March 4, 2007


Limit property agents' fees

I READ with great interest the article, 'New-for-old swops may feature more in collective sales'' (The Sunday Times, Feb25).

While many people focus on the issues of the owners and developers, few pay attention to the agents. These days, the agents are the ones laughing all the way to the bank, not so much the owners.

While there are rules to limit the professional fees that vendors are charged if they sell one property, there seems to be no such legislation on the limit for agents who manage collective sales.

Some will charge 1per cent of the sales proceeds or less, but some will go as high as 5per cent if they were to exceed the so-called reserve prices.

The work these agents do for 20 owners collectively is not much different from that for 200 owners. They are to find a buyer, mostly by means of a tender. The work is, strictly speaking, standard.

Yet they can bring home as much as $1 million or more.

Owners may not mind if these agents did some good work for them and so would deserve the credit and reward. But in some cases, the owners do most of the work, and the most important work the agents do is to persuade all the owners to sign the collective sale agreement.

If they are lucky, these agents will then be able to collect their handsome sum - much more than what an owner can make out of the collective sale - without much effort.

Most owners have only one property to sell, which they must have lived in for many years. But an agent can profit from many projects in a month.

Lawyers have rules and guidelines to abide by. But these 'en bloc specialist agents' do not. I hope there will be legislation soon to limit the fees charged by these agents.

Kim See Teo