Property Agent Commission in Singapore [Guide]

The real estate market is known for its complexity and constant changes. Whether you are looking to buy, sell, or rent a property, there are many factors to consider and regulations to navigate, which can be daunting.

Hence, the expertise of a property agent is crucial in facilitating a successful transaction.

In this property agent commission guide, we will provide you with valuable insights into its structure for different types of property transactions, as well as practical tips in selecting the right property agent.

Given the real estate market’s complexity and constant changes, facilitating a smooth and successful property transaction can be a complex process, especially if it involves legal issues. Hence, the expertise of a property agent is crucial in facilitating a successful transaction.

Guide: Property Agent Commission Structure

The commission rate charged by property agents in Singapore is not fixed and can vary for property sales. It is usually negotiable, ranging from 1% to 4% of the property’s price. The percentage may depend on factors such as the property’s value, location, demand, value-added services, types of marketing provided, and the agent’s track record.

Whether you are selling or buying a resale property, please factor this into your overall home ownership and marketing cost.

Although some small property agencies charge only 1% commission, the scope and scale of their services have to be taken into consideration.

For example, how much resources can these property agents provide to sell your property fast and achieve the highest possible price? Also, do they have the necessary proptech (property technology) and a large enough network to carry out their marketing effectively?

It is also important to ensure that the property agent is registered with the Council of Estate Agencies (CEA), a government body that certifies real estate agents and regulates Singapore’s real estate agency industry.

This is because there were cases where scammers posing as property agents ran away with their clients’ money.

Property Agent Commissions Are Negotiable

Although there are no industry-standard commission rates for buying, selling, and renting properties, what is highlighted below generally represents what is practised by the real estate industry.

Commissions being charged are contingent upon specific circumstances, especially in the sale/purchase of properties –  be it resale HDB flats or private properties. This is because such transactions may involve unique situations that require more effort and time to complete. [Note: No commission is payable for purchasing a new launch private property or a new executive condo].

Some of these circumstances that command a higher commission may include the following:

• Sellers’ urgency to sell their property or if they are challenging to sell (eg. near disamenities such as a rubbish chute or expressway).
• Represent overseas buyers that require undertaking additional responsibilities such as serving as investment advisors. In such cases, the decision to offer a higher commission ultimately rests with the seller, who may need to factor in the higher cost to complete the deal.
• In the luxury property segment (ie, properties exceeding $5 million), tiered commission schemes may be implemented to motivate the seller’s agent to secure a higher sale price. For instance, a commission rate of 2% may be applied for sales with a minimum price of $5 million, but if the final closing price exceeds this threshold, the commission will be more than 2% of the selling price, which is negotiated beforehand.

New Guidelines on Co-Broking Commission

On 14 Nov 2023, 16 property agencies – representing 88% of the over 35,000 property agents in Singapore – inked a pact to address the issue of agents trying to avoid sharing co-broking commissions.

The best practice guidelines for co-broking commissions will take effects 1 July 2024. It calls for buyer or rental agents to collect commissions from buyers or tenants, while sellers or landlords pay the agents representing them. These arrangements should be clearly stated before engaging clients.

The signatories to the new guidelines included PropNex, ERA Realty Network, Huttons, OrangeTee and Tie and the Singapore Estate Agents Association (SEAA).

The agreement could establish a new industry norm, replacing the current practice of agents sharing co-broking commissions. It will also facilitate a more upfront and transparent method of paying the respective agents for their services.

Currently, property buyers are not required to pay their agents commissions. Nevertheless, these commissions are often factored into a higher sale price to account for the cost of co-broking commissions.

Moreover, the practice of sharing of commissions creates a potential conflict of interest as the buyer’s agent is caught between putting the buyer’s interests first and protecting his own commission – which would, in effect, prioritise the seller’s interests.

Additionally, buyer agents may prioritise bringing their clients to view only units that offer them a higher percentage of co-broking commission, which might not be the cheapest or most suitable units for the buyer.

