Few private home buyers paying agent fees despite new guidelines

New industry guidelines which spell out how property agent commissions should be paid have been met with lacklustre response from private property buyers, two months after they were supposed to have kicked in.

- Wong Yang

The new guidelines were meant to change the longstanding practice of private property buyers not paying a commission to the agents representing them.

Property agents told The Straits Times that in private property transactions, agents of buyers continue to have to negotiate with seller agents for a share of the commission.

The commission for such transactions is usually 2 per cent of the property’s sale price, of which the seller agent typically receives 1 per cent to 1.5 per cent and the buyer agent gets 0.5 per cent to 1 per cent.

In November 2023, the Singapore Estate Agents Association (SEAA), an industry group, signed a pact with property agencies to adopt new guidelines, which call for buyer or rental agents to collect commission fees from buyers or tenants, while sellers or landlords pay the agents representing them.

The guidelines, which are not legally binding, took effect in July.

The SEAA argued this would bring more transparency to co-broking arrangements as the sharing of commissions creates a potential conflict of interest.

This is because buyers’ agents are caught between prioritising their clients’ interests and entering co-broking arrangements with seller agents who agree to share more of their commission.

The guidelines would also deal with issues arising from seller agents who refuse to co-broke despite being obliged to do so, and who ignore inquiries from buyer agents to avoid sharing their commission.

As at Aug 21, 66 property agencies – representing over 90 per cent of the more than 34,000 property agents in Singapore – have signed the agreement.