Sticky Stituation - How To Pay Agent 25K Commission Suddenly.

[HappyHouse88 0]

Now i have another sticky situation.

this is what happened.

Last saturday, we went to see a place and like the place and offer 1.2mil.

Agent say okay, so right away we go down to the seller house and to do the otp.

Suddenly , agent say that instead of taking commission from the buyer, he wants to "offset" his commission from the buying price and we pay him instead. We ask him what is the implication to us. He kept saying , everything is the same, only that we will be paying him.

At that point, we were too eager to close the due. So we didnt really think much , since it the same as he said. And we signed an agreement to pay him $25k after completion and otp for the house at 1.175 instead.

After we close the deal, I was concern abt the stamp duty and 4% that we need pay for the unit. Only as i was doing my loan, that it occur to me that i will require 83k cash instead of 60k for the transaction, because we need to pay the agent 25k in cash , which cannot be part of the bank loan or cpf.

*gosh* .. it's not 33/4k more .. it's 23k more cash!

now i am stuck..i want to pay the agent but how to get 23k ?

[Minerat 1]

Is it a pte property. Buyers are not supposed to pay agent fees for private properties. If indeed is the case, suggest you lodge a complaint with CEA or something.

[HappyHouse88 0]

no lah.. i still want him to get his $$...

just that it's not possible for us to raise $23k w/o incurring interest/losses in investment in 2-3 mths time? seriously, it's not spare change leh.. it's could be the annual salary for some ppl.

[Minerat 1]

But seriously I think what the agent is trying to do is wrong. For pte property, only seller pays the agent fees.

Anyway, even if he wants you to pay him, it should be only upon completion. If you have enough CPF, you can apply to reimburse your stamp fee using CPF. Then hopefully use that to pay the agent.

[yoongf 11]

Eh... this whole transection sound weird. If u wanna abort also can leh.

1. If u offered 1.2Mil.. this 1.2Mil offer shd be communicated to the seller. If u ask seller if he knew of the 1.2Mil offer, and seller say no, this agent licence can say bye bye.

2. Let's say u not yet exercise OTP, then why worry, u go back to seller and say u now wan a 1.2Mil OTP. Old one tear away. Why would seller reject a higher price??

3. Unless u telling me this agent your good buddy.. u wanna pay him comm as a buyer's fee. Then.. u got nothing to be upset about.

4. It is not true to say that agent comm is only to be paid by seller. Agent comm can only be paid by 1 party, and not both.

Anyway... as far as I see it. nothing is cast in stone yet.

[toonie 0]

1)Is the agent the seller's agent? or did you engaged him to find you a property?

There is no fixed rule that says that the seller is the only one who needs to pay commission now, an agent can collect "a finder fee" from the buyer if the buyer has engaged him to find a property, BUT an agent cannot collect commission from BOTH the buyer and seller, that means he cannot represent both parties as there is a conflict of interest. (does he looks after the buyer's interest ot the seller's interest)

So in this case, if this agent is the one marketing the property for the seller, an you have approached him through advertisement, he most likely will be getting a commission from the seller. and asking commission from you, he is double representing and that is against CEA rule.

2)Quoting Yoongf :"1. If u offered 1.2Mil.. this 1.2Mil offer shd be communicated to the seller. If u ask seller if he knew of the 1.2Mil offer, and seller say no, this agent licence can say bye bye." Yoongf is right in this case, the agent will get into very big trouble if your offer of $1.2mil is not communicated to the seller. I hope this is not the case, because he will surely loose his licence if this is made known to CEA.

3) However, if the agent has told the seller about your offer of $1.2mil and the seller has agreed with the agent to have the commission paid out from the sale price of $1.2 mil, then the agent has done nothing wrong. 1 reason why the seller may want to have it arranged this way is that the sale is a negative sale (he is selling at a loss), and all proceeding will be going back to the bank and CPF account and he won't have cash left to pay the commission so he rather have the buyer pays for it and accept a lower selling price. This may applies too, if the seller is a undischarged bankrupt.

Hope this helps, if it turns out that you are liable to pay him, then I suppose you sit down with him and work out a time frame when you can pay up. He has to understand that this is not a small amount.

All the best!

By the way, there is no fixed rate for commission, 2% is not a must, you are free to negotiate a rate that you feel comfortable with, most agents will still accept 1%. if there is a co-broke case, commission each agent gets can be as low as half percent. Hope it all work out for you.

Edited June 3, 2012 by toonie

[HappyHouse88 0]

thanks all for your advise...

For us, we will pay the agent lah.. We are not trying to find fault with the agent to "skip" his commission. But the issue is that it's a very hefty sum.

I am not sure if the agent will be able to accept payment over 12 mths for the 25k i.e. 2k for 11 mth , 3k for the last mth. If he need the payment immediately or in a few mths time, then we may need to factor in the interest inccur if we take a loan for it.

[shmj 0]

thanks all for your advise...

For us, we will pay the agent lah.. We are not trying to find fault with the agent to "skip" his commission. But the issue is that it's a very hefty sum.

I am not sure if the agent will be able to accept payment over 12 mths for the 25k i.e. 2k for 11 mth , 3k for the last mth. If he need the payment immediately or in a few mths time, then we may need to factor in the interest inccur if we take a loan for it.

