There are often a lot of backlashes online on why real estate agents should earn such commissions of their client’s property. After all, their services can be easily conducted by the clients themselves! In this article, I will explain some of the advantages of not hiring a real estate agent can bring versus hiring one. This can be quite a controversial topic so please keep an open mind and understand the reasoning behind my points.
Before continuing with my article, I will like to include a short disclaimer. I am a real estate agent who has been practicing for a year in Singapore. I like to obtain commissions for my real estate services from my clients, but I do understand that real estate services are not applicable to some people, depending on their circumstances. Such circumstances might be in cases where people are unable to due to financial difficulties or simply that they are well versed in the real estate market and do not require further assistance.
With Estate Magnates, I aim for this website to be as informative and unbiased as possible, so that you are able to make the right decision every time even without a real estate agent.
Not Hiring a Real Estate Agent
No Commission Fees
You do get savings off by not hiring a real estate agent and these savings can contribute to the downpayment of your new property. Refer to this article for reference on what are the usually recommended rates that you should pay your real estate agent for a successful transaction. However, commission fees are often up for negotiation and if you are able to get a good rate which the agent agrees to, it will be highly beneficial to both parties.
Not Having an Intermediary
This is a point that affects many other service-oriented businesses. Dealing with an intermediary also means that sometimes you might not be aware of the full negotiations throughout the process of buying/selling your home. However, having an intermediary also has its benefits such as being freed up from more mundane matters to handle more important ones. The downside is that you have to pay a negotiator fee for the process as you are paying for their expertise and speed.
Dealing directly without an intermediary will help you to understand the other party’s motivations behind the transaction, which allows you to better control and manage circumstances that you might not have been aware of in the first place without direct communications.
Reduced Exposure to Market
Most property listing portals have a limitation to you listing your property online if you do not have a Property Agent license. This form of listings is known as For Sale Buyer’s Only (FSBO) listings. Popular portals like propertyguru.com and 99.co require listers to have a real estate Salesperson Registration. This means that you are often limited to open directories such as Classified ads.
Limited exposure of your property means that it will be longer on the market, which causes your listings to be fatigued. This might cause your target buyers to steer away because they might feel that since your listing is on the market for so long, there might be other issues that they are not seeing immediately.
Real estate agents usually will have an internal network of other agents and clients, who might have exactly what you are selling or looking for. This reduces a lot of unnecessary wait and expense on your cost.
Having Already In-Depth Market Knowledge
If you are a Real Estate agent that is well-versed with dealing in the market, will you still hire another agent?
It is completely legal to conduct your own transactions, however, do take note that you are not allowed to receive any commissions or kickbacks from any party.
Hiring a Real Estate Agent
Work Their Best for You
Since real estate agents work on commissions, it is to the best of their own benefit to promote your properties effectively to the right audience. After all, advertising online is a very competitive space and real estate agents will need to adequately employ the right strategies so that their spending online will be worth the time and effort. There are real estate agents out there who will take the easy way out, so be sure take make the right judgment when finding out to execute the services for you.
Results Obtained from Agent Services
Selling your property is a very different as compared to selling other low value products. In the case of buying a used dining table, a buyer can easily get away with a lowball offer and potentially still go through with the purchase. However, there is a difference between negotiation and haggling, which in the case of placing lowball offers, is the latter.
As transactions happen very frequently by agents, and most of us fully understand the motivations of our seller clients. Real estate is a high quantum market and can easily impact the lives of homeowners/investors should they not put in due care into researching the true value of their properties. They will be susceptible to poor, low-value offers.
If you are a buyer, throwing out a poor offer will do you no justice either. Sure, you might be willing to take the risk with a low offer, but what if a rarely available property comes onto the market and with a poorly planned offer, the landlord might be offended that they will not be willing to renegotiate?
This is where real estate agents come in, as they are trained to understand the ins-and-outs of what constitutes a successful transaction. This means besides obtaining the property at a price that you are agreeable, everyone is also happy at their part of the deal. Making it a more pleasant, and sometimes even enjoyable, experience. In addition, they are able to qualify incoming leads so that your time is not wasted.
As I have been blogging for the past few weeks, you will have noticed that the real estate market is a complicated space. Real estate agents’ work is not as straightforward as being a middleman in a transaction.
Breaking Down Confusing Information
Recent examinations to be able to practice as a real estate agent in Singapore is not an easy affair. As of 2019, out of all new applicants, as many as 70-80 percent will fail the CEA examinations on their first try! The ones that made it through the tough examinations however, have to face an even uphill climb of testing their mettle against close to 30,000 other real estate agents!
Government regulations are consistently changing and if you are not aware of what are the most recent updates, you might be overlooking possible fees that are meant to be paid. Which in turn might cost you more than the commissions of an agent.
A good real estate agent should always provide a comparative market analysis (CMA) for your property before listing.
This includes information on but not limited to,
· Land Area and Build-up Area
· Tenure
· Location
· Amenities
· Market price
· Rental price
· Time on the market for other properties
· Any many more…
All these occur even before an actual agreement to a transaction, which legal documents such as Tenancy Agreements and Option-to-Purchase forms.
Inside these legal documents can include clauses, which if not vetted through carefully, will serve you a huge headache in the future.
How Much Should I Pay for a Real Estate Agent Services
Deciding how much to pay for a real estate agent services can be a tricky affair and some might request more than what they deserve. Always be sure about what services are being offered by the real estate agent and their marketing plan in order to get your unit sold.
Avoid Paying Under-Market Rate Commissions
Paying a lower amount for real estate services might seem like a no brainer. After all, why pay more when you can be paying a lower amount? Paying below-market rate for agent commissions will have repercussions in terms of the agent’s motivations
Agents who you hire at low commissions are not inclined to promote your listings as hard as other clients with listings that are willing to pay more. These cases usually happen in the case of agents having multiple listings located close to one another.
In addition, there are other co-broke agents who will be representing buyers. In the event that there are two similar properties currently being marketed and both have equal merits to the buyers, you can be sure that your listings will be promoted less by the agent should you tend to offer a lower commission.
Taking a look from an agent’s perspective, who is representing a buyer. The agent has found two identical listings for their buyer. However, one listing is providing for a higher co-broke commission as compared to another.
As the real estate agent in question, will you promote the listing which pays 0.5% or 1% to you?
Hands-Off Approach to Property Management
Part of representing the landlord in rental transactions means that the agent might offer an extra service in regards to handling all other matters after the rental transaction.
Do take note however that this is an added service, and real estate agents are not required to undertake them as this goes beyond the scope of their duties.
Should your real estate agent be willing to take on these additional duties, it means that you will not need to actively manage your property as your real estate agent will do it for you.
Do you require a real estate agent? Contact me to see if your situation requires one! I am contactable at +65 96329840 or joshua.loo@orangetee.com
The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual. The author does not accept any responsibility whatsoever for any harm or loss arising from accessing or relying on information contained in this blog post.