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 New 'rules' regarding commission fees for rental agent?

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nientsu
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PostSubject: New 'rules' regarding commission fees for rental agent?    Fri May 06, 2011 12:17 pm

Need some clarification from the property professionals regarding rentals.

Since the new rules from January 2011 regarding tenant and LL agents- what about tenant agent's commission fees? Are there actual rules?

Got a family looking for a place, budget $4k. Was told by agent that they have to pay a service fee of one month. But my fren discovered from the other agents that for rent above $2.5k, tenants do not have to pay anything as the 1 month fee paid by the landlord will be shares between the landlord and tenants' agents. When my fren approached this agent, the new rule effected in Aug allows him to ask for a service fee and that co-broking fee has nothing to do with the tenant. During the viewing, my fren suddenly ask the landlord's agent (who happened to be there) if the fee will be co-broked. The agent said yes. Thats where my fren felt ripped off and decided to walk out. However, this agent (representing tenant) maintains that this is the ruling nowadays which allows him to ask for a service fee.

Can someone help me clarify this? Both are my frens and i recommended this agent to my other fren. I have never been so squashed.
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Dream
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PostSubject: Re: New 'rules' regarding commission fees for rental agent?    Fri May 06, 2011 3:29 pm

Hi,

From what i know....

There's no fixed rule for the agent's commission or what some may call as "service fee"... but i do understand your confusions as it have been a concern for many prospective tenents or buyers.

Hope these will help to clear your doubts :


1/ "But my fren discovered from the other agents that for rent above $2.5k, tenants do not have to pay anything as the 1 month fee paid by the landlord will be shares between the landlord and tenants' agents. "
>>>
in the market, all agents practice on different comm rates depending on individual agencies which means... some bigger agencies have provided a guideline for their agents to follow, so some will cut off at 2k, 2.5k or even 3k.... but pls note that these are only recommended guidelines and not a rule.


2/ "When my fren approached this agent, the new rule effected in Aug allows him to ask for a service fee and that co-broking fee has nothing to do with the tenant."
>>>
there is no "new or old rule" ever exist stating that the agents are allowed or disallowed to collect commission from tenant, nor whatsoever rules on "co-broking fees".... I believe the agent is just trying to explain to your friend that he is not violating any rules/law to collect the comm from tenant, perhaps in a "not-so-pleasing-to-ears" tone.


3/ "During the viewing, my fren suddenly ask the landlord's agent (who happened to be there) if the fee will be co-broked. The agent said yes. Thats where my fren felt ripped off and decided to walk out."
>>>
This is very often an issue where misunderstandings may arised even among the agents... Firstly, if your friend asked the landlord's agent "Is this a co-broked unit/deal?", i m sure the agent will answer "yes" but it may not equate to sharing his commission with tenant's agent... The term "co-broked unit" is usually interpreted as the marketing agent for this particular unit welcome other agents to deal with him/her. But the commissions from many of such co-broked units may not be shared. It is between the 2 agents to come to their terms of 50/50, 75/25 or even 100/0 before the deal...





The rate of the commission or service fee will be determined by :

1/ The factors of the unit/property.
For eg: If the agent knows the unit is not in a desirable condition, location or other negative factors, he/she will rather use portion of the commission from the landlord as a marketing tool. This is to tap into other agents' wider network to close the deal asap... on the contrary, for popular listings in the market, the commission will not be necessary to be used as a "bait" by the agents. Some "hotcakes" may be expecting a commission of up to 3 months.

2/ The owner of the unit/property.
For eg: Some landlords are cutting off part of the recommended 1-mth comm to the marketing agent, therefore the agent will not be possibly sharing his/her comm with the co-broking agent representing the tenant... yet for some direct landlords or developers, they are attracting co-broking agents with up to 3-months comm, especially during those very down property market days.

3/ The type of unit/property.
For eg: Lease of properties include residential, commercial and industrial. Even for Residential, it may varies from hdb, condo, apartment, landed, conservation houses, etc.

