Monday, September 18, 2006
[RealEdge] TodayOnline Forum : Dual commission not an unfair practice
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| Dual commission not an unfair practice Commission built into the selling price could result in higher HDB sale levy Monday ? September 18, 2006 Letter from Goh Kian Huat I refer to the letters "Dual commission does not mean conflict of interest" by Mr Low Swee Kim and "Too many agents jostling for too few deals" by Mr Jason Chew (Sep 13). It appears that most people do not agree that buyers of HDB flats should pay the agent who is acting for the seller. I would like to offer a different perspective and hope that this could help put the matter to rest. When we buy insurance policies from agents acting for their insurance companies, as buyers, we pay the agents the commission through the payment of premiums. The commission the agents get could be worth a year's premium. But buyers do not complain, as the commissions are factored into the insurance premiums. This is similar to the sale of other goods and services (eg: Car loans) that involve the payment of commission ? by buyers ? to the salesmen acting on behalf of the companies. The sale of a HDB flat is no different. Currently, the commission for housing agents is structured in such a way that both buyer and seller are required to pay one per cent of the agreed selling price. But who actually pays? It's the buyer. The seller has factored in the commission payable to the agent in his selling price and uses the sale proceeds to pay this. Hence, the seller does not actually have to bear the cost. The way that the agency fee is currently structured may appear not to be fair to the buyer. There are other ways to re-package the commission. For example, the selling price could include the 2 per cent of the commission payable to the agent. The buyer would not be asked to pay any direct commission, but he is actually still paying it. However, in this instance, the commission would attract the HDB's sale levy as it is included in the selling price. The buyer might have to bear the additional cost should the seller decide to pass it down by charging a higher price. Therefore, the current practice of making both buyer and seller pay 1 per cent each of the agency fee, may actually help the seller to save on the levy. This saving could be passing down to the buyer in the form of a lower selling price. Thus, I do not agree that dual commission is not right. I also do not agree with Mr Chew that property buyers and sellers should not be forced to support real estate agents. When I bought my resale flat about 10 years ago, my agent had to wait eight months before I paid him the commission. This was because the flat was sold in advance before it reached the five-year eligibility criterion. While I appreciate the agent's patience, I would not want to be in his shoes. | |
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// posted by Shajahan @ 10:46 AM 