Advantages of New Co-Broking Agreement

• Prevents Blocking from Co-Broking: Ensures that agents can collaborate more freely, preventing scenarios where some agents might block others from co-broking opportunities. Hence, this will lead to a more open and cooperative environment.
• Reduces Conflict of Interest: Establishes clear guidelines to avoid conflicts of interest, ensuring that agents act in the best interests of their clients without being influenced by personal gains.
• Enhances Transparency: Improves the transparency of transactions, with all parties aware of the terms and conditions, fostering trust among agents and clients.
• Improves Client Service: With agents working together more harmoniously, clients benefit from better service as their properties can be marketed more effectively and efficiently.
• Standardises Practices: Establishes standard practices across the industry, making it easier for agents to understand their roles and responsibilities, leading to more consistent and reliable services.
• Encourages Professionalism: By adhering to a set of agreed-upon guidelines, the overall professionalism of the industry is enhanced, which can improve the reputation of property agents and increase client trust.
• Industry reputation: The pact could help improve the reputation of the real estate industry by promoting ethical practices and collaboration.

New Co-Broking Agreement Not Legally Binding

Although the new agreement will help to address the teething issue of blocking co-broking by some unscrupulous property agents, it is not legally binding or enforced by any authority.

Hence, it may take some time for the practice to be widely accepted. This is because the current practices of co-broking have been entrenched and some property buyers may not see the true value in paying their agents. This may result in them handling their resale purchases without an agent.

But, before deciding to do so, they must recognise that property agents can offer many value-added services. These include market analysis, price negotiation, spotting potential house defects, documentation, and transaction coordination, among many others.

These services will ensure a smooth and trouble-free completion of any property transactions.

Adoption of the New Co-Broking Framework a Success?

The new guidelines for property agent commissions, which took effect in July 2024, have been met with a lukewarm response from property buyers. Although the guidelines are intended to increase transparency in co-broking arrangements, they were not fully adopted for the following reasons:

• The old system has remained entrenched.
• Property agents are concerned that buyers will be discouraged from engaging them.
• The fear of potential income loss led agents to stick to the old method of co-broking.
• A lack of awareness and understanding of the new guidelines.
• Some buyers prefer to transact themselves than pay commissions, especially for highly priced properties.
• Seller’s agent reluctance to share commission thinking that buyer’s agent will be paid by his client.

Nevertheless, the new guidelines have led to some positive developments. Some property agents have been seen to work harder and provide value-added service to justify their commissions.

In the rental market, there is a greater acceptance of the new guidelines as tenants recognises the hard work and effort put in by their agents. However, this increased acceptance might also be due to the lower rental commissions compared to those for property purchases.

Despite the slow adoption of the new co-broking framework, the Singapore Estate Agents Association (SEAA), an industry group, said it is committed to promoting these best practices through continuous education, advocacy and collaboration with industry stakeholders.

Property Selling/Buying – Existing Commission Guide

Below is just a property agent commission guide that is widely practised. As mentioned earlier, there are no fixed rules, and the commission rates can be subjected to negotiation.

The Council of Estate Agencies (CEA) does not fix commission rates or provide guidelines on commission amounts. This allows market forces to determine competitive pricing while allowing flexibility and incentives for property agents to market properties effectively.

Rental – Property Agent Commission

Dual Representation By Property Agent & Co-Broking

Agents are prohibited by law from acting as both the landlord’s/seller’s agent and the tenant’s/buyer’s agent for the same transaction. This is due to the inherent conflict of interest, which could negatively impact the best outcome for either party.

For the rental of properties, the landlord’s agent (and occasionally the tenant’s agent) may aid both parties throughout the lease term. They may help to address any maintenance issues and disputes that may arise, although they are not legally obligated to do so.

The term “co-broke” or “co-broking” refers to the collaboration between two agents who mutually agree to facilitate a transaction. One agent represents the landlord/seller, while the other agent represents the tenant/buyer.

Co-broking is encouraged by the CEA to facilitate the closing of a property transaction in the shortest time possible. However, the co-broking arrangement and sharing of commissions will have to be negotiated between the agents.

