With the widespread use of property portals and HDB resale platforms, buyers and sellers are starting to wonder: why do we still need real estate agents? With the rise of Proptech, can we eliminate the middleman? However, the answer is not so clear-cut.
In fact, Anjia SG might be able to answer this question and explain why real estate agents cannot be completely eliminated.
Despite new technologies, some roles of real estate agents may be impossible for websites to replicate:
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Table of Contents
The Role of Real Estate Agents in the Broader Market
Although home buyers and sellers are the main client groups, the entire real estate market relies on real estate agents far more than many people expect. Take property developers, for example:
Industry insiders know that, aside from some marketing expenses (brochures, advertisements, etc.), most developers entrust the fate of their projects to real estate agents. It is the responsibility of real estate agencies to sell all units within a tight five-year deadline; otherwise, developers will face the Additional Buyer’s Stamp Duty (ABSD).
Furthermore, if you search for any project, you are likely to see a real estate agent’s website first, rather than the official developer’s site.
Developers often complain that real estate agents increase project costs (commissions can be as high as five percent of a new project’s sales price), but they have no choice: they can’t sit back and wait for buyers to come to them.
Property portals once advocated for directly connecting buyers and sellers, but most sites have abandoned this idea and agreed to work with real estate agents. Many portals do not allow sellers to list their homes themselves; it must be done through a licensed real estate agent.
This is due to the presence of fraud and questionable listings. When anyone could post a listing, portals were often plagued by scammers or other fake listings. Additionally, because direct transactions between inexperienced buyers and sellers could lead to issues, portals were sometimes held accountable.
Some portals also found that they had to provide significant assistance to inexperienced parties, and they saved time and money by ensuring that only experienced agents dealt with home buyers.
Therefore, as far as the broader real estate industry is concerned, the role of real estate agents remains very necessary, even in 2023.
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Why Do Home Buyers and Sellers Still Need Real Estate Agents?
In some cases, it is possible to bypass a real estate agent, and we will detail these situations below. However, real estate agents still provide services that are difficult to replicate:
- Controlling timelines and home upgrades
- Specialists in specific projects
- Extra vigilance during the transaction
- Managing negotiations
- Urgent listings
- Marketing expenses
1. Controlling timelines and home upgrades
The primary benefit of a real estate agent is demonstrated time and again in their management of timelines. For example, with a real estate agent, it’s possible to upgrade to a condominium while only moving once.
The role of a real estate agent is most significant when upgrading a home. When a buyer needs to sell their previous property and buy the next one, arrange moving times while the bank loan is not yet settled, an agent can help minimize costs such as temporary accommodation.
This is particularly important when the Additional Buyer’s Stamp Duty (ABSD) is involved. A condition for ABSD remission is that the previous property must be sold within six months of purchasing the new one, which means a quick sale is necessary. A good real estate agent can coordinate the promotion and sale of the old home while searching for a new one.
The ABSD is 20% of the property price (recently raised from 17%), while a real estate agent only charges 1% to 3% of the sales price. In the above situations, paying for professional services is justified.
Even without considering home upgrades, some inexperienced buyers have lost money by not following the correct sequence of transactions. For example, some buyers pay the deposit before securing a bank loan.
Once they are unable to find suitable financing, this non-refundable deposit is lost. The presence of a real estate agent can prevent these costly mistakes.
2. Specialists in specific projects
Real estate agents don’t just focus on specific areas; some specialize in particular projects. For instance, some agents might be representing seven or eight units for sale in the same project simultaneously.
These agents are well-informed about ongoing transactions and can sometimes offer invaluable advice. We recently encountered such a case with a ground-floor unit:
An agent familiar with a certain project knew that the price of a ground-floor unit would soon rise to an unusually high level because the unit underwent extensive renovations that the buyer had agreed to.
However, the impact of the renovation was not reflected in transaction records, such as in the Urban Redevelopment Authority (URA)’s caveats. Therefore, the high transaction price of the ground-floor unit would give the impression of rising property values and push up the prices of other units in the project.
This allowed the real estate agent to warn their client, enabling them to complete their transaction quickly before this effect took hold.
This kind of detailed, practical experience is one of the values an agent provides.
3. Extra vigilance during the transaction
A few years ago, there was a transaction where a real estate agent saved a client from tens of thousands of dollars in fire damage.
The buyer had already exercised the Option to Purchase (OTP), and the seller was about to move out. At this point, the buyer let their guard down and didn’t visit the property again. But the agent did. Because of this, the agent discovered fire damage at the back of the house that had occurred the day after the OTP was exercised, which the seller had hidden with a tarp and cardboard boxes.
