To Use or Not To Use An Agent
With the slew of Do-It-Yourself portals and websites that have recently emerged, and even government policies that encourage sellers and buyers to handle their own transactions, consumers today must be left confused as to whether or not they should use an agent. Just WHAT is a real estate agent’s role in a property transaction?
Let’s explore from the seller’s point of view. A seller certainly is able to market, negotiate and transact his own property. However, let’s not forget that a buyer and seller has two conflicting objectives – the buyer wants to pay the lowest price possible but the seller wants to achieve the highest price for his property.
Sometimes an agent may follow up with a buyer who seems interested in order to push the deal forward. A seller who calls the buyer to follow up however, will lose his bargaining position. He will seem too eager to sell and will not get a high price from the buyer.
Selling your own property is also an emotional task. Our homes are a reflection of ourselves and criticisms about our property seem like a direct hit at our egos. Buyers however will usually criticize a property in a bid to knock the price down. If you are unable to remain neutral and keep your cool in tricky negotiations, we recommend that you use a third party to handle it on your behalf in order not to burst the deal.
Some people believe that homeowners are the best salesperson for their house since they know everything about their neighborhood. While it is true that they have general information with regards to the pros and cons of their home, they usually are not equipped with specialized information about sales transactions in their precinct. Knowing recent transactions that took place is only the tip of the iceberg. Owners usually only know their own units but agents familiar with a development have seen many units and know the pros and cons of different units, facing and layout. An experienced agent will be able to analyze and compare, and have first-hand information through years of daily viewings and connections to your neighbors.
Many sellers think that they will get a better ‘feel’ of the market through marketing their homes themselves. This may not be the case. For example, when an open house is announced, a huge number of people may turn up. Not all of these will be genuine buyers. Some are there to have a look-see while others will be agents who want to check out your property and recommend it to their buyers.
For sellers who want to DIY as they think they can save commission, they may also face buyers’ agents approaching them directly with an offer. In most cases, commission would have to be paid to the agents as well for recommending their clients. Refusing to pay may cut out a huge chunk of buyers served by agents.
Agents have a few advantages being industry professionals: they are privy to more marketing channels as some portals do not allow owners to advertise for themselves. Also, agents may have their internal networking channels which can enhance their outreach to potential buyers. Lastly, agents also negotiate on a daily/weekly basis and are more skilled at achieving a better price for their clients.
Many consumers simplify the process of a purchase. They often select a project or neighborhood, look for the cheapest listings, view a few within their budget, bargain for a lower price, and close the deal. This is a simplistic way of making a major decision such as this.
When buying a property, a good agent will be able to advise you the right timing to enter the market by looking at trend lines. He can also show you how certain locations will be enhanced by developments in the Masterplan, or how the White Paper and population growth affects your potential capital gains.
Most of all, he can gauge if the entry price is correct for the units that you have shortlisted. He can give you an analysis of how the projects you have chosen have appreciated/depreciated and whether there is scope for further gains in the future.
If you are shopping for a resale unit, the marketing agent will always try to convince you that their unit is the best one for you. Having an agent on your side to advise you will help you to put things in perspective.
Of course, if you are a savvy buyer, and you feel that you do not need professional advice, sellers’ agents will be pleased to work directly with you but do bear in mind that the sellers’ agents will put the sellers’ interest first as compared to yours.
Using a responsible agent for a tenancy saves much grief on the landlord’s part. Under government guidelines, an agent’s job ends the moment the transaction is complete. However, many agents continue to take care of issues during the course of the tenancy in order to provide the best service to their clients. Such services may include arranging for contractors to rectify defects or problems in the house, going down on behalf of the landlord to sort out issues and doing the handback of the unit at the end of the stipulated period and asking for compensation on the landlord’s behalf for damage suffered.
Putting a middleman in between the tenant and the landlord has certain advantages. An agent can help to buffer some requests that the tenant makes. When the tenant is in direct contact with the landlord, they tend to make requests that the landlord find difficult to reject. For example, one of our clients had to keep going down to his unit every time the wife of his tenant couldn’t figure out how to use some appliances in his kitchen as her husband was often travelling. A good agent would have saved him the thankless task of making these trips.
Agents can also help to interpret the clauses in the tenancy agreement when there is dispute over who is to pay for repairs. During handover, agents with experience can decide whether damage is due to wear and tear or negligence. When there is damage, both landlords and tenants tend to get more emotional or defensive. When there is an agent involved, he can help to give a neutral opinion and provide objective advice to remedy the situation.
An agent also can help to modify and craft the tenancy agreement so as to protect his client’s interest, especially when the tenant makes unusual requests and want to take out or change standard clauses. Some tenants can arm-twist their landlords into giving in to unreasonable demands. This can lead to a lot of savings when there are disputes about damage to the property.
Some agents do defects reports during handover to document which defects were already present at lease commencement. Photos will be taken so that at lease expiry, it is clear which were caused by the tenant and which were not.
When your tenant defaults on the rental payment or is late, it is also easier to get your agent to do the job of demanding payment or sending a gentle reminder than to personally do it.
Having someone to professionally manage your property takes the stress off renting out your home.
When your lease is high enough (typically $3000/month with a two years’ lease), sometimes using an agent will cost you nothing at all. If not, a fee half of your monthly rental will take off the burden of finding a unit yourself.
A professional is much more familiar than yourself with Singapore and its condos, as it is part of his daily routine to visit them. He can make recommendations based on your preferences and save you the extra visits. He will even plan the viewing schedule, make appointments and drive you from place to place.
The agent will know rental transactions better as he has specialty apps for these information which can let him see transactions before you see them in official websites. With these apps and having an understanding of landlords’ mindsets as well, he can help to negotiate a better deal on your behalf.
Being familiar with paperwork means that he will be able to spot clauses that are unfavorable to you as the tenant, or clauses that are not standard ones, and highlight it to you in order to discuss the next step.
ARE ALL AGENTS THE SAME?
We have thus far discussed the positives of using an agent. Singapore’s real estate agents are highly regulated. However, we have to caution that not all agents are equal. Do your due diligence and check the track record of your agent. It is best to get a referral from someone who has worked with him. Ask him for his marketing plan if you are a seller/landlord and how he intends to push out your property.
Different agents specialize in different areas and it is a good idea to sit down and discuss if his area of specialty suits you: some agents are focused on a particular location, some are more familiar with rental than sales, some are good at analysis and serving buyers. Others are good at restructuring your portfolio and helping you make the most of your investments. Most importantly, it would be good to find someone who prioritize your interest and who is not putting their commission as their priority.
On a side note, if you work exclusively with one agent, you will in return get his commitment and he will be more inclined to invest more marketing costs into your property, or spend more time working on your case since he knows that his investment and efforts will pay off in the end. He will also hold out for a better offer price instead of pushing you to accept the first offer since he knows he has the exclusive rights and doesn’t have to compete with other agents to close the deal.
Working with too many agents will lead to disinterest on the part of agents to market your property or serve you as a buyer/tenant. They are dis-incentivized as their chances of closing your unit are very low. Therefore they will prioritize clients who keep the number of competitors low. You may end up with duplicate viewings, and may lose track of who has visited your property. Unscrupulous agents may also lower your unit’s asking price without your knowledge in order to attract calls.
We hope that this article has been useful in helping you gain perspective about the role of an agent. If you have a property to market or are looking for one, please contact our consultants HERE. We will be happy to meet you for a no-obligations consultation.
Disclaimer : This article serves as a guide only, and you should not make your decision based solely on this article. You are advised to seek professional advice from a licensed real estate salesperson to assist you in planning your real estate portfolio.
Comments powered by CComment