Should You Pay For A Buyer Agent?

You know those guides that say you should bang pots and pans, to scare off a bear? 

Or that you should talk calmly to an armed kidnapper to humanise yourself? 

Those are the kinds of solutions only someone in my current position – safely hammering away on a keyboard in my room – would present. I refuse to believe that many people would attempt that in the actual scenarios. And this is, I think, one of the issues the Singapore Estate Agents Association (SEAA) faces with their recent pact.

SEAA has signed guidelines with a lot of property agents, asking for buyers’ agents to collect service fees from their clients. This goes against the established norm, where in most cases, it’s the seller who pays the commission for both (i.e., there’s a two per cent commission on the sale of the property, of which the buyer and seller’s agents both get one per cent). This is negotiable, but only in the same way most United Nations crises are: a low chance of success, coupled with nobody being very happy.

And to no one’s surprise, it was recently revealed that the real world take up was “tepid”. 

Now the intentions are definitely good. If everyone was willing to pay for their own buyer’s agent, property transactions would actually be easier on all of us. Sellers’ agents wouldn’t have to ghost other potential agents, and there would be less impulse to engage in certain shenanigans. 

The problem is exactly the same as the aforementioned bear attack scenario. Sure, a property agent might understand how – industry wide and in an abstract sense – asking a buyer for money makes sense. But in reality, very few want to be the ones to try it. 

It doesn’t matter if you explain that oh in the end the costs even out as the seller has to pay lower commissions, which can be factored into the pricing etc. That doesn’t matter in the face of FREE, which causes the human brain to immediately ignore the numbers and divide everything into: Free/Not free.

Besides, how are they going to do it, unless there’s a guarantee everyone else is guaranteed to stick to the guidelines? If Agent A wants to charge their buyer, and Agent B doesn’t, then Agent A will soon be looking for a change of career. 

I understand that, by using guidelines, it’s possible for the industry to try and self-regulate before the authorities step in.

And maybe because it’s an organisation of professional salespeople, they’re confident they can sell any idea, even to other salespeople. But this is a classic collective action problem: even if it would be good for the property market as a whole, it’s nigh impossible to find the momentum needed for what is, essentially, a simultaneous behavioural change across the entire industry. Because again, this doesn’t work if some agents won’t charge buyers, whilst others try to. It’s just too much of an edge to lose, in an already competitive business.

In the end, this may boil down to requiring government-level regulations, rather than guidelines or an honour system (see what is happening in the US). 

Meanwhile in other property news:

• A new condo review is up! Check out 8@BT, a Bukit Timah condo which has some of the most efficient layouts we’ve seen.
• Condo units with private pools aren’t necessarily expensive, but they are hard to find. Here are some where you can have a quiet soak, sans screaming kids at the pool area. 

• Not all the best located freehold properties are obvious, or super pricey. Here are the hidden gems in the central areas, which you’ve probably missed.
• 999-year lease homes, for $3.88 million or under, and also next to an MRT station. Need we say more? Check it out. 

Weekly Sales Roundup (02 September – 08 September)

Top 5 Most Expensive New Sales (By Project)

Top 5 Cheapest New Sales (By Project)

Top 5 Most Expensive Resale

Top 5 Cheapest Resale

Top 5 Biggest Winners

Top 5 Biggest Losers

Transaction Breakdown

For more on the Singapore property market, follow us on Stacked.