Tuesday, August 5, 2008

Competition Watchdog Wants Fees Guidelines For Property Agents Removed

Source : The Straits Times, Aug 5, 2008

THE Competition Commission of Singapore (CCS) on Tuesday asked the Institute of Estate Agents (IEA) to remove its fees guidelines for property agents, saying that they are anti-competitive.

The current fees structure set by the IEA has been in place since 1999 and serves as an industry-wide guidelines for agents.

It generally recommends a seller pays an estate agent 2 per cent of the contracted price as sales commission, and the buyer pays 1 per cent as service fee to agents for Housing Board properties.

The IEA has said that the guidelines are non-binding and agents are free to negotiate fees with their customers.

But the CCS said even if the recommendations are not binding, 'they will still provide a focal point for prices to converge.'

'This will dampen competition and facilitate price coordination,' it said in a statement on Tuesday.

'CCS further notes that the fees payable by property sellers are couched as a minimum fee recommendation in the Fees Guidelines. This practice discourages any price competition below the recommended rate.

'More efficient estate agents or agencies, which are able to charge lower rates, will have little incentive to do so.'

It advised estate agents or agencies to set their own fees.

Consumers are encouraged to compare fees and services offered by different estate agents or agencies, before making a decsion, it added.

'This will facilitate and encourage competition amongst estate agents and agencies,' said the CCS.

The latest development comes as the industry is moving towards self-regulation.

Reacting to the new move, which comes into effect on Sept 25, some property agents on Tuesday said it will lead to some marking up their fees, while others said it the rates will become more competitive.

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