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IEA to remove guidelines on property agents' commissions
By Irene Chan & Pamela Almeda, Channel NewsAsia | Posted: 05 August 2008 2120 hrs
SINGAPORE: If you're shopping for a new home or selling one, you can now negotiate with your property agent on the appropriate commission.
The Institute of Estate Agents (IEA) will remove its guidelines on property agents' commissions next month, to fall in line with the Competition Act.
Consumer watchdog CASE has welcomed the move, pointing out that it is not compulsory to have agents facilitate a property transaction.
Property agents currently get about 2 per cent of a property's sale price from sellers, while buyers pay a fee of 1 per cent of the price. These guidelines were put in place some ten years ago.
IEA said the guidelines were meant to serve more as a reference point for agents, as well as consumers, to prevent overcharging.
But since the guidelines have been widely accepted and practised in the industry, the Competition Commission of Singapore (CCS) thinks that they may be harmful to competition.
Jeff Foo, president of Institute of Estate Agents, said: "We submitted our professional guidelines to CCS sometime in July 2007 because we were concerned whether our guidelines do or do not infringe the Competition Act.
"So after over a year of meetings and consultations, they finally came back to us on June 25 and said that our guidelines are likely to infringe on the Competition Act and advised us to remove them."
With the removal of the guidelines, it is now up to individual real estate agencies to set their own commission guidelines. It is still unclear if this will reduce commission fees paid to property agents.
IEA said the removal of the guidelines actually puts a greater burden on property buyers or sellers to do their own checks on market rates for such fees.
Mohamed Ismail, chief executive of Propnex, said: "With such a move, the industry will find its own footing in terms of the kind of support as well as service. Overall, I must say that this will help the consumer because at the end of the day, the agents do not have a choice but to increase their level of service."
Last year, the Singapore Medical Association withdrew its fee guidelines for doctors, paving the way for private doctors to set their own fees.
By Irene Chan & Pamela Almeda, Channel NewsAsia | Posted: 05 August 2008 2120 hrs
SINGAPORE: If you're shopping for a new home or selling one, you can now negotiate with your property agent on the appropriate commission.
The Institute of Estate Agents (IEA) will remove its guidelines on property agents' commissions next month, to fall in line with the Competition Act.
Consumer watchdog CASE has welcomed the move, pointing out that it is not compulsory to have agents facilitate a property transaction.
Property agents currently get about 2 per cent of a property's sale price from sellers, while buyers pay a fee of 1 per cent of the price. These guidelines were put in place some ten years ago.
IEA said the guidelines were meant to serve more as a reference point for agents, as well as consumers, to prevent overcharging.
But since the guidelines have been widely accepted and practised in the industry, the Competition Commission of Singapore (CCS) thinks that they may be harmful to competition.
Jeff Foo, president of Institute of Estate Agents, said: "We submitted our professional guidelines to CCS sometime in July 2007 because we were concerned whether our guidelines do or do not infringe the Competition Act.
"So after over a year of meetings and consultations, they finally came back to us on June 25 and said that our guidelines are likely to infringe on the Competition Act and advised us to remove them."
With the removal of the guidelines, it is now up to individual real estate agencies to set their own commission guidelines. It is still unclear if this will reduce commission fees paid to property agents.
IEA said the removal of the guidelines actually puts a greater burden on property buyers or sellers to do their own checks on market rates for such fees.
Mohamed Ismail, chief executive of Propnex, said: "With such a move, the industry will find its own footing in terms of the kind of support as well as service. Overall, I must say that this will help the consumer because at the end of the day, the agents do not have a choice but to increase their level of service."
Last year, the Singapore Medical Association withdrew its fee guidelines for doctors, paving the way for private doctors to set their own fees.
