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5 things your property agent never told you

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By Stella Thng

Buying or selling a home is one of the most expensive, complicated events in your life, no thanks to the ever-changing government regulations. Whether it’s your eligibility for a loan or the bewildering range of seller’s stamp duties depending on your occupation period, it can all snowball into one huge headache. So, most of us shell out good (commission) money for a property agent hoping to tap into their expertise to buy that dream home at a bargain or sell your property at a premium. Housing agents might have the industry knowledge to help you make a good deal, but be aware of what they’re not telling you, too.

1) THE HDB DOES NOT REQUIRE YOU TO ENGAGE A PROPERTY AGENT
Many first-time home-buyers do not know this. When adjunct lecturer Tang Xueling bought her first HDB fl at a decade ago with her husband, they didn’t have an agent and the seller’s became theirs by default, picking up an easy commission.

They had no idea then that if they were willing to handle the paperwork themselves, they wouldn’t even need to pay for an agent. “Since Jan 1, 2011, agents may only collect a commissionfrom one party even if he represents both. This prevents any conflict of interest,” says Kelvin Fong, a top-ranking group district director at PropNex, who leads over 1,200 real estate agents.

Generally, it is not difficult for buyers to represent themselves as long as they work closely with the seller’s agent to prepare all the necessary documents. But sellers who want to cut out the middleman may find it more daunting. They have to market the property, screen enquiries and organise viewings. Even if you make a successful sale, there’s the complicated paperwork and various deadlines to deal with.

Marcia Lai, director of Faith Property Network, an associate company of international real estate company Re/max, explains: “Many sellers may lack the technical know-how, especially about the new HDB regulations introduced recently.”

This may delay the completion of the transaction and affect the hand-over date. For some sellers, saving that few thousand dollars in commission is not worth the hassle. What about buying a resale private property?

Since buyers do not have to pay commission, your agent will collect a co-broking commission from the seller’s agent. You get someone looking out for your interest, so why not?

2) IT’S BETTER TO SIGN WITH AN EXCLUSIVE AGENT (BUT ONLY IF HE’S THE REAL DEAL)
Exclusive contracts last three months and the commission for selling a HDB or private property is usually one to two per cent of the selling price. Marcia says that sellers usually fare better when they work with a trusted exclusive agent. As he will handle all enquiries, he is in a better position to secure the highest possible price. “When too many agents are marketing the same unit, some may try to close the deal quickly by persuading you to grab the first offer instead of waiting for a better price,” she says.

According to Kelvin, an exclusive agent should provide all forms of media exposure such as classified newspaper ads, online or by printing brochures. He should also be part of a network of agents who help each other by finding the right buyers for their clients’ property, and be open to co-broke with other agents who can fetch a good price. If you suspect that your agent is not performing, ask to see proof of his marketing efforts. You can break the contract if he can’t back up his promises.

To weed out rogue agents and protect buyers and sellers, the Council for Estate Agencies (CEA) implemented new guidelines which came into effect from August 1, 2011, with eight templates for contracts that agents must use for the sale, purchase or lease of properties. CEA also spelled out the proper use of these forms as well as commission clauses, disclosure requirements and co-broking clauses.

3) YOUR PROPERTY MAY BE USED AS A “SHOWFLAT”
Should sellers go with an agent who claims to specialise in your area? His experience may come in handy, but he is probably also marketing several units in the neighbourhood – and they’re all your competitors. In the worst-case scenario, your home may be used as a “showflat” as homeowner YS Liang discovered. “Weekend after weekend, our agent would bring a stream of people to speed-visit our apartment, leaving within minutes. She didn’t even try to promote our apartment. It felt like we were just one of the many tour stops for her clients,” he complains.

According to Kelvin, other agents could also make use of your agent’s listings. “If your pricing is on the high side, these agents may use your home to convince their buyers why they should buy another apartment.” To counter this, Kelvin says it is crucial for your agent to offer a current market analysis before putting up your home for sale. “This helps you price your property correctly and realistically.”

4) AN EXPERIENCED AGENT CAN HELP WITH YOUR FINANCIAL PLANNING
Your property has appreciated but until you sell it, you’re just sitting on paper gain. “Property is the biggest asset for most Singaporeans, so you should leverage on it to create more wealth. The problem is that many agents keep asking the seller to sell, but do not help to plan what you can do with the profits,” laments Kelvin.

His suggestion? Cash out and use part of the profits as downpayment for a new home. Invest the rest in another property to collect rent. Buyers can borrow up to 80 per cent of the price of their first private residential property, and 60 per cent for the second. Kelvin points out that there is no such cap for commercial properties as long as you meet the bank’s loan criteria.

5) THERE’S LITTLE YOUR AGENT CAN DO ONCE THE DEAL IS DONE
You’ve excitedly moved into your new crib, only to realise that the air-con isn’t working and the plumbing is choked. Can your agent negotiate with the seller to pay for the repairs? Sorry, his hands are tied.

Once you put down the one per cent option fee to hold down a private property, you have to accept its condition as it is when you move in – faulty air-con, choked toilet and all. Get around this by asking your agent to include a final inspection clause in the option-to-buy letter. HDB flat buyers automatically enjoy this safety net. “There is a final inspection of the property two days before the completion of all HDB transactions. If the air-con is faulty, you can request the seller to repair it,” says Kelvin.

What happens if your seller backs out of the sale and refuses to return your deposit? Marcia shares an example that happened to her friend. During the second appointment at HDB, he learned that the seller had not paid his monthly instalments and Town Council fees for over a year, and the transaction could not be completed. “Although my friend offered to clear the Town Council arrears, the seller changed his mind and said he’d rather let the HDB repossess his home. He had also spent the $5,000 deposit and blatantly said he was too broke to pay back the money,” recalls Marcia.

Unfortunately, agents do not have the authority to check on a seller’s records with the HDB or the Town Council, which might help to flag such potential high-risk cases. Often, they are as much a victim of the unscrupulous seller as the buyer is. In this case, both the seller’s and buyer’s agents could not collect any commission as the sale did not go through.

Your agent’s role is purely as a middleman to facilitate the transaction. Once all the paperwork is processed, his job is done. Having said that, “A responsible property agent must help his buyer look out for all potential risks and not just think of making a quick commission. If your buyer is unhappy, the problem will come back to you,” advocates Kelvin.

Whether you hire an agent or not, property investment is an expensive business, so always do your own research. Buyers can check out recently transacted prices of HDB and private properties at www.hdb.gov.sg or ura.gov.sg before setting their budget or selling price. Visit the unit at different times of the day and observe the neighbourhood. If possible, speak with the neighbours to get a better feel of whether you and your family will fit in. It is also a good chance to find out if your seller has a dubious past.

 

Interested to find out more about property? Here’s another great read: TDSR and other property-related regulations you must know.