Singapore may now allow the open market to set brokerage commission, but here, adhering to the government scale is still the way to go
Local estate agents are not ready to let property sellers and landlords determine how much they should be paid for their work as the market has not yet reached a level of maturity that permits this kind of open structure.
“It can happen in Singapore as the market there is more sophisticated. but not here… not yet,” said Malaysian Institute of Estate Agents (MIEA) president K. Soma Sundram, in response to a question posed by NST-Property on whether the country could emulate the city state’s decision to axe guidelines governing the fee structure later this month.
The move followed Singapore’s Institute of Estate Agents assessment that the guidelines made the service uncompetitive and that not all agents undertake the same level of work to justify the same scale of fees.
While news of the deregulation was met with some positive comments from Singapore’s agents, the suggestion posed here was met with disapproval.
“Around 80 per cent of our market is formed by small- to medium-size agencies that cannot afford to have their fees any lower than it is now. ” said Soma.
“Furthermore, if we open our fee structure to negotiation, the Malaysian love for bargaining would press it down so much we could not possibly survive – worse, it may even lower the standards of the service.
“Everybody needs to be aware that estate agents are professional who have to undergo a multitude of procedures, including sitting for examinations, before they can be licensed.”
According to the scale of fees set by the Ministry of Finance’s Board of Valuers Appraisers and Estate Agents (BVAEA), registered agents may charge a fee 2.75 per cent for the first RM500,000 of a property and two per cent on the residue, and provide a maximum discount of 30 per cent.
In Singapore, vendors of HDB apartments are paying two per cent and buyers one per cent, while private property transactions, only vendors pay two per cent.
S. K. Brothers Realty (M) Sdn Bhd general manager Chan Ai Cheng said local agents’ commissions should be regulated as it “promotes and encourages professionalism”.
“Without it, there would be more illegal brokers, which would not augur well for the overall industry… the scale is a motivating factor for people to undergo the years if training, exams and probation needed to be a registered agent as it rewards with greater earning potential.”
BVAEA president Datuk Abdullah Thalith Md Thani said the existing scale provides some form of competition as agents are allowed to give a maximum discount of 30 per cent.
“It is the role of the Board to set the a maximum amounts agents should be entitled to … from there, it is up to the market to decide what they think the service of the agent is worth.
“This is similar to that of other professional bodies such as for accountants and lawyers where their boards set their fees.”
