ST Forum : Demerit system for agents enough to protect clients

Dec 1, 2009

Demerit system for agents enough to protect clients

I REFER to last Saturday's letter by Mr Ho Kah Chuen, 'Rules should cover concerted action by agents'.

The purpose of regulating against the practice of dual representation is to ensure that consumer interests (be it seller or buyer) in a real estate transaction are safeguarded by restricting the same estate agent to acting for either of the two parties instead of both. There exists a conflict of interest when the estate agent acts for both parties.

However, there is no necessity to further prohibit two agents from the same team in an estate agency from acting for seller and buyer respectively. Such a practice, known as internal co-brokerage, is a form of general co-brokerage.

It is unfair to imply that estate agents are more likely to collude with their own team members to the disadvantage of their clients if they co-broke internally since the same can also be said of estate agents from different companies who co-broke regularly with each other as friendly business allies.

Besides, it is the seller's prerogative to grant exclusivity and it is both a contractual as well as ethical obligation of the estate agent to make known all valid offers to the seller regardless of their origin (from his team or elsewhere).

Moreover, in the proposed regulatory regime, estate agents shall be individually accredited to practise and are subject to a demerit point system should there be professional misconduct. Estate agencies to which they belong shall also bear the brunt of the demerit points and other punitive measures meted out to their agents.

These proposed regulatory measures, currently absent in the industry, are adequate as a whole to deter estate agents from compromising on the interests of their clients. It would suffice to regulate against dual representation and not dual agents.

Dr Tan Tee Khoon
Chief Executive Officer
Singapore Accredited Estate Agencies