Role of Landlord’s / Seller’s Property Agent

The role of a property agent encompasses a range of crucial duties. Acting as a representative appointed by the landlord or seller to facilitate the marketing of a unit, the property agent assumes the following responsibilities:

Strategic Promotion and Presentation: The property agent formulates and implements effective strategies to enhance the visibility and appeal of the unit. These may involve staging, advising the client to tidy up the unit, and in some case, applying a fresh coat of paint to make the property looks more presentable.

The property agent will also devise targeted promotional initiatives to attract potential buyers or tenants. These may include advertising on major property portals, online classifieds, and social media.

Buyer/Tenant Acquisition: By employing multi-channel advertising, the property agent actively seeks out prospective buyers or tenants. This involves creating compelling property listings and engaging in proactive outreach efforts to connect with interested parties. These may include video advertising for added publicity and to garner more interest.

Viewing Management: The property agent manages the schedules and viewing process for interested individuals. This entails coordinating appointments, conducting property tours, and effectively showcasing the unit’s features and advantages to potential buyers or tenants.

Negotiation and Bidding Representation: Once one or more parties express an interest, the property agent assumes the vital role of advising and representing the landlord or seller during the negotiation and bidding stages. Leveraging on their expertise, the agent ensures an optimal outcome for the clients they are representing by employing effective negotiation strategies.

Compliance with Legal and Regulatory Requirements: Throughout the entire process, the property agent meticulously ensures that all necessary procedures, legal obligations, and regulatory requirements are diligently executed and strictly adhered to. This guarantees a smooth and lawful transaction, safeguarding the interests of all the parties involved, and minimising potential disputes.

It is imperative to note that the aforementioned responsibilities are fundamental in contributing to the successful marketing, negotiation, and finalisation of property transactions.

Role of Buyer’s/Tenant’s Property Agent

The buyer’s/tenant’s property agent assumes a pivotal role in assisting individuals seeking to acquire or rent a property. Their responsibilities encompass the following:

Property Search and Selection: The agent diligently conducts an extensive search for suitable properties based on the buyer’s/tenant’s preferences and requirements. This involves thorough market analysis and comprehensive property evaluations to identify options that align with the client’s needs.

Viewing Coordination: The property agent adeptly coordinates and arranges property viewings, ensuring optimal utilisation of the buyer’s/tenant’s time. They will meticulously schedule appointments, accompany the client during visits, and provide insightful guidance to facilitate informed decision-making.

Negotiation in the Client’s Best Interests: Acting as the client’s representative, the property agent skilfully engages in negotiations with the seller’s/landlord’s agent. Their primary objective is to secure the most favourable terms and conditions for the buyer/tenant, leveraging on their expertise and advocating for the client’s best interests throughout the negotiation process.

Professional Advice and Guidance: The buyer’s/tenant’s property agent offers comprehensive professional advice and guidance, meticulously explaining the proper procedures involved in purchasing or renting a property. They will provide clarity on the necessary paperwork, legal obligations, and any relevant regulations, ensuring that the client is well-informed and equipped to navigate the process smoothly.

It is vital to recognise the responsibilities and core duties of a buyer’s/tenant’s property agent. Their expertise and support will significantly contribute to the successful acquisition or rental of a property, fostering a positive experience for the client while safeguarding their interests.

Should Sellers And Buyers Save on Property Agent Commission?

When considering the prospect of saving on property agent commission, it may be advisable to reassess this decision. The acquisition or sale of the property represents a significant financial undertaking in one’s lifetime, necessitating a comprehensive understanding of a slew of laws and regulations.

Moreover, property agents possess valuable knowledge and experience in negotiation tactics, enabling them to effectively engage with opposing agents. In contrast, individuals lacking familiarity with the market and relevant regulations may encounter difficulties. Also, they may not be familiar using property portals such as the new HDB Resale Flat Listing Service.

This could result in protracted and convoluted transactions at best, and costly legal complications and financial losses at worst.

Hence, it is crucial to thoroughly evaluate the commission fees and services provided by various property agents before making a decision to engage one or multiple agents (Note: Contrary to popular beliefs, having multiple agents to market a property may not be the most effective.

