Who is the tenant's agent and should you engage one?

In a previous article, we’ve covered the two types of property agents in the rental market: Landlord’s agent and tenant’s agent.

In general, renters are familiar with landlords’ agents as most rentals will inevitably engage one in the process. The concept of a tenant’s agents, however, is more nebulous as they require active engagement on the part of the tenant.

Landlord’s agent

Any agent appointed by the landlord to market a property. This agent provides advice to the landlord on how to strategise the promotion and presentation of the unit to its best advantage, and helps to source for tenants through various means. The landlord’s agent should have the landlord’s best interests at heart.

Tenant’s agent

Any agent who assists the potential tenant in the property search and coordination of property viewings. The tenant’s agent typically provides valuable service in the form of professional advice and helps to negotiate deals in the tenant’s favour.

Different roles to different clients, but not dual representation 

In Singapore, property agents are not allowed to simultaneously represent the tenant and the landlord if they are seeking to complete a deal on the same piece of property (e.g. the landlord is renting out an apartment unit, and the tenant is seeking to rent that same apartment unit).

There are, however, no regulations forbidding property agents to act as a landlord’s agent to some clients and as a tenant’s agent to other clients, so long as those clients are seeking deals for separate properties.

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For example, Alex is a property agent, who is working as a landlord’s agent on behalf of Robert, a landlord seeking to rent out his apartment in Clementi. Alex can also acts as a tenant’s agent to Michelle, a renter hoping to rent a house in Jurong, which belongs to another landlord (not Robert’s).

Alex is able to render his services as both a landlord’s agent and as a tenant’s agent as long as there is no conflict of interest.

Some property agents may choose to specialise as a landlord’s agent, and others may choose to specialise as a tenant’s agent. But many property agents will serve as either type of agent at different times depending on the availability of clients.

The role of the tenant’s agent

The services rendered by the tenant’s agent include, but are not limited to the following:

1. Conducting research on property listings
2. Making enquiries to landlords and landlords’ agents on the availability of listings
3. Making rental recommendations to tenants
4. Scheduling of viewings
5. Providing advice on market rental rates and making rental negotiations with the landlord or landlord’s agent on behalf of the tenant
6. Some agents also offer to organise transportation for the tenant(s) to-and-from viewings

If you pick a knowledgeable and professional agent to represent you as a tenant, they may help you help save a significant amount of time and help you avoid great hassle.

For example, they can make specific recommendations based on their experience after listening to your needs. This prevents you from wasting time viewing places that don’t fit your non-negotiable requirements.

They may also do due diligence on the landlord to make sure you don’t get cheated.

How to engage a tenant’s agent

1) Direct engagement (agent was directly appointed to serve as a tenant’s agent)

A tenant who needs to look for a place to rent but does not have the time or knowledge to conduct their own search may either directly approach a property agency to appoint a property agent, or directly approach a property agent to help them conduct the search based on their needs, budget, and preferences.

If the appointed property agent agrees to carry out the search for the tenant, then that property agent becomes the tenant’s agent.

To formalise the agreement between the tenant and the tenant’s agent, both tenant and agent will need to sign a form provided by the CEA (Council of Estate Agencies in Singapore), “Estate Agency Agreement for the Lease of Residential Property by a Tenant”.

In the interest of both the tenant and the tenant’s agent, both parties should have clear agreements on the commission and services to be rendered by the agent prior to the commencement of the agent’s services.

2) Indirect engagement (agent initially came into contact with tenant while serving as a landlord’s agent)

Sometimes, a tenant will view the unit represented by the landlord’s agent (say for example, after searching on 99.co) and decides that they’re not interested in renting the unit after all. In such situations, the landlord’s agent may take the initiative to ask the tenant whether they are interested in other properties.

After all, the tenant still needs to continue their search, and the agent, who is knowledgeable in the real estate industry, may have some ideas on how to help the tenant look for the perfect place.

If the tenant is sincere in accepting the agent’s offer of service and willing to pay them a fee, then both the tenant and agent who offered the service will need to undergo the same procedures as in a direct engagement – to sign the “Estate Agency Agreement for the Lease of Residential Property by a Tenant” form, and agree on the commission and services to be rendered by the tenant’s agent.

Once the terms and conditions have been laid out and the form has been signed, that agent will now become the tenant’s agent.

If the tenant does not wish to engage the services offered by the agent, then they can politely decline.

Tenant’s agent commission

If the tenant has engaged a property agent to serve as their agent, then the tenant will pay a commission to the property agent depending on the rental rate and lease period.

Bear in mind that there are no official regulations on commission rates in Singapore. It is completely market-driven, but the “threshold” rate ranges from $3,000 to $4,000. This means that, typically, if the renter is seeking a two-year lease for a room with $4,000 in monthly rental, then the commission will be borne entirely by the tenant.

However, if the tenant does not enter into a binding lease for any of the rentals recommended by the tenant’s agent by the end of agreed period for the tenant’s agent’s service, then the tenant is not required to pay any commission regardless of services rendered.

(But of course, this does not mean that prospective tenants should exploit tenant’s agents to do as much work for them as possible without genuine intentions of finding a place through their agents.)

Check, check, and check again

The formalisation of the appointment of the tenant’s agent is often overlooked, which may lead to disputes if they deviate from their informal agreements during the course of tenant’s agent’s services.

For this reason, both tenant and the tenant’s agent should sign the “Estate Agency Agreement for the Lease of Residential Property by a Tenant” form, and agree on the commission and services to be rendered by the tenant’s agent prior to the commencement of any services by the tenant’s agent.

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If the tenant’s agent does not initiate the formalisation procedure, then the tenant should be proactive in asking the property agent about paperwork and commissions.

In the best interest of both parties, they should clear up any ambiguity by including as many clarifications and agreed terms as possible on the agreement form. This includes commission rates, threshold rates, declarations of any possible conflicts of interest, etc.

Last but not least, tenants and their agents are like tag teams – their success of finding a suitable rental together depends very much on each other’s trust, cooperation, and understanding. A good tenant’s agent will provide an invaluable service to the tenant, while a good tenant will provide the agent a commission when appropriate and treat the agent’s time with respect.

Whether it is the tenant who initiates the appointment of a tenant’s agent, or the property agent who offers his/her services to a potential client, they will need to make an effort to earn each other’s trust and cooperation to find a home for the tenant successfully.

This article was first published in 99.co.