Complete Property Market Updates of Singapore

June 10, 2008

What kind of paperwork deserves that much money for property agents?

Filed under: General,Legal Ground — Propertymarketupdates @ 3:07 am

I WRITE to join Mr Patrick Sio’s discussion on the contentious issue of the 1 per cent property sales commission. Let me state that I am all for real estate agents who deserve their due. If a buyer has commissioned an agent to represent them as they have no time to look for a HDB flat and are in need of the agent, by all means, the agent has earned it. An independent buyer’s position, however, is completely different.

If HDB holds educational seminars for buyers to help them with the resale purchasing process, that clearly shows and means that buyers are empowered to act on their own and have a right to represent themselves, in which case, why should the sellers’ agents be paid a commission by independent buyers in order to make up for what agents say is a loss in profit as they are not selling a multi-million dollar private property? As reported on May 8, ‘Fee dispute: PropNex drops lawsuit against couple’, agents say the 1 per cent commission is practised by them due to the ‘lower prices of HDB flats, which translates into a lower commission’.

Saying that independent buyers should pay the 1 per cent commission in order to make up for the lower commission they make on HDB flats is like saying we should all pay a $2,000 airfare regardless or whether we are travelling to Los Angeles or Bali so that the airline company can make up for the ‘loss’ in profit. What’s the rationale behind that? It is utterly ridiculous and a blatant perversion of financial integrity.

The fact that agents say the 1 per cent commission is due them in order to boost their earnings on a lower-priced sale already betrays their position. In which case, how can the same agent represent both seller and the independent buyer?

Then there are reports of agents who refuse to sell it to independent buyers without the commission. These agents are practically extorting money from buyers who end up being blackmailed into signing the commission agreement. What recourse do independent buyers have when they are coerced in this manner? None.

The difference between the definition of a commission or service fee and that of an admin fee is huge. They cannot be the same. Does the service of a form filler command a fee of thousands? How much paperwork is there really? Please.

If, for example, having to fill in names and details, say five times over, in a 25-page document equals to a lot of paperwork and I get thousands for that, I think we need to seriously consider making an executive profession out of this prestigious task that seems so difficult it’s beyond the mental capacity of any independent HDB flat buyer. We must be a nation of HDB dwellers who do not know how to write even our own names.

And what services do they render that justify them a commission that equals twice, thrice, four times that of what an average Singaporean may earn in a month? I found this comment on a blog: ‘If a lawyer gets $3k for helping a client buy or sell a $3mil house, why should the agent earn $30k for helping the client buy or sell the same house?’

Even conveyancing lawyers do not represent both the seller and buyer. And these agents are not even required to have relevant qualifications. If they were to be paid by the hour, independent buyers would be paying them by the thousands. That’s a $1,000-$5,000/hr job. Even Donald Trump has to do a lot more than ‘paperwork’ to earn that kind of a salary. Never mind that agents submit part of the ‘paperwork’ online these days in less than 15 minutes.

I cannot understand this – why haven’t there been laws instituted to regulate this 1 per cent commission issue despite it being raised for a few years already? Are we waiting incredulously for the real estate agent associations whose own interests are at stake to address this issue? What can be done to create a movement to begin this?

I hope to see an article with a comparison between other nations and Singapore in this area. It is an issue that is in dire need of regulation. The silence and inaction of those in leadership positions who have been empowered to create the much-needed legislation in this area is very disappointing.

Source : Straits Times – 13 May 2008

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