By Ravinder Kapur
Real estate transactions can be complicated and stressful. When you are buying a property, you would want to close the deal at the lowest possible price.
But it is practically impossible to gauge the mind of the seller. Even after the negotiations are over, you may still have a niggling doubt. Did you pay too much for the property? Was there scope for further negotiation?
The seller may also be thinking along the same lines. Of course, being on the opposite side of the transaction, the seller would be unsure whether it would have been better to hold out for a higher price. Get help for your property transaction here.
To complicate matters further, in addition to the buyer and the seller, there are usually two additional individuals involved in the transaction. These are the two property agents - one representing the buyer and the other, the seller.
How can you be sure that your property agent is working in your best interests? Do these agencies really provide any value and are they worth the amount that they make out of the transaction? In fact, during the course of the entire buying/selling process, a number of questions regarding the functioning of property agents would arise in the minds of both the buyer and the seller.
Many Singaporeans have several misconceptions about this profession. Let us examine some common myths about engaging a property agent.
Myth #1 - Both the buyer and seller have to pay the property agent
It is important to understand that there is no law in Singapore that governs how much a property agent must be paid. There is neither a floor rate nor a ceiling. The fees that different agents charge are based on the amount the buyer or the seller negotiates.
Having said that, there are several practices that are commonly followed. For instance, in a sale transaction involving a private property, the seller’s agent would receive a sum equal to 2% or a little more, of the sale price. This amount would be borne entirely by the seller.
In this situation, how is the buyer’s agent compensated? The usual practice is that the seller’s agent passes on a certain part of the commission to the buyer’s agent.
As far as HDB properties are concerned, the convention that is followed is slightly different. The seller pays 2% and the buyer pays 1% to their respective agents.
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Myth #2 - The best way to find a good agent is through a friend’s reference
You need to exercise a great deal of care when you are in the process of engaging a property agent. A competent and experienced agent could save you tens of thousands of dollars. In a high-value transaction, even a small percentage change in the price could be that much.
You will also be looking to your property agent to guide you on many other matters related to the transaction. It is absolutely essential that the agent that you appoint is familiar with Singapore’s property market and how it works.
What is the best way to find an agent who is both trustworthy and completely committed? A common misconception is that you should locate an agent through a friend or a relative. If their deal went through successfully, it should be enough reason for you to engage the same individual.
While this could be true to some extent, you should not accept a friend’s recommendation blindly. Do your own due diligence as well. Here are some of the points that you should look out for.
- Does the agent specialise in the type of property that you are interested in buying or selling? Your friend may have bought an HDB flat, but you may be interested in purchasing a private property.
Every agent has a certain specialisation. You should use someone who has experience in the type of property that you intend to deal with. The problem is that an agent who may not have the relevant specialisation will not pass up the chance for additional business. So you will have to verify the agent’s area of expertise using your own resources.
On the other hand, a specialised agent would be most familiar with the property type of your interest and would have the best feel for the property transactions that have taken place in the areas of your interest. That means, you can expect to have the most up-to-date and relevant advice from your agent for your transaction.
- Is the person you are dealing with a professional full-time agent? Engaging an individual who treats this work as an activity to be done when there is free time may not be the best idea.
- Does the agent return your calls? Is she accessible? If you have to call repeatedly to ask a question, you may want to look elsewhere.
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Myth #3 - A property agent does not have any specialised skills
Every property agent in Singapore has passed an exam that is conducted by the Council for Estate Agencies (CEA), which is a statutory board set up in 2010 under the Ministry of National Development. What’s more, every agent is also required to undertake a prescribed level of training after passing this exam.
How can you be sure that you are dealing with a duly certified agent? You can verify an agent’s details on the public register maintained by the CEA.
When you are dealing with a duly certified agent, you can be quite sure that the person has the requisite skills and knowledge for the job at hand. A strict watch is kept on any unauthorised activity in property transactions. Recently, a person was convicted and fined a sum of S$23,000 for carrying out unlicensed estate agency work.
In another instance, CEA’s disciplinary committee imposed a financial penalty of S$7,500 on an agency for failing to draw an investor’s attention to the risks involved in purchasing a certain foreign property.
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Myth #4 - It is better to appoint several agents instead of just one
If you plan to sell your flat, you may think that it is preferable to give the assignment to several agents from different agencies. You would reason that it would help to spread the word faster and get you the highest price as there would be a certain degree of competition to acquire your property.
In fact, the reverse could happen. Telling several agents would lead to each of them having a lower level of interest in selling your flat as none of them would be sure of closing the deal. Another unexpected result could be that with multiple agents working to sell your property, the price may be driven down as each agent tries to be the one to finalise the transaction.
Refrain from appointing several agents. Instead, find one that has a high level of competence and is trustworthy. You will get better service and it is likely that you will be able to complete the transaction faster.
No one property agent has the expertise to handle all types of property transactions. Find the right one for you here by searching for property agents who have experience in the location and property types of your interest.
Take your time in identifying a property agent
Every real estate transaction takes several weeks or even more to complete. You will not lose much by taking some extra time to appoint a property agent. Look for one who you can trust and who has handled similar deals earlier.
Once you have a knowledgeable property agent on your side, your real estate transaction will be much easier to conclude.
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