About Property Agent Commission and Market Practice in Singapore

Navigating property agent commissions in Singapore involves understanding market practices, the duties agents perform, and the regulatory environment. While specific rates are not fixed, industry practices and new guidelines aim to enhance transparency and professionalism.

Here's a detailed breakdown:

Property Agent Commission in Singapore: Latest Market Practices

1.     Commission Negotiability and Influencing Factors

The commission rate charged by property agents in Singapore is not fixed and is usually negotiable, typically ranging from 1% to 4% of the property's price. The Council of Estate Agencies (CEA) does not set fixed commission rates, allowing market forces to determine competitive pricing. Factors that can influence the commission percentage include:

• The property's value, location, and demand.
• Value-added services and types of marketing provided by the agent.
• The agent's track record.
• The seller's urgency to sell the property or if the property is challenging to sell (e.g., near disamenities).
• Representing overseas buyers, which may require additional responsibilities like serving as investment advisors.
• The luxury property segment (exceeding $5 million), where tiered commission schemes may be implemented to motivate agents to secure a higher sale price.

2. Existing Commission Guide by Property Type

Before the widespread adoption of new co-broking guidelines, the general practices for commissions were:

• Non-Landed Properties (e.g., condos, executive condos): The seller usually pays 2% commission, which can sometimes go up to 4%. Buyers typically pay no commission, as the seller’s agent splits their commission with the buyer’s agent.
• Landed Properties: The seller usually pays a 2% commission, which can be higher due to the complexities and additional government regulations involved in such transactions. Similar to non-landed properties, buyers pay no commission, as the seller’s agent splits the commission with the buyer’s agent.
• HDB Flats: Sellers usually pay 2% and buyers pay 1% commission. In these cases, buyers and sellers typically pay commissions to their respective agents.
• New Launch Private Property or New Executive Condo: No commission is payable for purchasing these types of properties.

3. New Guidelines on Co-Broking Commission (Effective July 1, 2024)

As of February 2025, a significant majority of estate agencies (70 agencies representing 90% of real estate salespersons) have adopted the SEAA Best Practice Guide on Co-broking Commission.

• Key Change: These guidelines call for buyer or rental agents to collect commissions directly from their buyers or tenants, respectively. Meanwhile, sellers or landlords pay the agents representing them. This arrangement should be clearly stated before engaging clients.
• Rationale: This new norm replaces the previous practice of agents sharing co-broking commissions and aims to facilitate a more upfront and transparent method of payment. It also seeks to address potential conflicts of interest, where a buyer's agent might prioritise properties offering a higher co-broking commission over the client's best interest.
• Advantages: The new co-broking agreement offers several benefits, including preventing blocking from co-broking, reducing conflicts of interest, enhancing transparency, improving client service, standardising practices, encouraging professionalism, and improving the industry's reputation.
• Legally Binding Status and Adoption: While the new agreement is not legally binding, it has been increasingly adopted as the standard market practice. The initial slow adoption was attributed to entrenched old systems, agents' fear of discouraging buyers, potential income loss, and lack of awareness. However, continuous education, advocacy, and collaboration by the Singapore Estate Agents Association (SEAA) have led to its greater acceptance.

4. Rental Property Agent Commission

For rental transactions, the commission typically depends on the rent amount and lease duration:

• Above S$3,500 in rent with a two-year lease: Generally, one month's rental commission. If only a landlord's agent is involved and the tenant contacted them, the landlord pays their agent one month's commission. If both landlord and tenant have agents, the tenant pays their agent one month's commission, and the landlord pays their own agent one month's commission.
• Above S$3,500 in rent with a one-year lease: Generally, half a month's commission. The payment structure mirrors the two-year lease scenario.
• At or below S$3,500 in rent with a two-year lease: Generally, one month's commission. The landlord and tenant pay a one-month commission to their respective agents. If there is no tenant's agent, the tenant does not pay any commission.
• At or below S$3,500 in rent with a one-year lease: Generally, half a month's commission. The landlord and tenant pay half a month's commission to their respective agents. If there is no tenant's agent, the tenant does not pay any commission.

Duties Involved for Property Agents

Engaging a property agent is often advisable due to the complexity and regulations of Singapore's real estate market. An experienced agent provides valuable support and guidance throughout the transaction process.

