Everyone can be a guru with the availability of internet. A quick search on google will provide you with tons of information be it you are looking to rent a property for yourself, rent out your own property, or to buy/sell a property. As a result, many individuals are questioning the justification to engage a real estate agent and having to pay the estate agent fee which can add up to quite a substantial sum. Many savvy individuals have also chosen to DIY, that is they take on the role of the estate agent and go through the whole process themselves.
Typically, estate agents charges 1 month rental for a 2 year lease for rental cases, 1% of the transaction price for buying, and 2% for selling a property. Take for instance, you are selling your 5-room HDB unit at $500,000, you would have to pay $10,000 + 7% GST to the estate agent. Regardless if you are making profit from selling the property, no one would want to pay an additional sum which would eat into your profit or in worst case scenarios, add on to the loss or expense that you are already incurring.
It is common to hear one complaining about how easy an estate agent’s work is, and the fast and easy money they make from just closing a property transaction. On surface, it may sounds like a ridiculous amount of money that they earn from just helping you to sell your property, while you imagine yourself having to endure possibility 2 months of work in order to get that amount from your paycheck. Plus you may also be imagining that if the estate agent close a case every day, he/she would have a monthly income of $300,000 ($10,000 X 30 days) and that is achieved from merely bringing someone to view a house which would possibly at max takes up a hour of his time every day, while you have to put in a minimum 8 hours in the office.
Well, if life was so easy, everyone would have just quit their job and be an estate agent. While it looks easy on the surface, imagine yourself in the shoes of the estate agent and rethink if the commission cheque that they earn is justifiable.
Regardless if the estate agent is engaged to sell or rent out a property, he has to spend a substantial sum of money to advertise for the unit. It can be in the form of newspaper advertisement, online property posting or printing of pamphlets. Yes, it is not free to advertise on online media such as propertyguru, iproperty and all the other popular property websites and they spend huge sum on an annual basis to subscribe to these websites. To create more attention for the property that they advertise, some even engage professional service to shoot a video on the property. Estate agent do not get a monthly basic salary and these advertising expenses come out from their own pocket, regardless if they manage to close the transaction ultimately.
Your company may send you for courses to upgrade your skillset or attend seminars/workshops to upgrade your skillsets from time to time. We all know how important this is, if not government would not have come up with Skillsfuture credit to encourage Singaporeans to upgrade themselves. For estate agent, they have to fork out from their own pocket again to sign up for courses and also attend a certain number of hours to fulfill their CPD hours (Continuing Professional Development) as set by the governing body for estate agent, CEA (Council of Estate Agent) before they could renew their estate agent license on an annual basis. Yes, it is another sum to pay to renew their license on an annual basis. While your employer is likely to be the one to pay for your courses and you attending these courses during your official working hours, estate agent pay themselves and at their own time as well.
If you are selling your property, you may be thinking that the agent is just spending at most an hour to bring a prospective client up to your property for viewing, making some small talks to convince the client, and doing some documentation works to close the transaction. But in reality, the time spent by the estate agent is certainly much more than the facetime that you have with him/her. Firstly, he has to do his own research before he meets up with you in order to convince you to entrust the property to him, advertise your property and screening/filtering/entertaining the calls and enquiries, making arrangement to bring clients up to your property, preparing his speech/reasoning to convince the potential buyers, and lastly, advising and guiding you and the buyer towards the completion of the transaction.
Now imagine that you are the real estate agent and having to answer enquiries via phone call/message at all sort of timing on a daily basis. You may be in the middle of a meal, driving, on vacation, talking to another client, in the midst of having a fight with your spouse, in the middle of doing your business in the toilet, or out on a date with your partner or family. Estate agent do not have an official working hour and still attend to calls in the evening and weekends while you can happily go on your date with your beau once you knock off. For estate agent, they have to continue be on standby mood whenever and wherever. Appointments to view the property can also be a last minute affair, and they have to cancel and sacrifice personal appointments. Relationship with family, partner, and spouse can be stressful as a consequence of them having to prioritize their viewing appointments and them not being able to give full attention to them even when they are out physically with them. To top it all, all these sacrifices are done without the guarantee of them being able to close the deal ultimately and it may just end up as wasted time and effort. There is also no annual leave, paid sick leave, medical benefits and all the benefits that come with being an employee. While they do not have a boss to report to, you are their boss when you engage them and they have to deal with different sorts of “bosses” day in day out, and we certainly do know that some clients can be weird or unreasonable.
You know those cases where you are down in luck and you got yourself a tenant/landlord from hell literally or even in the case of buying/selling where you get to meet someone who is difficult to deal with, the estate agent comes in to act as the middleman or peacemaker to take away the hassle and headache of dealing with the counterparty. Tempers may flare and things can get ugly or even explosive when you are the stakeholder so rather than dealing it yourself, the estate agent comes into the picture and be the two-faced middleman to sweet-talk and pacify the parties involved.
I do agree that the amount of the commission cheque that estate agents earn can be substantial at times, but most do not have the luxury of closing a deal on a daily basis. They may bring a prospective buyer out to view potential houses for a month and not close the deal. They may advertise for your property and brought truckloads of potential buyers to view the house but the deal got snatched by a competing agent. They may be putting in time and money in trying to close the deal for you for weeks and months, only to have you telling them that you have changed your mind and does not intend to buy/sell the property anymore. In fact, for the same number of successful estate agent who managed to strive in the competitive industry, there are similarly a large number of agents who exit the industry. Even for those who managed to succeed, you would most likely hear stories of them not closing any deals and getting an income for months while they still have to manage the advertising costs and personal expenses incurred along the way. It is also common for the successful agents to have down period where they do not close any deals for months and have to make ends meet using their own savings.
We have to say that the job of being a real estate agent is just like running a business. They may get paid a substantial sum from closing one deal, but likewise there are deals where they have invested in which does not reap any rewards so it is not necessary a bed of roses from what most perceives. As the saying goes “No Pain, No Gain”, and there is certainly sacrifices made that are not known.
Unless you are someone who has the luxury of sitting at home doing nothing and has all the time in the world, I would say paying someone or the expert to get the job done would certainly relieve you of much stress and time that could be better spent on stuff that needs your focus on. On the other hand, if you have the luxury of sitting at home, I bet you would most likely be quite loaded and the estate agent commission may just be peanuts to you.
What’s your take?