4/ The guidelines provided by independent real estate agencies.
Some agents will choose to follow the recommended guidelines given by the agencies. these are usually practice on units that are in average condition, no particular plus or minus factors. but still, it is not fixed, the cut off range from 2k to 3k.





From my point of view, i will advise your friend to leave all these above confusing factors to the property professionals Smile I hope that your friend can enjoy the process of unit-hunting instead of getting upset by all the miscommunications...

Perhaps by looking from another perspective, if this particular unit is "speaking" to your friend ( be it fate, an auspicious unit number, near to their family members, or a pretty sexy neighbour ), then dont get distracted by the word "rightful commission", take it as paying alittle more for an extra perks Smile

Many such instances, becos of all the $$$ clarifications or negotiations, we may not pay attention to check on the unit condition itself... Oh, sometimes we do not even dare to take up units that are "too-good-to-be-true" Smile

And i believe the agent representing your friend do at least deserve some credits for closing the deal on behalf.

To avoid future upsets, your friend are most welcomed to check with all the agents on the necessary commissions on those shortlisted units before wasting time n energy to arrange for viewing Smile

Still, issue your BATNA whenever necessary Smile
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nientsu
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PostSubject: Re: New 'rules' regarding commission fees for rental agent?    Fri May 06, 2011 3:34 pm

Hi Dream

This definately clarifies lots of things. Thanks a lot!
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motokah
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PostSubject: Re: New 'rules' regarding commission fees for rental agent?    Fri May 06, 2011 10:05 pm

In addition...

Since CEA came into effect, Real Estate Salesperson (aka. property agent) can't collect commission from "both sides", ie. cannot collect commission from both Landlord & Tenant for rental deals or from collect commission for sale of property from both buyer & seller.

This means for any rental or sales transaction, a property agent can only collect (or have a share of the commission) from a single source. Collecting from both sides is against CEA rules.

Co-Broke means willingness of property agents to deal with another property agent, sharing of commission is fully negotiable.... which includes not sharing commission.
Please ask the property agent what his/her commission fee would be before going to inspect the recommended properties.

IMHO... if you pay peanuts, you'll get monkeys.
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Tituman
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PostSubject: Re: New 'rules' regarding commission fees for rental agent?    Sat May 07, 2011 12:55 pm

nientsu wrote:
Need some clarification from the property professionals regarding rentals.

Since the new rules from January 2011 regarding tenant and LL agents- what about tenant agent's commission fees? Are there actual rules?

Got a family looking for a place, budget $4k. Was told by agent that they have to pay a service fee of one month. But my fren discovered from the other agents that for rent above $2.5k, tenants do not have to pay anything as the 1 month fee paid by the landlord will be shares between the landlord and tenants' agents. When my fren approached this agent, the new rule effected in Aug allows him to ask for a service fee and that co-broking fee has nothing to do with the tenant. During the viewing, my fren suddenly ask the landlord's agent (who happened to be there) if the fee will be co-broked. The agent said yes. Thats where my fren felt ripped off and decided to walk out. However, this agent (representing tenant) maintains that this is the ruling nowadays which allows him to ask for a service fee.

Can someone help me clarify this? Both are my frens and i recommended this agent to my other fren. I have never been so squashed.

This is one of the various reasons where the complaints against property agents comes about. Whether his intentional or not, the agent knows that anything below $2500, he has to let the tenant know he has to pay 1 month rent as service fee/commission as landlord's agent won't be sharing his portion from the landlord. Thus, if tenant blur blur pay the 1 month commission even if above $2500 as service fee, he will just accept it even if he still shares 50% from the landlord's agent. Think in the first place, he has to inform the tenant that anything below $2500, he has to come out 1 month rent and anything above $2500, tenant pays nothing. Thats what I practiced anyway. No 2 ways about it for me.
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