Zen Chee

AN ESTATE agents” group has launched a push to heighten the professionalism of property agents.

Singapore Accredited Estate Agencies (SAEA) wants all housing agents to have at least an entry-level Common Examination for Salesperson (CES) certificate. SAEA wants ”to move the estate agency profession to the next lap”, said its recently appointed chief executive officer Tan Tee Khoon.

At present, about 6,000 out of 24,000 property agents at accredited agencies have either first-tier Common Examination for Housing Agents (CEHA) or second-tier CES certification.

Although SAEA wants all agents to be accredited, obtaining a certification will be voluntary and there will be no penalty should an agent choose to not be accredited. But property agencies and SAEA are confident that the agents will choose to be accredited ‘’since it will benefit them in the long run”, Dr Tan said.

To encourage them to obtain certification, SAEA has obtained funding from the Workforce Development Agency (WDA) for first-tier CES accreditation. The funding will cover up to 80-90 per cent of the course fee, which is about $350, excluding examination charges. Some agencies, such as HSR, will fully subsidise the remaining costs.

Another SAEA initiative will improve the procedure for dealing with complaints and disputes involving estate agencies.

Dr Tan said that the procedure has been enhanced to provide greater transparency for consumers, from the time that a complaint is lodged until when the matter is closed. SAEA will also work with CES external examiner Ngee Ann Polytechnic to introduce a Certificate in Real Estate marketing so that CEHA and CES holders can upgrade to a recognised professional qualification.

The first 120-hour course will run from November this year. SAEA and Ngee Ann Polytechnic are working on the prospect of getting funding from the Skills Development Fund for the course, which will cost $1,500 for six months.

Business Times – 18 Jul 2009
By ZEINAB YUSUF

When you’re thinking about buying or selling your property, you need to ask yourself the following questions:

1. Do you have the time, energy, sources of information, and contacts to do the job yourself?
2. If you are one of the ‘do-it-yourself’ people, would the results be as good or better than they would be if you had professional assistance?
3. Would it go smoother?
4. Would it give you more personal time?
5. Would you purchase for less, or sell for more, if a real estate agent was involved?

Read the rest of this entry →

There is a standard percentage that real estate agents expect to earn as a commission. Upon appointing the exclusive agent to represent in your property dealings, you and your agent will agree on the amount of commission payable after the property transaction. When you agree to a commission with a listing agent, you should keep in mind that there are usually two agents involved in most transactions. Most of the time, only part of the commission goes to the listing agent’s company. The other portion goes to the company representing the buyer.

Some commission-related questions you could ask:

Will my property be listed in the Multiple Listing Service (MLS)? Being listed in the MLS expands your sales force. Every agent is invited to bring potential buyers to your property. This large supply of buyers will increase your pricing power and the ability to sell your home more quickly.

What kind of Internet marketing will you do? There are many high profile web sites you will want your agent to advertise on. Ask which ones he/she will use and ask for specific statistics. What about the agent’s company and personal website? What newspapers do you advertise in? Ask if the agent advertise your property in the classified newspapers? What is the frequency of advertisements? Does the agent provide any virtual tours to your property marketing?

What multi-media marketing options do you employ? What kind of Virtual Tours is offered? Is 24/7 streaming video available? Where can it be found?

What Exclusive and Customized services do you offer? Go beyond the “traditional” marketing services that are available through most fine companies and find out what your agent and his/her company offers that the other companies and agents do not offer.

What is the effect of your co-broke offering on the company representing the buyer? Since part of the commission usually goes to the company representing the buyer, you may want to ask whether that portion of the commission being offered is the standard amount. As mentioned above, the more agents bringing their clients to show your property, the more pricing power you will have and the sooner your property will be transacted. And the larger amount of commission being shared with the co-broke agent, the more agents will be willing to show your property.

What is the effect of your marketing to other agencies? Very few properties are sold through advertising or open houses, but it does happen. Most often, those ads generate calls from potential buyers or sellers, who end up as clients for real estate agents — and you want agents to bring potential buyers to your property. Advertising your property to other agents has a higher impact than direct advertising to consumers.

Lastly, ask yourself…

What is more important to you – getting the most amount of money from your sale, or paying the lowest sales fee? Once you decide which is more important, how much commission to invest in your property sale becomes clear.

A property agent should work in his client’s best interest, so look out for anything that indicates otherwise.

