By Mr. Propwise
Your property agent is supposed to always act in the best interests of the buyer and/or seller but many of us know from personal experience or anecdotal evidence that that is not always the case. In order to protect consumers, the Council for Estate Agencies (CEA) has published a brochure titled Consumer Tips for Engaging a Real Estate Salesperson to help buyers and sellers get the best possible prices or rents when looking to enter into a property transaction.
To clarify the use of terminology, the CEA defines “Estate Agents” as the estate agency businesses that broker property while they refer to “Salespersons” as the individuals who perform the estate agency work, i.e. people we would typically refer to as property agents. For the rest of the article I will use the phrase “property agents” (as that is what most people would call them) instead of the CEA’s “salespersons” but they mean the same thing.
What is a Property Agent Responsible For?
Your property agent is responsible for the following:
- Give you professional and truthful advice without making any unsubstantiated claims (e.g. “You will DEFINTELY make money GUARANTEED” etc)
- Help you negotiate based on your instructions
- Immediately notify you whenever any offers come in (i.e. they should not withhold any offers from you even if it is detrimental to their own interests, e.g. from co-broking agents)
- Help you through the process of a transaction and explain all documentation to you
- Follow your instructions and declare any conflicts of interests in the transaction
Additionally, for HDB transactions the agent is required to:
- Brief you on your eligibility to buy, sell, lease and borrow
- Guide you through the resale checklist and check whether the renovations are approved
- Assist you in submission of forms and documentation
Your agent must also carry and display his Estate Agent card whenever he is carrying out estate agency work.
What a Property Agent is Not Allowed to Do
A property agent is not allowed to represent both the buyer and seller or landlord and tenant to prevent any conflicts of interest. This is called “dual representation”, and is prohibited even if both parties consent to pay the agent commission.
Agents are also not allowed to make referrals to moneylenders, and to hold on to any transaction money (e.g. option fee, downpayment, stamp duties, deposits and sales proceeds). Note that valuation fees and commissions are not included in this category.
Best Practices When Dealing With Property Agents
Agents often want you to sign an “exclusive” agreement with them, which means that you agree not to appoint any other agent to market your property for a set period of time. If you do this, even if you sell the property directly or through another agent, you will be liable to pay commission to the agent you have an exclusive agreement with so be careful before you sign this.
As for commissions, contrary to what many agents claim, there is no set commission (the CEA does not prescribe this to allow competitive market forces to work for the consumer’s benefit). So you can negotiate the rate. Of course, how much you are willing to pay depend on how much value you think the agent brings – property agents do play a critical role in any transaction so they should be compensated fairly.
When paying commissions, make sure that you only pay it after the transaction is completed, and this should be paid to the Estate Agency and not directly to the property agent. You should also clarify when fixing the commission rate whether it includes or excludes GST.
Tips on Working Well With Your Property Agent
- Engage only licensed property agents – you can check the Public Register at www.cea.gov.sg
- If you are appointing multiple agents, it is good to inform them so their marketing efforts do not overlap, which can work to your disadvantage
- Read and understand any documents before you sign them. If you don’t understand anything, clarify it with your agent or your conveyancing lawyer
- At the end of the day, you are responsible for making the final decision, not your agent
- If you have a dispute with your agent, you can lodge a complaint with his or her estate agency. If you are unable to get a satisfactory resolution, you can go for mediation/arbitration under the CEA’s Dispute Resolution Scheme (as long as you’ve signed a prescribed Estate Agency Agreement). You can also lodge a complaint with the CEA.
- If you are familiar with the property transaction process, you can choose to represent yourself. There is no legal requirement for you to engage a property agent.
Following the steps above will minimize the probability of misunderstandings with your agent that might only come up at a later stage, and ultimately help you get the best possible deal.