Similarly, we have heard many stories of agents who, by frequently visiting a property at different times, discovered details that would be hard for a buyer to notice—such as noisy neighbors or loan sharks targeting other units in the building.
4. Managing negotiations
This is one of the most common reasons people hire real estate agents, and even experienced real estate investors sometimes choose to use an agent for this specific reason.
The most obvious example is a cultural or language barrier. Sometimes the buyer and seller speak different languages, so an agent is needed to act as a linguistic intermediary. Beyond that, some people just find negotiations stressful.
They don’t like the back-and-forth of haggling, or having strangers repeatedly view their home and comment that certain rooms are ugly, etc. It’s an emotional and time-consuming drain, so they prefer to entrust it to an agent.
An agent’s experience also comes into play—if you receive a good offer on the first day of marketing your home, do you accept it? Or are you confident a better price will come along? How do you determine if an offer is genuine? How do you screen potential buyers?
These are often overlooked points in a property sale.
5. Urgent listings
When it comes to buying or selling a property quickly, almost no one can move faster than a real estate agent. As mentioned above, most major property portals don’t even allow individuals to list homes for sale, so an ordinary person has little way of achieving the same results as a qualified agent.
At the same time, because they spend all day networking, agents already have a large pool of contacts and interested buyers, so they can start making calls to a targeted group immediately.
6. Marketing expenses
Real estate agents are effectively running their own businesses, a point that many people overlook. When you see posts on social media about agents earning six figures a month, don’t forget that this is like a company’s revenue, not profit.
A significant portion of the money an agent earns is often used for marketing costs. These can be digital ads (Google, Facebook, etc.), classified ads in newspapers, flyer expenses, and a large portion may go to property portal advertisements. There are also other costs, such as photography or videography for YouTube.
If your house is reasonably priced, well-located, and easy to sell, some of these expenses may not apply.
However, if you own a property that targets a more specific audience, you will quickly realize that marketing expenses can add up.
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When Do You Not Need a Real Estate Agent?
- Simple HDB resale transactions
- Transactions that are not urgent
- A “chain” of tenants exists
- You already have an interested buyer
1. Simple HDB resale transactions
HDB resale platforms exist to help ordinary people complete HDB transactions on their own. Although it requires some paperwork and you need to find a buyer yourself, there are many successful cases.
Especially between 2021 and 2023, due to very high demand for resale HDB flats, many such properties essentially sold themselves. If a seller has the right channels to market the property (often the biggest hurdle), they might be able to complete the transaction on their own.
2. Transactions that are not urgent
If you are not in a hurry to sell, or want to test the market (i.e., set a price far above valuation because you’re in no rush), then you may not need a real estate agent.
We have met some sellers who, due to high-end renovations, the property belonging to a celebrity, or other non-fundamental reasons, firmly believed they could sell for a price above valuation. In such cases, they prefer to wait until someone accepts their offer.
The same applies to rental properties. Some landlords would rather keep their property vacant until they get the price they want.
In these situations, a real estate agent may not be able to help and might temporarily shelve your property if they believe your expectations are too high. It can be more annoying if they start pushing you to accept lower offers because they want to collect their commission and move on to the next deal.
3. A “chain” of tenants exists
Some landlords have a continuous stream of tenants who recommend other tenants. Student rentals are a good example: graduating students often recommend their landlord’s property to their juniors, who then move in after they graduate.
This can also happen with companies, for example, an expatriate employee recommends a house to a colleague, and when they leave, the colleague moves in.
Landlords fortunate enough to have this situation often don’t need to hire a real estate agent because they already have a constant source of tenants.
This is also a good reason for landlords to build good relationships with their tenants and keep their properties well-maintained.
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4. You already have an interested buyer
The most obvious example is a transaction within the family (e.g., someone’s sibling has already agreed to buy the property). There is no need to find a buyer, and the seller may not care about the highest price because family is involved.
In other cases, the buyer may be a partner or a friend who is ready to proceed with the paperwork and pay the deposit. In these situations, some sellers can complete the transaction with just the help of a law firm.
However, in other situations, you can still rely on a real estate agent. Although agents no longer hold all the cards (including all market data) as they did in the 1980s or 1990s, it has been proven that even today, real estate agents are hard to replace, and for good reason.
However, it needs to be clear that all the above situations depend on finding a good real estate agent. Most real estate agents are not outstanding, which is why there is a generally negative impression of them, and the behavior of those who use exaggerated methods to attract other agents doesn’t help.
To learn more about market changes, you can follow our website, Anjia SG. Whether you want to use a real estate agent or handle things yourself, we will provide you with opinions on new and resale properties, as well as the latest trends and strategies in Singapore real estate.
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