In fact, it can complicate matters as different agents may price the property differently, which could affect its potential selling price. Please WhatsApp me to find out more.

Hence, it may be prudent to sign an Exclusive Rights agreement with the agent, which is a legally binding arrangement granting sole representation in marketing and selling the property. Such an exclusive right usually last three months, and can be extended, upon agreement between both parties.

Should Landlords And Tenants Save on Property Agent Commission?

In the context of saving on property agent commission, it is crucial for landlords and tenants to carefully consider the potential ramifications. For landlords, the inclusion of a landlord’s agent can prove invaluable, mitigating a plethora of potential challenges.

This is because the agents possess the requisite expertise to not only identify suitable tenants but also to effectively screen out individuals with dubious backgrounds. Furthermore, depending on the agreed-upon responsibilities, a landlord’s agent may assist in navigating tenant-related issues that may arise during the rental period (although the agent’s responsibility ceases upon the conclusion of the deal).

Conversely, tenants who possess the time and resources to independently search for and arrange viewings for rental properties may opt to forgo the engagement of a tenant’s agent.

Nonetheless, we strongly advise tenants to seek rental properties exclusively represented by a landlord’s agent as there have numerous cases where unscrupulous landlords abscond with tenants’ deposits or effect sudden and unjust evictions, emphasising the necessity of proper representation.

Even in cases where the lease duration spans just a year, the engagement of a property agent on either or both sides can provide a safeguard and peace of mind.

Conclusion

In conclusion, due to the complexities of the real estate market and the potential risks involved, it is prudent to prioritise engaging the services of a property agent. By doing so, individuals can mitigate the challenges and uncertainties inherent in property transactions, safeguard their interests and ensure a smoother and more efficient process.

Please WhatsApp me if you have further queries or wish to find out more about the property market in Singapore.

FAQs About Property Agent Commission And Services

1. What is the new agreement on co-broking about?

The new agreement by major property agencies in Singapore seeks to prevent buyer agents from being blocked from co-broking, addresses conflict of interest, and enhances transparency in resale property transactions. The agreement calls for buyer or rental agents to collect commission fees from buyers or tenants, while sellers or landlords pay the agents representing them.

2. What services do property agents provide?

Property agents offer a wide range of services, including property search and selection, property valuation, marketing and advertising, negotiation, paperwork assistance, and sometimes after-sales support. But do take note that a property agent’s responsibility ends once the transaction is completed. Any assistance rendered subsequently is on a goodwill basis.

3. How do I find a reliable property agent?

To find a reliable commission property agent, consider seeking recommendations from friends, family, or colleagues who have recently engaged in property transactions. You can also explore online platforms that provide agent listings and reviews. But do ensure to choose an agent with the necessary experience.

4. Are property agents regulated in Singapore?

Yes, property agents are regulated by the Council for Estate Agencies (CEA) in Singapore. They must be registered with the CEA and adhere to a strict code of conduct, ensuring ethical practices and professionalism.

5. Can I negotiate the commission rate with a property agent?

Yes, the commission rate is negotiable. However, it’s important to remember that a lower commission rate may impact the level of service and dedication you receive from the agent. It’s crucial to strike a balance between affordability and quality of service.

6. What should I expect during the property transaction process?

During the property transaction process, you can expect your property agent to guide you through property viewings, handle negotiations, prepare legal documents, and provide insights on market trends and property values. They will be your trusted advisor throughout the journey.

7. How can I verify a property agent’s credentials?

You can verify a property agent’s credentials by checking their registration status with the Council for Estate Agencies (CEA). The CEA provides a public register where you can search for the agent’s name to ensure they are licensed and in good standing.

Other Property Resources

• Singapore Property Market Overview.
• Understanding Singapore Property Policies & Financing Options.
• Choosing a Housing Loan.
• Singapore Property Rules for Foreigners.
• How to Buy an HDB BTO Flat.
• Executive Condo Eligibility Criteria.
• En Bloc Sale Guide.