SINGAPORE – 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.

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.

But of the 10 property agents The Straits Times spoke to, nine said the status quo continues because buyers are not willing to pay for services they now receive free.

Some agents also said they are worried buyers would be upset if they bring up the new guidelines.

Ms Clara Heng, a property agent of nine years, said the new guidelines have not changed anything.

“There is no shortage of agents who will serve buyers without expecting a commission, and buyers can also go to sellers directly and arrange viewings on their own,” said Ms Heng, 45, from PropNex Realty.

She added that her colleagues, like her, are still not collecting commissions when representing buyers.

“A lot of my clients have been with me for many years, so if I suddenly talk to them about dollars and cents, it could seem like a betrayal of the relationship we have built up,” she said.

Some agents also raised concerns that the guidelines could produce different expectations between agents, pointing out that it could make seller agents less likely to share their commissions as they think buyer agents should now be paid by their own clients.

That said, when it comes to rentals, tenants appear to have warmed to the new guidelines.

Property agent Wendeline Goh from ERA Realty Network said about 50 per cent to 60 per cent of tenant agents she has dealt with while representing landlords are now paid a commission by their tenants, up from about 20 per cent before the guidelines were announced in November.

Since then, she has also observed more tenant agents providing value-added services to justify the commission.

This could include producing property condition reports with photos of the property that can protect their client in the event of a dispute, said Ms Goh, 47.

But she also said private property sale transactions involve much higher quanta, so buyers will be less agreeable to paying their agents commission.

Only one of the 10 property agents, Ms Susan Mariam of OrangeTee Group, has noticed an increase in buyers who are willing to pay a commission.

She said about 60 per cent of buyers she and her team have interacted with are willing to do this now, up from about 30 per cent before July.

“Disputes arise when you are not being transparent from the start. So I have been upfront with my clients and tell them there is a fee they have to pay to engage me,” Ms Mariam, 43, said.

“While surprised, they mostly recognise the hard work I put in for them and are okay with paying me commission.”

PropNex Realty chief agency officer Eddie Lim said agents must go “above and beyond” to convince buyers to pay them a commission.

Mr Lim, who is also assistant treasurer of the SEAA, said this could involve monitoring the market for them after the transaction or helping to look out for interest rate changes, among other things.

PropNex Realty agent Grace Cheong said the muted response so far could be due to a lack of publicity about the new guidelines by the SEAA and real estate firms when they kicked in.

“It’s not ideal for information about these guidelines to come through the agent because buyers will think we are trying to cheat them, and there are already stereotypes about us agents being untrustworthy,” she said.

Mr Mark Yip, chief executive of Huttons Asia, said buyers and tenants are comfortable with the current commission practices.

“Without sufficient education for the public on the new guidelines, nothing will change,” he added.

When asked about the guidelines’ tepid take-up, Mr Thomas Tan, SEAA’s first vice-president, acknowledged that some consumers were still adjusting to new expectations relating to commission payments.

But he also said there was a gradual increase in buyer and rental agents collecting commission fees from their own clients.

He said: “While the guidelines are not legally enforceable, SEAA is committed to promoting these best practices through continuous education, advocacy and collaboration with industry stakeholders.”