1. Prohibition of Dual Representation and Co-Broking

• Dual Representation: Agents are prohibited by law from acting as both the landlord’s/seller’s agent and the tenant’s/buyer’s agent for the same transaction due to the inherent conflict of interest. This is a key ethical guideline stipulated in CEA’s Professional Service Manual.
• Co-broking: This term refers to the collaboration between two agents (one representing the landlord/seller and the other the tenant/buyer) to facilitate a transaction. The CEA encourages co-broking to expedite property transactions. The commission-sharing arrangement in co-broking is typically negotiated between the agents. Co-broking benefits sellers by increasing property exposure, broadening marketing reach, offering additional expertise, and being cost-effective (as sellers typically don't pay extra fees).

2.     Role of Landlord's/Seller's Property Agent (Listing Agent)

These agents are appointed to market a unit and assume various crucial responsibilities:

• Strategic Promotion and Presentation: Devising and implementing effective strategies to enhance property visibility and appeal, including staging, advising on tidying up or painting, and targeted promotional initiatives across major property portals, online classifieds, and social media, potentially including video advertising.
• Property Evaluation: Providing recommendations for pricing strategies based on factors like size, location, and current market trends.
• Buyer/Tenant Acquisition: Actively seeking prospective buyers or tenants through compelling property listings and proactive outreach.
• Prospective Buyer/Tenant Screening: Pre-screening potential clients to ensure genuine interest and financial qualification.
• Viewing Management: Coordinating schedules, conducting property tours, and effectively showcasing the unit's features and advantages.
• Negotiation and Bidding Representation: Advising and representing the landlord or seller during negotiation and bidding stages to secure an optimal outcome.
• Compliance with Legal and Regulatory Requirements: Meticulously ensuring that all necessary procedures, legal obligations, and regulatory requirements are diligently executed and adhered to, safeguarding interests and minimising disputes.
• Closing the Deal: Overseeing the transaction to ensure all parties meet their obligations, contracts are signed, and necessary payments are made.
• After-Sales Support: While their primary responsibility ends upon transaction completion, they may provide after-sales support for issues during the closing process on a goodwill basis.

3.     Role of Buyer's/Tenant's Property Agent (Buyer's Agent)

These agents assist individuals seeking to acquire or rent a property, with responsibilities including:

• Property Search and Selection: Conducting extensive searches for suitable properties based on client preferences, involving thorough market analysis and comprehensive property evaluations.
• Viewing Coordination: Adeptly coordinating and arranging property viewings, accompanying clients, and providing insightful guidance.
• Market Analysis: Providing clients with market analysis to help them make fair, competitive offers.
• Negotiation in the Client's Best Interests: Skilfully engaging in negotiations with the seller's/landlord's agent to secure the most favourable terms and conditions for the buyer/tenant.
• Due Diligence: Assisting clients in taking reasonable steps to satisfy legal requirements, including reviewing property documents and ensuring legal compliance.
• Professional Advice and Guidance: Offering comprehensive advice, explaining proper procedures, necessary paperwork, legal obligations, and relevant regulations.
• Paperwork and Documentation: Helping complete necessary documentation and paperwork for transactions, ensuring compliance with law and regulations.
• Inspections: Arranging inspections (e.g., pest, mould) to ensure the property meets client expectations.
• Closing Assistance: Guiding clients throughout the closing process, ensuring all contractual obligations are met.

4.     Value of Engaging an Agent

While individuals may consider handling transactions independently to save on commission, this can lead to pitfalls such as overlooking critical legal or financial details, misjudging market conditions, or administrative delays.

Property agents offer expertise in negotiation, market analysis, identifying property defects, documentation, and transaction coordination, ensuring a smoother and more efficient process.

For landlords, agents can identify and screen suitable tenants, and for tenants, engaging an agent (especially one representing the landlord) can provide safeguards against unscrupulous landlords or unjust evictions, offering peace of mind.

In addition, a property agent can offer the latest information about Singapore’s property market should the seller wishes to either upgrade or downgrade to another property. These may include new launches, resale private properties, executive condos or HDB flats.

Regulatory Framework

Property agents in Singapore operate within a regulated environment primarily overseen by the Council of Estate Agencies (CEA).

• CEA Regulation: Property agents are regulated by the Council for Estate Agencies (CEA), a government body responsible for certifying real estate agents and overseeing the real estate agency industry in Singapore.
• Registration and Verification: It is crucial to ensure that any property agent engaged is registered with the CEA to avoid scammers. The CEA provides a public register where clients can verify an agent's credentials, ensuring they are licensed and in good standing.
• Code of Conduct: Agents must adhere to a strict code of conduct, which ensures ethical practices and professionalism within the industry.
• No Fixed Commission Rates: The CEA does not fix commission rates or provide specific guidelines on commission amounts. This policy allows market forces to determine competitive pricing, providing flexibility and incentives for agents to effectively market properties.