If you are currently thinking of buying or selling a property, you face the same dilemma as everyone else which is to use an agent or For Sale by Owner (FSBO).
Many people are unsure if it is better to use a property agent or transact on your own.
According to a Straits Times report, in 2018, the percentage of HDB owners who transacted without the services of property agents was 25% as compared to only 11% in 2010.
So the number of “for sale by owner” transactions are trending up.
In today’s article, we will look at 5 factors when considering the pros and cons of selling your property using an agent VERSUS “for sale by owner”.
The 5 factors you should look at are:
Property agents are professionals in their industry and in Singapore, all agents must be licenced by the Council For Estate Agencies (CEA). This is to raise the professionalism of the real estate agency industry and to safeguard consumer interest.
As an industry professional, property agents would be able to provide you with expert advice.
This is especially important when it comes to pricing.
Many owner listings often tend to overprice their properties for sale. This, in turn, will lead to very low enquiries and no transactions.
Let’s face it, everybody wants to sell high and buy low.
When it comes to pricing your property for sale, agents have access to real-time transaction data.
They will be able to advise you on the latest transaction prices in your neighbourhood or even your block of floor level. Some agents even have tools to provide a reasonable selling price based on transaction data and computer-generated appraisal of the unit.
Pricing your unit to sell is a very sensitive issue. Price it too high and you will not be able to sell and if you price it below market value, you will be short-changing yourself.
Agents would also be able to advise you on financial matters, such as the down payment, how much cash or CPF funds you can use, monthly instalments and taxes such as BSD and ABSD.
Let’s face it, we all hate paperwork and legal matters.
HDB has a resale portal that guides you through the buying and selling process and it is quite a tedious process with numerous forms to be filled and documents that you need to provide at the HDB transaction meetings. Then there are also application forms if you are eligible for the various government schemes and housing grants.
Going FSBO would mean you have to do the pricing research, do the paperwork and be familiar with all the HDB schemes and grants.
If you are unable to spare the time to do the things that an agent does, it would be better to use an agent.
Most agents subscribe to the numerous property portals available in Singapore and they will be able to help you shortlist listings and schedule viewing appointments.
When buying a property, I’m sure we all have our own preferences and know what we are looking for in a home.
The agent will be able to identify all available listings that fit your criteria. Most of us work full-time and are unlikely to spare the time scrolling through tons of listings to identify potential units as our dream home.
An agent will be helpful as he can zero in on a few ideal listings for you to consider, thus saving you a lot of time and hassle.
If you are planning to sell the property yourself, you will have to advertise and promote it. This costs money. There are not a lot of channels that provide free property listings, and even if they do, chances are that your listing will be too far behind to be noticed.
An advantage to property agents.
It takes about 3 months to sell an HDB flat, 6 months to transact a condominium and at least 12 months to transact a landed property, and that is with the services of an agent.
An agent also has his/her own network of clients and might be able to transact your property faster. Sometimes, if you are lucky, your property might just be what the agent’s other clients are looking for and it can get transacted really fast.
Agents also co-broke with other agents and this will speed up the time taken to transact.
An advantage to property agents.
Selling directly would be very time consuming as you have to post your listing on the various portals and newspapers.
For a buyer, you will also need to scroll through tons of listings to identify potential units that fit your criteria, make enquiry calls and schedule viewing appointments.
The biggest advantage of FSBO is money saved!
While the CEA regulates the industry, they do not set a standard commission rate.
Most agents charge 2% of the transaction price for their services. Some may charge a lower 1% or 1.5% and some specialised agents may even charge 5%.
The commission rate is negotiable and as with everything else, is co-related to the level of service provided.
With HDB resale prices going a 15-month upward trend and private property prices also going up, a 2% commission of the transaction price can be quite a hefty sum.
Think of the things you could do with the money saved, like saving for your kid’s education, going on an extended holiday (now that travel is beginning to happen again), or other forms of investment.
An advantage to FSBO.
After living in a house for many years, making many memories and starting a family, it can be quite an emotional time when it comes to selling it.
As a direct seller, you may tend to reject a reasonable offer and turn away from a good deal.
The good thing about selling direct is that you are in charge of the whole negotiation process. Some agents may urge you to sell, even if the offer is below market value as the agent will get his commission as long as the transaction is successful.
Unless you are very experienced in the art of negotiation (which many of us are not), negotiating a property transaction can be very difficult.
Remember the saying buy low, sell high, all sellers will want to get as much money for their property as possible and you, I’m sure, are no different. Having an agent negotiate for you will ensure that the offer is fair to both buyer and seller as he will be using data and trends to justify the final price.
Ultimately, the choice of using an agent or FSBO will depend on you, yourself.
Consider if you have time to perform all the tasks that an agent will do. Many property agents also have a long list of “kangtaos” or contacts for property related services. If you need a housing loan, many agents have their own list of bankers that they work closely with and if you are not taking the HDB housing loan, they can provide you with a reliable source.
Most agents also have their own list of contractors for minor repairs or touch-ups, ID companies and movers, if you require such services. This will take away the hassle of searching for them on your own.
Nothing in this world is free and if you cannot spare the time, then using an agent would save you all the hassle but you must be prepared to pay the commission. When appointing an agent, be sure to negotiate the commission rate and have it down on black and white to prevent any disputes.
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