Property Jargon of the Day: Agent Commissions

Once in a while, 99.co takes a piece of property jargon and breaks it down in plain English. Today, we’re looking at agent commissions.

The agent commission is always negotiable

There is no law in Singapore that fixes a property agent’s commission. It is always a negotiable amount. It’s not unheard of for some buyers to pay agents more during urgent situations.

For example, say you are upgrading to a bigger condo, and you purchase your new home before selling your old one. This would subject you to an Additional Buyer’s Stamp Duty (ABSD) of 17% if you’re a Singapore citizen. However, you can apply for ABSD remission if you sell your old home within the next six months.

You finally locate a buyer with the highest price about two months before the deadline. But two weeks later, the buyer forfeits the deposit and backs out. This leaves you in a crisis: you’re in very real danger of losing your 17% ABSD if the house doesn’t sell. In such an instance, you may be inclined to offer a higher commission instead to any agent who can sell your house in the short time frame.

It’s also possible that agents will ask for a higher commission, if the property you want them to sell is especially challenging. For example, if the property has a very short lease remaining, or the unit has defects that can’t be rectified (e.g. water seepage from the exterior, which the management will not resolve).

Likewise, note that some property agents may not be willing to co-broke (share their commission with another agent).

And in a hot rental market (like what’s happening now), we’ve heard of tenants paying commission to their agent as well.

How agent commissions work

Sale of properties

As mentioned earlier, there’s no hard and fast rule on the commission rates. But by convention, for sale of properties, agent commissions are a percentage of the deal they close. This is as follows.

Condos

The seller usually pays 2% (sometimes up to 4%) of the final sale price. If the buyer has an agent, the commission is split between the two.

HDB resale flats

The seller usually pays 2% to their agent, while the buyer pays 1% to their agent.

Landed properties

The seller pays 2% (or maybe more depending on the arrangement), while the buyer pays nothing (same with condos).

Rental of properties

Likewise, there’s no hard and fast rule on the commission rates for rentals. By convention, here are the common practices.

Two-year lease, with rental above S$3,500 per month

Landlord pays one month worth of rent as commission to their agent. If the tenant has an agent, as of 2023, our understanding is that the tenant will have to pay the commission to their agent.

One-year lease, with rental above S$3,500 per month

Landlord pays half a month’s worth of rent to their agent. If the tenant has an agent, the tenant pays half a month of rent to the tenant’s agent.

Two-year lease, with rental at S$3,500 per month or below

Both tenant and landlord pay one month of rent to their respective agents (if any).

One-year lease, with rental at S$3,500 per month or below

Both tenant and landlord pay half a month of rent to their respective agents (if any).

How should you approach a property agent about negotiating their commission?

Some property agents will ask outright if you are willing to pay the full “comm” (commission). Otherwise, you should take the following steps.

1. Upon meeting the property agent for the first time, communicate your intent right away. Be fair and waste neither their time nor yours: state if you are not going to pay the full commission, for example.

2. Explain the situation to the property agent. For example, if you are offering a higher commission because you need to sell fast, make sure the agent understands what you’re facing. You should be setting clear conditions, like a fixed deadline, for the agent to meet.

If the property agent is not comfortable with your situation (e.g. they don’t believe your house can be sold in two months despite their best efforts), they should back out at this point.

3. Cement the negotiations in writing. Never rely purely on a verbal contract; if your property agent says they will take a lower commission, this must be reflected in at least a text or a WhatsApp message. Preferably however, get them to write it in an email.

4. Evaluate the agent, and get them to give updates in writing. For example, you should receive simple updates like “two more viewers this week, so far the highest offer is S$X”.

If you have an exclusive agreement with the agent, you may also request your agent to add a “Commitment to Service” document to the estate agency agreement. This document lists down the agreed services offered, such as the frequency of ads and viewing sessions. If you feel that the agent does not meet this, you can choose to terminate the agreement.

Do remember to give your agent feedback along the way. Let them know if you feel the number of prospective viewers seem low, or if the offers received aren’t ideal.

What part of bit of property jargon confuses you? Voice your thoughts in our comments section.

If you found this article helpful, 99.co recommends Letter of Intent (LOI) : LOI for Tenants in Singapore and What is the Annual Value of a property and how do I check mine?