1. Do your homework. Always get a valuation done on the property so you know if you are being cheated, said Mr C.M. Tan, 64, a retired bank manager who has worked on home loans.

2. Don’t rush to appoint an agent. Meet a few and have detailed discussions with them before deciding on one, said Ms Ivy Lee, chief executive of Ivy Lee Realty.

3. Get a reputable agent from recommendations by friends.

4. If an agent is unwilling to advertise or co-broke your property, he is not exposing it to a maximum number of buyers, said experts.

5. Be wary of agents who make promises that sound too good to be true, said Ms Lee.

6. Do not leave your agent alone to do his work. Check up on him every two weeks or so to ensure that he is working hard to sell the property.

This article was first published in The Straits Times on February 08, 2009.

REFUSING TO CO-BROKE A PROPERTY

Co-broking is when more than one agent is involved in a property transaction – for example, if one agent introduces a buyer to another agent.

Because the commission from a co-brokered sale will have to be shared, some agents may refuse to meet or follow up on clients from other agents, to avoid splitting up their commission.

‘This prevents a client’s property from getting maximum exposure and is not in his best interests.

‘To see if this is the case, clients can call their agent from an unknown number, pretend to be another agent, and see what they say,’ said Mr Mohamed Ismail, chief executive officer of PropNex.

OVERPROMISING

‘Some agents tell sellers they have a ready buyer for a very high price so that sellers will appoint them exclusively for a period of time,’ said Ms Florence Choo, a real estate agent in her 50s.

‘It may then turn out they did not actually have a ready buyer, and sellers may be forced to settle for a lower price as they cannot hold on to the property any longer.’

WORKING FOR MORE THAN ONE COMPANY

Agents should work for only one company, but some carry more than one name card – that is, they get to access more than one firm’s client listings.

Because different agencies have different pay structures, such an agent may take a client under one agency’s listing but close the deal under another agency which pays him better.

In such a situation, the client may not suffer a loss but the affected property firm gets the bum rap.

HIJACKING

Hijacking refers to an agent going behind another agent’s back and stealing his clients by promising them a better deal and urging the clients to sign with him instead.

‘It’s really not nice and unethical of some agents to approach the seller on their own without notifying the original agent and stealing their client,’ said Ms Susan Lim, 28, a property agent.

This is an example of the cut-throat competition among property agents.

This article was first published in The Straits Times on February 08, 2009.

ONE home-loans package charged 2.6 per cent interest. Another was as low as 1.2 per cent.

No prizes for guessing which one many people went for in the past two years or so.

The first package was an HDB concessionary loan. The second, a bank loan.

But your winning guess is something of a booby prize – the interest rates on bank loans have now risen sharply, while the HDB loans rate has not budged at all.

Bank rates fluctuate according to the price banks pay to borrow the money they lend out, but the HDB rate is pegged at 0.1 percentage point above the interest rate on Central Provident Fund (CPF) Ordinary Account savings.

The latter rate, in turn, is based on the 12-month fixed deposit and savings rates of local banks.

The CPF Board recently computed the bank deposit and savings rate to be 0.59 per cent but is continuing to pay 2.5 per cent for your Ordinary Account because it is the minimum stipulated in the CPF Act.

Bank interest rates for housing loans vary according to whether they are fixed or floating rates.

For example, fixed rates for loans up to 80 per cent of the value of a property now stand at around 2.75, 3.75 and 3.5 per cent for years one, two and three, respectively.

Paying such higher interest is only one of the woes of loan converts.

For they also now have no avenue to switch back to HDB concessionary loans.

Some borrowers may not know that a limit on the use of CPF savings for housing applies to them, says Mr Dennis Ng, a certified financial planner and co-founder of mortgage broker Leverage Holdings.

For HDB concessionary loans, the CPF limit does not apply at all, which is why Mr Ng says he has advised HDB clients with such loans not to switch to bank loans.

This is an example of home owners being unfamiliar with CPF rules, which in the first place are not exactly the easiest to understand or keep track of.

Says Mr Ng: ‘Any hiccups or mistakes you make because you are unaware of the rules may have serious repercussions on your financial future.’

Do you know the following?

CPF withdrawal limit
GONE are the days when you can rely on your CPF savings to pay for your mortgage until the end of its term.

Since January 2003, if you buy a private property, or refinance your HDB loan with a bank, or buy a HDB flat with a bank loan, you are subject to a cap on the CPF savings you can use for the mortgage.

