Exclusive/Sole Agency

Most successful real estate transactions are conducted through exclusive agency. This means appointing only one real estate agent to manage the marketing and sale/rental of the property. In Singapore’s context, this exclusive period is valid for three months upon signing the agreement.

Now let’s take a closer look at the advantages and disadvantages of such an arrangement.

Disadvantage of exclusive arrangement
Most of the time, it is only down to one reason – appointing the wrong agent.

• The agent disappears after the agreement is signed. He does not return the owner’s call and there is no update from him.

• He does not carry out any of the activities that he claimed that he will be doing.

• He does not act in the interest of the owner.

Three months go by very fast and the owner ends up with an unsold unit. Worse still, the market has gone down some more in the meantime. The owner swears off using a sole agent and starts telling everyone he knows not to do it.

Unfortunately, things like that happen.

Advantages of exclusive arrangement

• The established partnership gives the agent total confidence to go ahead and market the property. He does not have to worry about the deal being closed by another agent. This ensures full commitment and marketing effort. Is this good for the owner?

• This agent will keep the owner updated regularly of the marketing progress and will be the only person that the owner will have to talk to. He qualifies the buyer and ensures that the owner does not waste his time opening the unit to unsuitable buyers. Is this good for the owner?

• This agent will be able to control and hold the price. For units that are marketed by multiple agents, such agents always quote the lowest price to attract buyers to call them. As such, the lowest price is always exposed. Is this good for the owner?

• The buyer who goes agent shopping. Such buyers call up many agents to see who can get him the best price for the unit. There may be ten different agents calling to enquire about the property but the same buyers could be behind these ten different agents. As an owner, is it better for the appointed agent to make ten buyers compete to offer the highest price or is it better for ten buyers to make many agents compete among themselves to secure the cheapest price?

• The majority of buyers who show up at a viewing come with an agent. The owner will still have to pay commission to the agent if the deal is concluded. Since this is the case, the owner might as well appoint one right from the beginning to ensure that his interests are well taken care of. In the event the buyer comes without an agent, the buyer will expect the owner to give a discount since the owner has no agent. Is this good for the owner?

In conclusion
I hope I have given you a good idea of the pros and cons of appointing an exclusive agent.

Appointing the wrong person to handle your property could turn out to be a very costly mistake. But it does not mean appointing exclusive agents to work on your property should be ruled out.

As explained above, it actually has many benefits. What it means is you have to be more careful with whom you choose to work with. Picking the correct agent to work with on an exclusive basis ensures a win-win situation for all parties.

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Since coming into this line, I have had the opportunity to work with many clients of diverse backgrounds. If you are looking for someone to assist you with your real estate needs, I am just a phone call away. Contact me for a friendly, no obligation discussion. Many have done so and are glad that they did – see their testimonials here.