Singapore property firms dangle cash incentives to lure agents to jump ship amid hot

Singapore property firms dangle cash incentives to lure agents to jump ship amid hot market

Joyce Lim
Senior Correspondent

Sep 20, 2021

SINGAPORE - The hot property market has sparked a recruitment war between real estate agencies, with all manner of inducements rolled out to entice agents to jump ship.

Agencies are offering hefty cash incentives for agents to sign on with them, as well as training and technology subsidies, and penalty support schemes to reimburse agents who incur fees for changing firms.

There are about 30,000 property agents here, but despite the large number of them, the surging market has meant that the recruitment war has reached fever pitch, said industry observers.

PropNex Realty rolled out a "Rescue & Grow Package" in May with subsidies of up to $3,000 to reimburse agents who would incur penalty fees if they left their current agency.

ERA Singapore responded a month later by raising its cash reimbursement for penalties to $3,000.

PropNex is the largest real estate agency here, with 8,918 agents, followed by ERA Singapore, which had 7,771 as at Jan 1.

Both agencies told The Straits Times that they had rolled out their penalty support schemes after noticing the hefty penalty fees incurred by agents who wanted to join them.

PropNex Realty chief executive Ismail Gafoor said: "The current unfair practices by some large and small agencies to lock down their salespeople with inflated penalties is unethical.

"Salespeople need to be alert and not sign agreements (with) inflated freebies and initiatives that tie them down unfairly."

ERA Singapore key executive officer Eugene Lim said: "The issue of the hefty penalties is the latest trend that we have noticed since 2020.

"When the first property agencies started imposing hefty penalties to prevent their agents from leaving, ERA and others were inevitably forced to reimburse the transfer costs of the incoming agents who were penalised by their previous agency."

Mr Lim said ERA started reimbursing agents last September, by up to $1,000 for penalties incurred.

The Council for Estate Agencies (CEA) conducts the real estate salesperson registration renewal exercise in October every year, and most property agents apply to switch agencies during this period.

A CEA spokesman told The Straits Times that from 2017 to last year, the CEA approved an average of about 4,000 switching applications a year. It has received about 700 applications so far for this year's exercise.

It is a numbers game, said industry observers, noting that a boots-and-all battle is inevitable as the Big Four agencies - PropNex, ERA, OrangeTee & Tie and Huttons Asia - need to maintain their positions.

Dr Lee Nai Jia, deputy director of The Institute of Real Estate and Urban Studies at the National University of Singapore, said: "Agencies have been aggressively courting the real estate agents, as their numbers continue to be an important criterion in getting projects to market and achieving economies of scale."

Dr Lee believes the penalty fee is a clawback by agencies on the monetary incentives given to the property agents who did not fulfil the period of time they agreed to stay with the firms.

He does not think it is used to tie down agents but "to prevent some salespersons from gaming the system".

Huttons Asia unveiled a "Booster Package" in May with $4,250 worth of support for new agents who join the firm. The package includes reimbursement of real estate salesperson course fees and subsidies for marketing and advertisements.

Huttons Asia chief executive Mark Yip said: "If we were to draw an analogy, it is similar to scholarships. The path or package is structured to help the person excel and succeed.

"In return, the recipient has to fulfil conditions. Once the conditions are fulfilled, a real estate salesperson may choose to join another agency."

Mr Lewis Ho, managing director of LHG Properties, which has 50 agents, feels that "such packages encourage agents to hop around agencies" and smaller agencies like his "lose out in the battle" as he cannot offer the same amount in terms of incentives provided by the bigger firms.

Mr Steven Tan, chief executive of OrangeTee & Tie, said that property agencies are becoming more like insurance firms by offering higher and higher cash incentives, which is "very unhealthy".

A 26-year-old property agent who spoke on condition of anonymity said she had to pay more than $2,000 in penalty fees to her former agency - she was with the firm for about three months.

"My former agency said it had spent millions of dollars to upgrade its digital platform to help agents. This cost is apparently divided among the number of agents, and those who leave would have to reimburse the company for its investment," said the agent, who did not close any deals while with her former agency.

Another agent who also declined to be named said she had left a big agency to join a smaller one last year, after attending a workshop it conducted.

"The speaker shared his success formula on how to earn $100,000 in eight weeks. I have never earned that kind of money and I wanted to try," said the 60-year-old agent.

When she realised that the firm was not a good fit for her and applied to switch last month, she was asked to pay more than $2,000 in training grants because she did not fulfil her contractual period of two years.

ST understands that some agents have complained to CEA about the hefty penalty fees imposed by some agencies.

The CEA spokesman told ST: "CEA is... not empowered under the Estate Agents Act to intervene in such contractual matters."

The spokesman added: "CEA encourages all property agents to work with their current agencies to resolve any outstanding issues before submitting their applications to switch agencies.

"Property agencies should act in good faith when deciding whether to support their agents' switching applications."

Cost of switching

The Council for Estate Agencies (CEA) conducts the real estate salesperson registration renewal exercise in October, and agents generally apply to switch companies then.

Most agents are associates and not employees of property agencies. They sign associate agreements with an agency to carry out estate agency work.

Different agencies may have different terms and conditions in their agreements, including recruitment and retention conditions, which agents should read carefully before signing, said a CEA spokesman.

Agents from various firms told The Straits Times about some of the clawbacks they face if they breach these agreements.

These include having to reimburse:

• CEA registration or renewal fees of $230 a year and the $53.50 CEA administration fee

• The $150 real estate professional indemnity insurance premium

• A training grant of up to $3,000

• Support package - which includes advertisement vouchers, marketing toolkit and apparel - worth up to $4,200, regardless of whether it has been used

• A $700 digital grant

• A $350 confidence training subsidy

• A $500 door-knocking training subsidy

https://www.straitstimes.com/busines...-ship-amid-hot