This year, the cap – also known as the CPF withdrawal limit – is 138 per cent of the so-called valuation limit, which is the lower of the valuation or purchase price.

The CPF withdrawal limit will fall to 132 per cent and 126 per cent next year and 2007, respectively, for purchases made in those years.

The rate of 120 per cent will apply from 2008 onwards.

Beware: At some point in the future, you can expect to pay cash for your entire mortgage instalment.
If your loan’s interest rate is 5 per cent from the third year onwards, be prepared to cough up cash as early as after the 20th year, says chartered financial consultant Leong Sze Hian.

‘How many Singaporeans can service their housing loans entirely with cash after two-thirds of a 30-year loan period?

‘Home buyers may like to consider carefully before buying,’ he says.

The scenario he sketched is not as dire right now.

It applies from 2008 when the CPF withdrawal limit – now at 138 per cent – hits rock bottom at 120 per cent.

On the other hand, things are worse than many home owners realise.

The reason: En route to the CPF withdrawal limit, home owners will reach the milestone of 100 per cent of the valuation limit.

Whether they can use their CPF savings further for their mortgage depends on whether they have enough money in their Ordinary and Special Accounts to be set aside for the cash component of the Minimum Sum.
This cash portion amounts to $45,000 currently and will rise to $60,000 by year 2013.

If this requirement is met, what CPF savings is available for the continued servicing of the mortgage is known as the Available Housing Withdrawal Limit (AHWL).

It is not the easiest calculation to make, but thankfully, the CPF website has a worked example at www.cpf.gov.sg

Beyond the AHWL, the ultimate limit is the CPF withdrawal limit which, as stated above, is currently 138 per cent of the lower of the valuation or purchase price of the property.

Buying old property

FANCY that old apartment in bustling Chinatown?

Prior to July 19, you could not use your CPF savings to buy a private residential property whose remaining lease was less than 60 years. Now you can.

Beware: To begin with, you can use CPF savings only if the property has a remaining lease of at least 30 years.

Even then, you cannot just buy any old property. The remaining lease must be at least enough to cover you until you reach 80 years old.

So if you are 35 years old, the property must have a remaining lease of at least 45 years at the point of purchase, says Mr Ng of Leverage Holdings.

In joint purchases, the age of the youngest owner using CPF savings for the mortgage repayment will be used to determine the minimum lease required.

Note that banks still do not give financing for the purchase of properties with a remaining lease that is less than 60 years, says Mr Lim Kok Guan, managing director of Home Advantage, a mortgage broker. Only Hong Leong Finance does, he adds.

Beware: Unlike normal property purchases, you will be more restricted in how much you can use your CPF savings to pay for private residential properties with remaining leases of between 30 and 59 years.
The percentage is calculated according to this formula: Remaining lease when the CPF member is 55 years old divided by lease at the point of purchase multiplied by 100.

So if you are aged 35 and buy a property with a remaining lease of 45 years, the maximum CPF savings you can use is only 56 per cent of the valuation limit, says Mr Ng.

After age 55
IF YOU use the monthly contributions to your CPF Ordinary Account for repaying your mortgage, chances are you will have little surplus in your account.

On reaching 55 years old, you are required to set aside the Minimum Sum, which is for you to withdraw monthly from age 62.

Beware: The Minimum Sum currently is $90,000 of which the minimum cash component is $45,000.
The Minimum Sum will rise to $120,000 by year 2013 with a minimum cash component of $60,000. The Minimum Sum comprises your savings in the Ordinary and Special Accounts.

For example, says Mr Ng, if on reaching 55 years old, you have $20,000 in your Ordinary Account and $40,000 in your Special Account, you have met the requirement. But you cannot use any of that money for mortgage repayment.

The harsh reality is you have to pay cash for the mortgage instalment.

Buying second property
SINCE July 19, the maximum loan you can borrow from the bank has been raised from 80 per cent to 90 per cent of the valuation of the property.

Beware: Note that from July next year, the use of CPF savings for second and subsequent properties will be restricted.

Only the surplus Ordinary Account savings after setting aside the Minimum Sum cash component can be used for mortgage repayment.

In addition, the applicable CPF withdrawal limit is not 138 per cent – as applies to first properties bought this year – but 100 per cent.

chanteik@sph.com.sg