to sell my flat as high a price as possible. else, no commission for them. simple as that. no need to talk abt gd or bad service now. if i can earn a profit of $20-$30K from selling my house, maybe i dun really mind paying them. but its not the case lor...

Actually what you are saying has nothing to do with your affordability; its your willingness to pay.

Would you accept it if your customer tells you that they cannot pay for their orders because they are not making enough profit? Take note its "not making ENOUGH profit", not that they are losing money or not earning anything at all.

Or can you walk into a LV boutique and ask for discount, because your monthly salary is less than the price-tag of that tote bag you are eyeing?

Or can you tell your lawyer who is fighting for your lawsuit of compensation, that you will pay him only if you manage to claim a GOOD compensation amount? The lawyer will probably tell you, "Then go to court yourself, or don't fight the case!"

Now, if you are unwilling to pay, then you should take the efforts to sell the flat yourself, or don't sell at all. Its not fair to make the agent work harder to earn what he would normally earn; if you want him to work harder, you got to pay more, isn't it?

Edited August 11, 2008 by zirhk3355

[kaylinpickles 1]

Actually what you are saying has nothing to do with your affordability; its your willingness to pay.

Would you accept it if your customer tells you that they cannot pay for their orders because they are not making enough profit? Take note its "not making ENOUGH profit", not that they are losing money or not earning anything at all.

Or can you walk into a LV boutique and ask for discount, because your monthly salary is less than the price-tag of that tote bag you are eyeing?

Or can you tell your lawyer who is fighting for your lawsuit of compensation, that you will pay him only if you manage to claim a GOOD compensation amount? The lawyer will probably tell you, "Then go to court yourself, or don't fight the case!"

Now, if you are unwilling to pay, then you should take the efforts to sell the flat yourself, or don't sell at all. Its not fair to make the agent work harder to earn what he would normally earn; if you want him to work harder, you got to pay more, isn't it?

nothing to do with my affordability? maybe, but not entirely true. like i mentioned b4, i need to sell the flat for at least $375K to earn abt $8K, all of which will go to the agent or maybe not even enough. if its u, will u b willing to just fork out w/o batting an eyelid? unlike our mothers' time, they bought their flats for like, $30K in the 1970s, and if they sell now for $300K, they're making a profit of $200K or more. for me, i don't think i can even make a profit of $20K, or worse still, suffer a loss. why wouldnt i feel the pinch? so yes lor, u r rite, either i sell the flat myself, or dun sell at all. anyway that 1% 2% thing, why is it still applicable like now, since the market is so bad? like u know the resale levy, last time HDB also go by %, depending on how much u sell yr flat, u pay different amt, like property agents. but few years back they changed to flat rate...if i buy new flat now, i gotta pay a resale levy of $50K. i think its more reasonable & fairer that way. why cant the agents do the same

[zirhk3355 1]

nothing to do with my affordability? maybe, but not entirely true. like i mentioned b4, i need to sell the flat for at least $375K to earn abt $8K, all of which will go to the agent or maybe not even enough. if its u, will u b willing to just fork out w/o batting an eyelid? unlike our mothers' time, they bought their flats for like, $30K in the 1970s, and if they sell now for $300K, they're making a profit of $200K or more. for me, i don't think i can even make a profit of $20K, or worse still, suffer a loss. why wouldnt i feel the pinch? so yes lor, u r rite, either i sell the flat myself, or dun sell at all. anyway that 1% 2% thing, why is it still applicable like now, since the market is so bad? like u know the resale levy, last time HDB also go by %, depending on how much u sell yr flat, u pay different amt, like property agents. but few years back they changed to flat rate...if i buy new flat now, i gotta pay a resale levy of $50K. i think its more reasonable & fairer that way. why cant the agents do the same

Like I said, it depends on your willingness to pay. Eg if a family member is in hospital and you do not earn enough to pay for the bills, would you not let your loved one receive medical attention?? Of course not right, by hook or by crook also must find the money to treat him/her. Same here; if you are very motivated to sell the flat, no matter how also will sell, you will find a way to pay for the agent's fee.

Anyway, the 2%/1% rule doesn't really apply anymore; I know in the market, people had been bargaining like crazy. Some agents are not collecting comm from buyers, some are even willing to lower to 1% for seller.

And yes also got some negotiate until fixed sum, but bear in mind lor, if its fixed eg $10K, whether you sell $300K or $500K also $10K comm for the agent, why should the agent bother to push the buyer for $500K? Might as well PUSH YOU to close at $300K! So by asking for fixed sum comm, you are creating trouble for yourself.

[kaylinpickles 1]

Like I said, it depends on your willingness to pay. Eg if a family member is in hospital and you do not earn enough to pay for the bills, would you not let your loved one receive medical attention?? Of course not right, by hook or by crook also must find the money to treat him/her. Same here; if you are very motivated to sell the flat, no matter how also will sell, you will find a way to pay for the agent's fee.

Anyway, the 2%/1% rule doesn't really apply anymore; I know in the market, people had been bargaining like crazy. Some agents are not collecting comm from buyers, some are even willing to lower to 1% for seller.

And yes also got some negotiate until fixed sum, but bear in mind lor, if its fixed eg $10K, whether you sell $300K or $500K also $10K comm for the agent, why should the agent bother to push the buyer for $500K? Might as well PUSH YOU to close at $300K! So by asking for fixed sum comm, you are creating trouble for yourself.

ya lah, it did occur to me oso, that the agent will push me to close at $300K. not that i didnt think of it at all. i'm motivated to sell the flat, more like i'm not motivated to pay the agent fees. cannot compare with loved one receiving medical attention, coz that one is more like out of desperation gotta find $, selling flat is not that desperate, unless i'm bankrupt or kena chased by loan sharks (choy!).

so in yr point of view bargain got use? since u said we're asking for trouble if we ask for fixed sum comm, and really got agents dun accept any commision, sure not? like that is free lunch lor, i oso want

[zirhk3355 1]

so in yr point of view bargain got use? since u said we're asking for trouble if we ask for fixed sum comm, and really got agents dun accept any commision, sure not? like that is free lunch lor, i oso want

You didn't get me right; I said agents might not collect comm from buyers, not sellers. And that's because they are probably the exclusive agent for the seller and they got 2% (or more??), so in order to do quick deal, they are willing to sell to you without collecting any comm. And this is very common for private property, where buyers usually do not pay comm at all; if there is a buyer's agent, s/he will share (co-broke) with the seller's agent.

My point is not so much to bargain, but to find that agent who is willing to work for lower comm. This could probably be done by your own advertising to sell the flat and when the agents call you, that's where your power to negotiate lies. If you call up an agent to bargain, they usually won't budge because you call them mah.

[kaylinpickles 1]

You didn't get me right; I said agents might not collect comm from buyers, not sellers. And that's because they are probably the exclusive agent for the seller and they got 2% (or more??), so in order to do quick deal, they are willing to sell to you without collecting any comm. And this is very common for private property, where buyers usually do not pay comm at all; if there is a buyer's agent, s/he will share (co-broke) with the seller's agent.

My point is not so much to bargain, but to find that agent who is willing to work for lower comm. This could probably be done by your own advertising to sell the flat and when the agents call you, that's where your power to negotiate lies. If you call up an agent to bargain, they usually won't budge because you call them mah.

yes you're right! thx for the tip.