AGENT’S COMMISSION GUIDE (RENTAL)
Commission is an amount that
is mutually agreed upon between the Property agent and his/her customer.
It’s important to understand
that Commission is a variable factor and can change depending upon various
factors.
Agents can charge higher
commissions and there is no restriction or regulation on the amount of commission
that a property agent should charge his/her customer.
There are no industry
standard commission rates nor is there any board which determines the amount which
Agents can charge.
Dual representation is not allowed as per the
law
Agents charge commission
based on
-
Their
experience, position and performance. Top agents charge a higher commission but
they also are in a position to ensure a good service based on their previous
performances. They sometimes work in a team and the customer has an advantage
of many people working for his interests if he hires the agent.
-
Commission rates
may also vary depending upon situational factors such as the urgency,
complexity of the deals and the time taken.
-
Commission
depends upon market dynamics as well, in a Buyers market, the agent can ask for
a higher commission from the Seller as it becomes challenging to get the seller
the price he wants within a stipulated time and vice versa.
Although, there are no
stipulated commission rate sheets in Singapore
Based on my dealings in the
market, the commission rates usually charged by agents are: -
INCASE OF RENTAL DEALS
FOR PRIVATE PROPERTY
For the rental amount above $3500
Scenario 1 – Only one Agent
(Landlord’s Agent)
-
For the rental
amount above $3500 & a 2-year lease – landlord pays 1 month’s rental plus
GST.
And
in a 1 year lease, he pays half a month’s rent as commission plus GST to his
agent.
If
the tenant has contacted the Landlord’s Agent directly, the landlord pays
his
Agent commission, which he/she keeps. The tenant pays no
commission.
Scenario 2 – Two Agents
(Landlord’s Agent & Tenant’s Agent)
-
In the above
$3500 rent segment, incase, the Tenant has used the services of an agent; who
assisted the tenant and represent his interests. The Landlord’s appointed agent
will share the commission given to him by the Landlord with the Tenant’s agent
provided the tenant signs a 2 year lease. If incase, the tenant signs a 1 year
lease, he needs to pay his agent the commission.
Hence,
some agents ask the tenants to sign a 2 year lease as they don’t need to pay
agent’s commission plus they can lock the house for a period of 2 years on the
same rental amount.
We highly recommend a 2 year’s lease if
employment conditions are long term in Singapore
For the rental amount at $3500 or below
It’s each to his own, The Landlord’s
Agent collects a one-month commission from the landlord & the tenant’s
agent collects a one-month commission from the tenant. If the tenant contact’s
the landlord’s agent directly, the tenant doesn’t pay any commission as dual
representation is not allowed.
However, there have been
cases wherein an Agent has advertised for the Landlord, but he informs the tenant
in advance that the Landlord is not paying him any commission and he will be
collecting the commission from the tenant. If the information is received in
advance and the tenant is okay with the house, he can still proceed with the
deal as it is not dual representation. In this case, the tenant pay’s the
Landlord’s agent Commission, although he approached him directly.
FOR HDB PROPERTY
It’s each to his own, The Landlord’s
Agent collects a one-month commission from the landlord & the tenant’s
agent collects a one-month commission from the tenant. If the tenant contact’s
the landlord’s agent directly, the tenant doesn’t pay any commission as dual
representation is not allowed.
There are NO FIXED RULES OR
REGULATIONS.
Please remember that these
are market practices, there is no hard and fast rule.
There are exceptions which include:
-
Cases where the
property is in high demand, the landlord’s agent may not co-broke as he doesn’t
feel the need to share the commission”.
-
In some cases,
like room rentals, the Agent has advertised for the Landlord, but he informs
the tenant in advance that the Landlord is not paying him any commission and he
will be collecting the commission from the tenant. If the information is
received in advance and the tenant is okay with the house, he can still proceed
with the deal as it is not dual representation. In this case, the tenant pay’s
the Landlord’s agent Commission, although he approached him directly & even
though he may be marketing the property on the landlord’s behalf. Technically,
they would be switching roles to become the tenant’s agent and should be acting
in the tenant’s best interest.
