Commission structure for property agents – Are you paying your agent the right amount?

Unsure about how much to pay your property agent? How much commission one has to fork out for the services of a property agent is no doubt an important concern for many Singaporeans. For your benefit, we have compiled a guide for you below!

Before we dive into the commission structure for agents, we have to first differentiate between the different type of property agents. They are mainly two types of property agents that Singaporeans typically engage – namely, the seller’s or landlord’s agent, as well as the buyer’s or tenant’s agent.

Landlord’s / Seller’s Agent

On one side of the transaction is the landlord’s or seller’s agent, who has been appointed by the landlord or seller to market a unit.

Typically, the roles of the seller’s agent involves advising home owners on presenting and promoting their homes to showcase its best features, and making it more attractive to potential buyers or tenants. This could involve advice on how to spruce up your home when buyers or tenants make a visit, to even taking photographs to present your home nicely.

The seller’s (or in this case, landlord’s) agent also aids the home owner in sourcing for tenants for the seller, either through his personal contacts, or advertising on various platforms such as newspapers or listings on online portals. He or she then arranges for property viewings.

After receiving enquiries from different interested parties, the seller’s agent then represents the owner of the property in the negotiation and bidding process to find the best offer.

Tenant’s / Buyer’s Agent

On the other end of the spectrum is the tenant’s/buyer’s agent.

The buyer’s agent will assist potential buyers and tenants in finding and selecting suitable properties. The agent will then arrange for viewings.

During negotiations, the buyer’s agent will negotiate in your favour.

It is however, illegal for agents to represent both the landlord/seller as well as the tenant/buyer for the same deal! Each agent is supposed to have their client’s best interests at heart, and representing both sides would arise a conflict of interest.

Co-brokering is however allowed. Co-brokering is when two agents have an agreement to broker a deal together, with one representing the Landlord and other representing the Tenant.

Common Practices for Commissions of Property Agents – Rental

There are no universal rental commission rates that real estate agents follow, which can make it all the more confusing for people who are considering engaging a real estate agent.

There is, however, a rough guide from experienced property agents who have been on the ground for many years.

Scenario 1:

If monthly rent is $3,500 or lesser at a lease term of 1 year

  • Landlord pays half a month’s rental to the Landlord’s Agent
  • If the tenant engaged a Tenant’s Agent, he/she pays half a month’s rental to the agent.
    Note: The tenant does not have to pay if he/she did not engage any Tenant’s Agent.

Scenario 2:

If monthly rent is $3,500 or lesser at a lease term of 2 years

  • Landlord pays one month’s rental to the Landlord’s Agent
  • If the tenant engaged a Tenant’s Agent, he/she pays one month’s rental to the agent.
    Note: The tenant does not have to pay if he/she did not engage any Tenant’s Agent.

Scenario 3:

If monthly rent is above $3,500 at a lease term of 1 year

  • Landlord pays half a month’s rental to the Landlord’s Agent
  • If the tenant engaged a Tenant’s Agent, he/she pays half a month’s rental to the agent.
    Note: The tenant does not have to pay if he/she did not engage any Tenant’s Agent.

Scenario 4:

If monthly rent is above $3,500 at a lease term of 2 years

  • If there is only a Landlord’s Agent, the landlord pays 1 month’s rental to the Landlord’s Agent
  • If there is a Tenant’s Agent, the landlord pays 1 month’s rental to the Landlord’s Agent who splits the commission with the Tenant’s Agent (tenant bears no cost)

Do note again, that there are no fixed rental commission rates on who should be paying the agents and how much is the correct rate. Like many things, the rates will be different in different situations, depending on the needs of the clients and their requests as well.

It is almost important to communicate with your agents on the commission rate they require and their reasoning behind it!

Common Practices for Commission of Property Agents – Buying / Selling

HDB Flats

  • Buyer usually pays 1%
  • Seller usually pays 2%

Private Properties (Condominiums, Apartments)

  • Seller usually pays 2- 4%
  • Buyer does not have to pay a commission fee even if they have engaged a buyer’s agent
  • The commission will be shared between seller’s agent and buyer’s agent

Private Properties (Landed Properties)

  • Seller usually pays 2% (negotiable as it is dependent on the situation)
  • Buyer does not have to pay a commission fee even if they have engaged a buyer’s agent
  • The commission will be shared between seller’s agent and buyer’s agent

Ultimately, the best gauge to determine how much commission to pay is how much of your precious time your property agent is saving you or how much value he can add when facilitating your transaction.

Buying and selling a property can be a tedious and complicated process. If you are unclear of what to do or don’t have the time for it, then it’s definitely worth paying property agents for the good work they do.

Cassandra Ho

Cassandra has been in the banking industry for close to 8 years, and her passion for her work has enabled her to achieve numerous testimonials and awards when it comes to providing banking solutions to her clients. With the right attitude and determination, she believes that she’s able to help her clients see that with proper planning, the right mortgage package can make a huge difference to their financial futures.
Cassandra Ho

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