Dual Representation – A Case of Conflict of Interest and Creative Marketing At Work

 Property agents or salesperson cannot represent both buyers and sellers in the same transaction. The rational of this is simple, that is to prevent salesperson of having conflict of interest. Before the new dual representation ruling kicks in, salesperson can get commission from both buyers and sellers. The agent may get up to 3% commission in total. Some salesperson shared with me about the recent happenings in the market.

For private property transactions, salesperson representing the seller no longer share commission with the salesperson representing the buyer. Last time, the salesperson representing buyer will get a 0.5% cut of commission from the seller’s salesperson. I can see where the seller’s salesperson is coming from. It doesn’t make sense to pay buyer’s salesperson for cobroking in the private transaction because this would be having to imply that both salespersons are serving the seller. It is the same thing happening in HDB transaction. Creative marketing at work. Seller’s salesperson ask his colleague to get buyers for his HDB flat that he is marketing. His colleague will get his commission from the buyer who called through the advertisement and the seller’s salesperson will get his commission from his seller. This is actually prohibited and is considered as both salespersons are serving the seller. Is this not the same in the private transaction? Seller’s salesperson pays 0.5% commission to the cobroking agent. I think the time has come that buyers and tenants will start to pay commission once this market practice starts to spread in Singapore. I think is only fair that buyer pays commission to his representing salesperson for his work done such as arranging for viewing appointment and accompany buyers to view houses. All these takes time and effort to coordinate. In countries such as US and Australia, the real estate agencies had already started this practice of having buyers and tenants to pay commission to their servicing agent. That is why we have both exclusive and non exclusive basis of Estate Agency Agreement for the Purchase and Lease of Residential Property. These standard documents is to let buyers and tenants be aware that they have to pay commission to their servicing salesperson if the tenant or buyer closes a deal through them. It takes time materialize… With the new standard agency forms, it certainly help some salesperson to secure their buyers or tenants in a way to be loyal to them. Imagine if you are the salesperson who is serving the buyer and after several viewings, your buyer bought another house but not through you. How do you feel? Free labour? Or blame market is as such and can’t do anything about it. However for buyers and tenants to pay commission to their servicing salesperson takes time to materialize. It takes time to educate the public on this practice. It is a conflicting thought, on one hand you are afraid to lose the deal and on the other you are afraid that the buyer is wasting your time. Educating the public We as salesperson should start educating the market by telling buyers and tenants that they have to pay us commission for having to make all the necessary arrangement and driving around. On our end we should do our part as well, that is to raise our service level and be professional in the things that we do. Take pride of it and not to further deteriorate the image of this real estate industry. Only through progressive learning and sharing of experiences can we raise our service level. What are you thoughts on this topic of conflict of interest?

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(By Lawrence Lee Chong Yan)