Clearing the air on agent’s commission and ethical obligation

I REFER to yesterday’s Forum Online letter by Ms Koh Siew Buay, ‘Couple viewed flat and then came hubby’s sister – seeking agent’s commission‘.

It is not clear from Ms Koh’s letter if she had advertised to sell her own property or she is an estate agent acting on the seller’s behalf. In either case, we would like to clarify that it is proper for agents to represent their family members in property transactions.

However, the rules of good practice and disclosure of interest continue to prevail. In this situation, the buyer’s agent should have made contact with Ms Koh in the first instance to identify herself as the brother’s appointed agent and make arrangements to view, even if she is unable to be present at the initial viewing. Doing so would have prevented any controversy or misunderstanding arising subsequently.

If Ms Koh is an agent, we suggest she present the buyer’s offer to her seller as she is expected to do so and resolve her contention with the buyer’s agent over commission separately. There is no cobrokerage contract as yet between Ms Koh and the buyer’s agent even if the seller accepts the offer.

Alternatively, Ms Koh is at liberty to negotiate the proportion of shared commission with the buyer’s agent if she deems it appropriate. In the event that Ms Koh is unable to resolve this, Singapore Accredited Estate Agencies can facilitate mediation for both agents.

If Ms Koh is the property owner, she is, of course, not obliged to accept the offer or pay commission. There is also a potential conflict of interest if the buyer’s agent is asking the seller for commission.

In addition, we would like to add that if the agent is acting on the seller’s behalf, there exists an ethical obligation for him to declare the relative’s interest in the property to his client should a family member wish to buy. This also applies to the agent who may be interested in buying the property he is marketing for the seller.

Dr Tan Tee Khoon
Chief Executive Officer
Singapore Accredited Estate Agencies

Source : Straits Times – 10 Dec 2009