By YANG Bingke
Lianjia, one of China's largest real-estate agents for second-hand homes, has announced a reduction in its commission rate in Beijing from 2.7 percent to 2 percent of the purchase price.
It's another positive turn for the housing market this month. Furthermore, the commission will now be shared between buyers and sellers, as opposed to being solely the responsibility of buyers as it was previously.
On a 5-million-yuan (US$680,000) home, the fee will decrease from 135,000 yuan to 100,000 yuan, with half to paid be by the seller. This means that fees for buyers are effectively now only 1 percent.
Since the government began easing housing policies, housing platforms have witnessed an influx of new listings, further confounding the problem of oversupply.
According to YANG Xianling, the head of Lianjia Research Institute, of over 160,000 listed houses in Beijing, more than 140,000 have no possibility of being sold within a year. Buyers hold all the bargaining power, hence the shared commission.
ZHANG Dawei of Centaline Property emphasized that fair competition is essential to keeping commission rates low. One of the largest property agencies in Hong Kong, Centaline has nearly 40,000 employees and more than 2,000 offices in 39 cities in Mainland China, Hong Kong and Macao.
When a few big companies monopolize the market, said Zhang, commission tends to skyrocket. This is why most major agencies charge over 2.5 percent, while smaller agencies charge less than 1.5 percent.
In Beijing, some buyers are still paying the entire 2 percent commission. Agents claim that sellers have already reduced the price, making it "impossible" to add an extra commission fee.
It will take time for both the public and businesses to adapt to this new model.
