Real Estate Agents Likely To Influence Hike

Areal estate agent and president of Realtors Association of Fiji founding, Vyas Sharma, believes that agents may influence the hike in real estate prices.

This is to get more out of their two per cent commission.

Mr Sharma is the principal agent and chief executive officer at Khelvin Realtors Limited.

His views follow Government’s move to regulate the commission charged by real estate agents on residential properties to no more than two per cent of the sale value.

The Attorney-General and Minister for Economy Aiyaz Sayed-Khaiyum made the announcement last week while delivering the Revised 2021-2022 National Budget.

“There is a general consensus among stakeholders such as the real estate agents and licensing board, property developers, architects, and engineers to regulate the commission rates, ”Mr Sayed-Khaiyum said.

“Below a certain price threshold, which will be finalised in the regulations, we will be limiting the commission charged by real estate agents on residential properties to ‘no more than two per cent of the sale value.”

Mr Sharma said competition determined the commission that individual agents charged to their clients.

Standard Charge

However the standard charge ranges from three per cent to five per cent depending on the sale value of the property.

“Normally, the agent would try and get the selling price down for the purchaser to suit the client’s budget and eligibility for funding from financial institutions,” he said.

“But remember the selling price is determined by a valuation certificate which is prepared by an independent registered valuer.

“I have to agree that the purchaser will end up paying the maximum price of the property. In short, it will mean that most of the agents will have to.”

He said the two per cent cap on all residential properties of up to $1.5million would in short drive the majority of real estate agents out of business.

“It is simply unrealistic and unworkable, at some point the Government would put a cap on fees that realtors can charge so that property prices do not skyrocket out of control."

"However, a lot of research and study will have to be done before a government can actually arrive at that figure,” he said.

“The majority of the deals will be in the range of $250K to $359k and the return of two per cent is simply not enough to break even.

“Real estate companies carry a lot of overhead and it is clear that the government did not consult relevant stakeholders before making the announcement.”

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