How much should you be paying for Property Agent Commission
Found your ideal property agent based on our helpful guide (Complete Guide To Engaging The Perfect Property Agent 2020)?
Now it’s time to discuss and agree with your agent what the property agent commission fee (if fixed) or structure (if flexible) will be like.
Today, let’s look at some factors that you can consider to determine a fair property agent commission structure.
Table of Contents
Property Agent commission For Sale
Isn’t there a range you ask?
Well, if you asked your friends and family, some common, old school responses you might hear includes:
- Seller usually pays 2%
- Buyer pays 1%
Private Properties (Condominiums, Apartments)
- Seller usually pays 2- 4%
- Buyer don’t need to pay commission. (If buyer has an representing agent, seller’s agent to split the commission with co-broke agent.)
Private Properties (Landed Properties)
- Seller usually pays 2 – 4% (negotiable as it is dependent on the situation)
- Buyer don’t need to pay commission. (If buyer has an representing agent, seller’s agent to split the commission with co-broke agent)
Property Agent commission For Rental
Monthly rental is $3,000 or lesser for a lease term of 1 year or less
- Landlord pays half a month’s rental to the Landlord’s Agent
- If the tenant engaged an Agent, tenant pays half a month’s rental to the agent.
Note: The tenant does not have to pay if tenant did not engage any Agent.
Monthly rental is more than $3,000 for a lease term of 2 year
- Landlord pays a month’s rental to the Landlord’s Agent. If Tenant has an representing agent, Landlord’s agent to split the 1 month’s rent with co-broke agent.
- Note: The tenant does not have to pay if tenant did not engage any Agent.
Is that really the case? Be sure to check with them when was the last time they sold or bought a property – chances are they have not done so recently and are basing their experiences from decades ago.
A more accurate range is perhaps, as shared by Channel NewsAsia report in December 2018, showing that local property agent commissions can range from 2% to 5%, depending on several factors.
Curious? Let’s unravel these different factors that determine how much you should pay your property agent.
Difficulty and Urgency of Selling Your Property
Some are less appealing (could be an older flat, shoddily maintained, inconvenient location, low floors etc.) than others, and are more difficult to sell as compared to others in a better situation (prime location, new estate, well maintained etc.)
In such situations, even with lowered property prices, it is still going to be harder to sell.
In another situation, imagine you really need to let go of your property immediately.
Wouldn’t your property agent need to step up significantly on his/her effort to help make that happen?
In a saturated property market, with hyper-competition coming from all the DIY platforms posting thousands of properties, do you think your property is going to be in demand (especially if it needs to be let go quickly)?
Put yourself in the perspective of how hard or easy it will be to sell your property and you should be able to calibrate a more realistic property commission.
Expectation of Your property selling price
With all things being equal, a property with a lower asking price is likely to be an easier sell compared to a similar property with a higher asking price.
If your neighbours are selling their apartment for $1 million and you are asking for $1.1 million, your agent is going to have to put in extra effort to make that happen.
This may mean having to search harder for more buyers willing to pay that higher price, facilitate more viewings and definitely dedicating a longer time and effort for marketing.
In such a situation, your agent may ask for a higher commission rate.
Property Agent Value-added Services Offered
Selling a house in the saturated and highly competitive Singapore market these days take a lot more effort than it did 10 years ago.
Nowadays, to even get your property in front of the right potential buyers, takes plenty of effort – and that is just the first step.
From providing home styling services, to doing market analysis, to advising suitable price position, to coming up with detailed marketing strategies (which platform to use, targeting buyers using social media platforms and unique content), property agents now need to provide these additional services and expertise at additional cost to best service their clients.
Lets look at some of them;
1) Marketing Platform
2) Profession Add-on
Professionally-angled photos and videos has become a trend of attracting buyers to consider coming down for viewings.
And it takes effort and cost to the property agent to add all this services to market your unit.
3) Marketing Report
Get to know what kind of services they add on during viewing.
Old school salesmanship no longer works as much in today’s market. Buyers would want to look at market analysis report comparing price trends and upcoming developments that will interest them into buying your unit.
Furthermore, knowledge expertise is vital for more complex circumstances for example, HDB contra where you sell and buy properties concurrently.
Property agents are required to determine the exact timeline or you may end up with no place to stay.
Property investments such as Sell One Buy Two will also require in-depth knowledge of the market situation and comprehensive understanding of financial calculations.
After knowing these behind-the-scenes efforts, doesn’t it make sense to motivate and reward the extra-hardworking agent who’s doing their best to get you that ideal price?
Questions to ask yourself
Does lower property agent fees mean better selling price for your home or better results?
What is the purpose of selling your flat?
Are you familiar with the latest marketing trends?
Do you have a step by step action plan?
Do you know that 73% of homeowners did not prep their house right for selling?
So how much property agent commission should I pay?
Use the above factors as a guideline to help you decide.
Speak to your agent and understand their perspective too.
If you are interested in exploring my services to facilitate your property transaction and would love to discuss property commission fees, please feel free to contact me for a non-obligatory discussion on your needs.
What does it mean when agent co-broke?
It’s a situation where two agents agrees to work on a deal, one representing Landlord/Seller and the other representing the Tenant/Buyer.
When to pay property agent commission
Be fair to your property agent.
Pay the agreed commission after he/she facilitates a successful property transaction.
Commission payment should be made the to your agent’s property agency, and not to the agent, after a transaction is completed.
All in all, there is no best choice on how to sell your house and choose the agent.
However, these factors should be able to help you understand what are the pointers to consider when discussing the commission package with your agent.
Put yourself in the buyer’s shoes, meet their needs and they may just say yes to your house.
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Rick Huang, Associate Deputy Group Director of OrangeTee & Tie, has been in the Real Estate industry for a decade.
He is driven, committed and is enthusiastic about real estate investments.
Today, he leads Team Youhome.sg, and together, he aims to provide his clients with the best experience in their property journey.
The team focuses on understanding the client’s finances and needs and is determined about delivering the best solutions and results for them.
Amidst the hustle and bustle, Rick enjoys quiet time and indulge himself in the intricate art of tea-brewing and teapot appreciation.
He would also take this chance to energize himself and reflect on his personal development and areas of improvement.
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