If you have already decided to pay the agent's fee to him, then you will have to work out with him on the payment terms.

For my last house transaction, we did agreed to pay our agent her fees over a 6 months' period... interest free installment.

She was kind enough to let us do that and of course, we signed an agreement to commit that we will pay lah.

All depends on how flexible your agent wants to be. Good luck!

[HappyHouse88 0]

Actually like everyone mentioned in this thread.. he is at my mercy. I just checked with CEA , regardless if he taking commission from both side, he is doing a dual representation. The seller and mine interest has been compromised because of this.

then again, i am not trying to be a bad customer and avoid paying him. After this is his wage for the work he has done.

Edited June 4, 2012 by HappyHouse88

[Minerat 1]

Well, before you decide to pay him or otherwise, why don't you check with the seller if he knows that your offer is $1.2mil? For all you know, he may have informed the seller that your offer is only $1.175mil, thus pocketing the seller commission based on $1.175mil and your $25K.

Secondly, you've mentioned a loan. I doubt you can get a bank loan for this purpose unless you are talking about those overdrafts or credit lines, which of course, comes with pretty steep interest rates.

[HappyHouse88 0]

Well, before you decide to pay him or otherwise, why don't you check with the seller if he knows that your offer is $1.2mil? For all you know, he may have informed the seller that your offer is only $1.175mil, thus pocketing the seller commission based on $1.175mil and your $25K.

Secondly, you've mentioned a loan. I doubt you can get a bank loan for this purpose unless you are talking about those overdrafts or credit lines, which of course, comes with pretty steep interest rates.

Actually , i was as careful as i could be with this deal already. We signed the otp in front of the seller and the seller is fully aware of the offer.

yeah.. overdraft and credit line has very high interest..

[Minerat 1]

Actually , i was as careful as i could be with this deal already. We signed the otp in front of the seller and the seller is fully aware of the offer.

yeah.. overdraft and credit line has very high interest..

Sorry for sounding long winded. You signed the OTP of $1.175mil in front of the seller. Of course he is aware of that "offer". But is he aware that your offer was $1.2mil?

[HappyHouse88 0]

The offer is 1.2mil. He's totally aware that agent is collecting from us instead.

[leechaorui 2]

The offer is 1.2mil. He's totally aware that agent is collecting from us instead.

I think case is closed since you are comfortable with double representation by agent which is considered unethical by CEA. I don't think agent will reject the commission paid over a period of time since the agent himself is tainted with this illegality and you are still proceeding to pay him.

From you posting, you seem to be buying the property that is stretching your means. Taking up more loans, credit lines, etc.. would mean that future net income may be seriously impacted. You may want to think and reflect on how this situation came about, how you managed it and what are the implications to you and your family in future.

[bepgof 20]

Now i have another sticky situation.

this is what happened.

Last saturday, we went to see a place and like the place and offer 1.2mil.

Agent say okay, so right away we go down to the seller house and to do the otp.

Suddenly , agent say that instead of taking commission from the buyer, he wants to "offset" his commission from the buying price and we pay him instead. We ask him what is the implication to us. He kept saying , everything is the same, only that we will be paying him.

At that point, we were too eager to close the due. So we didnt really think much , since it the same as he said. And we signed an agreement to pay him $25k after completion and otp for the house at 1.175 instead.

After we close the deal, I was concern abt the stamp duty and 4% that we need pay for the unit. Only as i was doing my loan, that it occur to me that i will require 83k cash instead of 60k for the transaction, because we need to pay the agent 25k in cash , which cannot be part of the bank loan or cpf.

*gosh* .. it's not 33/4k more .. it's 23k more cash!

now i am stuck..i want to pay the agent but how to get 23k ?

Obviously, u are not familiar with rules of the "game".

1. Completely needs no "agent commission" to be paid by BUYER like u in pte resale. Even, if you get yr own agent during viewing, buyer agent will "hand-shake" with seller agent on "agent commission" which is payable solely by the seller.

2. Why sign OTP so fast, u confirm can get bankloan meh? You supposed to have 14 days to search for your best deal(bankload), why "give up" this choice?

3. Booking = 1% = $12,000 for exchange of otp doc, from SELLER.

4. Only upon signing OTP, u need to pay another 4% ($48,000) to seller DIRECTLY, no lawyer/bank at this point of time.

5. Stamp duty (1,200,000 x 3% -5,400)=$30,600, pay through yr lawyer.

6. The remaining (20%-5%)= 15%, say u are eligible to loan 80%, also through lawyer (to seller's lawyer), cpf

7. You need 5% + stamp = $90,600, not $83k. Stamp fee must be paid in cash FIRST, then fill up cpf form....

8. Overdraft facility is the "best" - you pay interest on amount (variable)u activate. Overdaft application takes time and need "business proposer".....

9. Another option, which I have used before - borrow from siblings/relatives, just to "tide over" this unplanned urgent situation, say nice words and thick skin a bit won't die.

Yr situation a weired: need only pay $60k(5%) to seller/agent direct, stamp fee payment, 15% etc, need go through lawyers (yr & buyer's)

Edited June 10, 2012 by bepgof