Tan Kin Lian's Blog: Regulation of estate agents

Monday, January 03, 2011

Regulation of estate agents

A new body has been set up to regulate estate agents. This body has the goal of enforcing standards of service.

This body should have another role, that is, to ensure that consumers are paying a fair fee for property transactions and that the fees charged by the agencies are advertised. This will allow consumers to get access to the efficent agencies that charge lower fees.

The fees for making property transactions are too high in Singapore. An estate agent can make one transaction a month and earn more than a regular job. This is why this industry attracts so many people, including professionals trained in other fields, to handle the property transactions. It is a waste of resources for the economy.

Some people pointed out that fees are higher in other countries. But, unlike Singapore, these countries are big and have properties located in sparsely populated areas. .

Singapore does not need so many property agents, especially those who are qualified in other fields. The first step to stop this wasteful use of resources and to bring the cost down, is to regulate the fee for property transactions (especially for sale and rental of HDB flats) to half of the current level, or to make it easy for the consumers to handle these transactions directly without going through an agent.

Tan Kin Lian

7 comments:

Benjamin said...: Dear Mr Tan,

All other "proper" real estate professionals (project managers, architects, engineers, quantity surveyors, valuers, asset managers, property managers) have to work very hard to earn their fee. The fee is often not high in percentage terms, and for legislated professionals there are both professional and often long term personal liability to be concerned about. Compare that with the amount of time and effort an agent puts in to earn that commission and next to nothing liability, no wonder most people gravitate to the job that gives the highest reward/work ratio. No different from the way the brightest brains gravitate towards the financial sector.

The high QP fee that you mentioned in another post is due to the government outsourcing the checking work and therefore risk to the private sector. Every time the QP stamps his approval on a drawing, he has lifetime liability and therefore there is a high cost to the stamp even though the work is very easy. The government should take this work back in house to reduce cost to the public.

Benjamin; January 03, 2011 10:05 AM
Unknown said...: I agree wholeheartedly. Such regulation is necessary to remind young people that earning money involves development of virtues over time, such as diligence, prudence and character. Getting rich quick is never the real point.

Another reason the industry being attractive is due to people finding trouble paying their bills among escalating living costs. More of a push factor than a pull factor.; January 03, 2011 12:23 PM
zhummmeng said...: Why do you think young graduates, engineers, accountants flock to selling life insurance? Can get rich quick , lah!!!!How much can these professionals earn in their their field of training? Also in life insurance no need real qualification, only take tikam tikam exams and you can con people. Do the exams really equip them in finance? Rubbish!!!!!Do the authority care? The exams are meant to pull a wool over the buying public's eyes to fool them that the agents are "professionals", able to plan the consumers' finances.. A load of crap...IT IS actually to provide and feed the industry with ready salesmen and conmen quickly to peddle and push their products.
The exams are stupid exams fit for the monkeys at best and at worse to con the consumers into beleiving that they are qualified.
Where can former receptionists, clerks,bus drivers, taxi drivers, sacked secretaries earn few hundred thousands a year? Is it they earn as FINANCIAL ADVSIERS? or financial conmen or magic stone conmen and women?
AUstralia and UK will admit only those with TERTIARY financial qualifications now and alos no more commission as remuneration.
If lawyers are remunerated by commission what can happen?
If doctors can earn commission on products for treatment hell will break out, right?; January 03, 2011 4:02 PM
zhummmeng said...: If the traffic policemen earn commission for bringing in 'sale' of traffic misbehavior who will die?
If MAS auditors earn commission for bringing in 'sale' of mi-sselling cases by insurance agents who will die?
If insurance agents get fat commission for bringing in sale of rotten wholelife products who will die?; January 03, 2011 10:01 PM
AC said...: I have many friends who are engineers ending up as property agents, for a simple reason -easy money for a day's work. We as consumers can play a part, by not paying the commission asked. We should negotiate for a lower commission. There are enough property agents out there. I am sure there are enough competition to force the cost down.; January 06, 2011 2:54 PM
Vincent Sear said...: I'm neutral, just objective about it. An agent has no salary. If you ask him to sell a flat for you, he puts up the advertisements. That costs hundreds of dollars, how much, depending on response.

If say, within 3 months your flat is sold for S$300,000, that's S$3,000 for him on a 1% commission basis. But wait, it's not all his. His agency that provides the backoffice support and pay for overheads has to take a cut.

Is it fair remuneration net of all the costs? I don't want to convince anybody. You decide. Is it so easy to sell one flat per month? Is it so easy to sell a flat at all? Is it so easy to get a condo or landed instead of a flat. I'd suggest you try.

We can do without agents too. Nothing in the law says you must sell or buy property through agents. I'd suggest you try too.

Disclaimer: I'm neither a property agent nor speaking for them.; January 07, 2011 12:09 AM
John YS said...: The grass is always greener on the other side. That's why we have lots of green eye monsters.

Success is only granted to people who put in hard work and dedication.

Those agents who got rich quick will find themselves suffer in the long run thinking that constant self learning is not necessary.

I'm an agent myself. There are a lot of costs involved. Petrol, advertisements, online and offline, sourcing for customers, administrative charges, office support, etc.

Don't forget that there's no fixed pay and no CPF is provided.

A new agent with limited network, experience and skill, his income is averagely less than $1500/mth. If he has a Diploma or a degree, he can easily get a job that give him $2000/mth.

What the general public is seeing those experienced agents who earn top dollars, they are the top 5% of the industry.

What about the rest of the agents working hard in the industry?

Before making baseless comments, why not try being an agent yourself?; January 09, 2011 9:57 PM