Monday, November 17, 2014

Do-It-Yourself In a Property Transaction

A few weeks ago, I saw a CEA advert in the newspaper highlighting certain rules of the property market, in case consumers were not aware. One of the rules that caught my eye was that "Agents are not allowed to tell you that you must engage the services of an agent".

If they can't tell me that, is it because I actually do not need an agent?

Well, the answer is yes, you do not need to engage a property agent. You are allowed to Do-It-Yourself (DIY). The CEA consumer guide brochure was quite explicit about it, but it did not elaborate.

Don't get me wrong, real estate agents aren't freeloaders that earn money doing nothing. They do have value. However, I am against blanket 0.5/1/2% commission fees for work which is essentially same for a $500k condo and a $10 million bungalow. If I can do the transaction myself then I will save my side of the commission. Whoever is selling me their property, well, he can just pay his agent commission out of his own pocket. Not really my problem.

DIY is apparently not as obscure at I thought it would be. Back in 2012, 1 in 10 HDB resale transactions were done DIY with no agent. That means BOTH parties did not use an agent. This really is a lot more common than I imagined.

However, information and guides on this process is very scarce. I would have imagined that at least a few people would have at least complained or talked about their experience doing a DIY transaction. I have only 3 resources so far and I have only skimmed through them. PropertyHub gives a very precise overview, PropertyGuru elaborated on the OTP, while URA has all the officially worded stuff.

"The tedious paperwork" that requires the rare expertise and skills of a professional property agent seems to involve just 3 things:

1) OTP
2) Sales and Purchase Agreement
3) Certificate of Title

I haven't read much about the entire process, but I hope that as I read and learn more about this DIY process, and I will blog and journal my experience to other to know of this option.

In all frankness and absolute honesty, I am not pissing on the real estate profession. However, just like the insurance profession, the real estate profession is a dying and shrinking profession. Their value has been greatly eroded by technology. Sure, 15 years ago when no one used the internet much, finding and matching buyers and sellers was a task that no ordinary Joe could do. Property agents WERE the market. On top of that, managing newspaper ads and liaising appointments on landlines isn't easy.

However, with the internet, many things have changed. The internet has now made this very opaque market transparent to anyone with an internet connection. I don't see much value of a property agent other than haggling ability and paperwork skills. The better ones have experience, "gut instinct" and a better visibility of market depth and prices. That's not to say that it isn't valuable. But.... 1% of a $1 mil property is a lot of money. If property agents offered their services fee-based, I wouldn't even give 2 shits about doing it DIY, I would engage an agent.

It's the same problem as the entire financial industry. Charge me for the labour and work, but not based on how much I can afford. Unless your cost scales with the price, you can just bugger off.

It's not personal, it's just money.

Welcome to the future.


  1. I don't like the concept of a buyer agent for hdb flats. They have a fixed rate of commission on the sale price. Therefore, they have no incentive to help buyer bargain down the price.

    They also refer buyers to banks for mortgage, getting a referral fee which is also a % on loan quantum. Higher sale price, higher loan quantum. Uber no incentive to help buyers on the price.

  2. For people who wanna DIY. Can refer to this website for the steps.

    For more information, pay $25 for the hdb resale seminar.

    1. Hi pf,

      Thanks for your comments and your links, it is really helpful. I will get down to piecing together all the information that I have gathered soon! Thanks!


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