ST Forum : Market will fix commission rates

Oct 2, 2010

Market will fix commission rates

WE THANK Miss Koh Wee Leng for her feedback ('Confused over stand on fixed commission rates'; Sept 18). The Council for Estate Agencies, when it is set up, will not prescribe commission rates, but will instead allow them to be determined by market forces. Estate agents will then have the right incentive to price their services competitively, and consumers can negotiate the best rates.

In general, the Competition Act prohibits market players from fixing prices. The Competition Commission of Singapore ruled earlier that the Institute of Estate Agents' guidelines for professional fees, commission for estate agents and salespersons would likely infringe the Act, and advised that estate agents and salespersons set their fees and fee structures independently.

Although the guidelines are non-binding, they may still discourage price competition below the recommended rate and facilitate price coordination. More efficient estate agents, who can charge lower rates, would then have little incentive to do so. The institute voluntarily withdrew the guidelines shortly after the ruling.

Consumers should compare fees and services before deciding on their choice of agent and negotiate fees and terms to facilitate and encourage competition. To let consumers make informed choices, agents can provide a breakdown of their fees vis-a-vis the level of services and options they provide.

Cheryl Lim (Ms)
Deputy Director
(Regulatory Control)
Ministry of National Development