Agencies strive to boost headcount - but up to half of 30,000 agents may be dormant

THERE are over 30,000 registered property agents in Singapore, but the number may be misleading as some estimate that as many as half of all agents could be dormant.

This comes amid intense competition among real estate agencies to boost headcounts because developers tend to engage the bigger agencies to market their projects.

Based on figures from industry regulator Council for Estate Agencies (CEA), there are 32,414 registered agents spread across 1,102 agencies as at Jan 1, 2022.

This represents an increase of just 4.4 per cent in the last 10 years, from 31,040 at the start of 2013.

Agencies may feel compelled to keep inactive or “sleeping” agents to lift their numbers, even though these agents drain their resources in terms of spending on incentives, professional indemnity, events and training, without contributing to the industry. 

Considering that the number of resident households - which includes public and private dwellings - has, according to the Singapore Department of Statistics, grown 21 per cent since 2012 to 1.39 million in 2021, there are also concerns that there are insufficient quality agents to adequately serve consumers.

Inactive agents may not offer consumers the service level and advice they deserve, and may even risk mishandling transactions.

To become a licensed property agent, one of the requirements is to pass a Real Estate Salesperson (RES) examination. Thereafter, an agent has to fulfil at least 6 credit hours of continuing professional development (CPD) courses every year, among other criteria, in order to renew his or her licence.

However, there is “currently no requirement for property agents to complete a certain number of transactions in order to maintain or renew their registrations” said CEA in response to queries from The Business Times.

CEA says it is unable to estimate how many property agents are inactive, as it only collects and publishes residential property transaction records of property agents.

“Property agents with no residential property transaction records could be facilitating commercial and industrial property transactions or taking on managerial roles that require them to supervise and guide other property agents,” said a CEA spokesperson, adding that consumers can view information on all residential property transactions facilitated in the last 24 months by property agents on CEA’s website.

Meanwhile, there is strong demand to sit the RES exam, which is typically held three times a year, with places for 3,000 candidates at each seating. All seats for the latest exam in April were taken up by eligible applicants shortly after the opening of the registration process.

According to CEA, the average annual passing rate is about 30 per cent.

Given the passing rate, there should be about 2,700 new agents registering each year, but over the past 3 years, only an average of some 1,500 new property agents have been registered annually.

CEA says this could be because not all available exam seats were taken up every time, some applicants may not have met the full registration criteria, and not all who pass the exam proceed to register as an agent.

At the same time, an annual average of about 1,200 agents did not renew their licences at the end of the last 3 years.

PropNex Realty, Singapore’s largest agency with 10,796 agents as at Jan 1, declined to comment for this story.

However, ERA Realty, the second largest agency with 8,492 agents as at June 8, said that most who join the real estate industry after passing the RES exam would probably still be in other full-time employment.

“So, the way we look at them is that they are real estate agents in transition,” said Eugene Lim, its key executive officer.

ERA’s own definition of an inactive agent is one who has been with the company for more than a year, does not attend any ERA-organised events, briefings and trainings and submitted zero transactions since joining.

Based on this definition, it says less than 9 per cent of its agents are inactive.

The third largest agency here, Huttons Asia, with 4,388 agents, considers those with zero transactions in a year as inactive, but did not reveal how many among its ranks fall into the category.

“Generally, there are inactive agents across the agencies and the number will be bigger proportionately with their agent force,” said its chief executive officer Mark Yip. “The industry average is probably about 10 to 30 per cent.”

Reasons for agents not transacting include them being under full-time employment elsewhere, going on medical or sabbatical leave, travelling overseas frequently, or keeping their licence as a backup.

“One of the primary reasons they continue to maintain the real estate salesperson registration even though they are inactive, is because it is extremely hard to pass the RES examination, even for diploma or degree holders, and some of them only managed to pass after multiple attempts,” explained ERA’s Lim.

Still, there may be a case for weeding out agents who have no real intention to transact, as practitioners say sleeping agents aren’t good for the industry.

“Once in a while, these agents come out and have 1 or 2 referrals they want to work on, but they have been inactive for so long, they’re not in the loop, not aware of policy changes and can jeopardise a deal,” says the owner of a small agency, adding that when he speaks to such agents, they are unfamiliar with financial or legal procedures and may fail to follow them.

“Some transactions are not so straightforward, especially those involving divorce and probate, and these agents don't advise the clients properly.”

He reckons that almost 60 per cent of agents are inactive.

Another agency boss says sleeping agents ultimately impact overall service levels.

“When the property market is hot, agents get more choosy and are not interested in low-hanging fruit, such as handling smaller deals like the rentals of rooms. The commission is not enough to entice them,” he says. “But there is a spectrum of needs in the market after all.”

The Singapore Estate Agents Association (SEAA), which represents estate agencies and salespersons, acknowledges that less active agents may fall short in keeping updated with the latest regulations and real estate knowledge.

“This may result in providing misinformation to clients and being penalised for the mistakes committed,” said an SEAA spokesperson.

To address this, SEAA proposes increasing CPD hours, promoting competency and ethical conduct and updating industry knowledge.

However, this is not ideal, says the agency boss, who is “very confident” that at least 50 per cent of agents have zero transactions in a year. “To me, inactive means licensed for at least a year but with no transactions. I don’t care if you come for training. After all, what's an agent if you don't transact?”

He says minimally, an agent should close at least 3 transactions a year. Anything less than that, and he or she may be out-of-pocket given licensing, agency, advertising and platform fees, he adds.

When asked if there should be a prescribed minimum number of transactions before an agent can renew his or her licence, SEAA suggested 3 to 5 transactions over a 2-year period or the agent’s “time and effort spent in real estate work may be a suitable gauge”.

The spokesperson added that other factors that ought to be considered include the agent’s years of experience in the industry and any medical conditions.

When posed the same question, CEA says it conducts regular reviews to ensure that its policies and regulations for the industry remain relevant, and that property agents continue to uphold professional standards.

“In reviewing the registration and renewal criteria for property agents, CEA will consider factors that could contribute to the raising of professional standards, as well as the potential impact to the industry and consumers.”