Set commission, scope of work?

http://www.todayonline.com/hotnews/EDC091126-0000092/Set-commission-scope-of-work


Set commission, scope of work?

These are among several suggestions for new regulatory framework
by Tan Hui Leng
05:55 AM Nov 26, 2009
SINGAPORE - A property seller signs a commission agreement to pay the property agent 2 per cent on the deal but later complains to the Singapore Accredited Estate Agencies (SAEA), saying that he should not be paying so much as the agent had not "fulfilled his responsibilities".

A scenario like this could soon become a thing of the past if a proposal - that the Government set a standard commission guideline and implement a standardised form that sets out what an agent is expected to do - becomes part of a new regulatory framework for the real estate industry.

"We would usually ask what is the scope of work committed in a commission agreement but there's usually nothing more than that of an agent who will procure a buyer for the seller," said SAEA chief executive, Dr Tan Tee Khoon. "When this is done, his work is done."

With agents' commissions being a touchy issue, it comes as no surprise that one suggestion the Ministry of National Development (MND) has received in its public consultation on the regulatory framework is that of regulating the commission rate of property agents.

Some respondents suggested that the Government should set standard commission guidelines to curb undercutting among agents and protect less-educated consumers from being overcharged.

The public consultation - carried out between Oct 13 to Nov 17 - drew over 200 independent comments and suggestions, some of which may not be feasible, said industry players.

The suggested commission fee guideline for one, may not be viable. There was already such a guideline from the Institute of Estate Agents (IEA) previously but it was removed last year because the Competition Commission of Singapore had deemed it to be anti-competitive.

"The consumer feedback may not be in the spirit of existing laws or rules, it is also in the consumers' favour to let the market dictate," said PropNex chief executive, Mr Mohamed Ismail.

IEA president Jeff Foo, however, is for restoring the fee guideline as it would help consumers gauge the market rate for commissions.

Other suggestions to regulate the industry include standardising real estate industry practices; limiting the size of agencies for better control of agents; and disallowing agencies and agents from direct buying of properties from sellers or developers.

The last point is a breach of "basic human rights" to invest, said Dr Tan. This should be allowed as long as there is proper disclosure and the transaction is above board, he added.

In general, the public was supportive of key features proposed, including mandatory accreditation of agencies and agents; maintaining a public central registry for accredited agents; setting up an independent tribunal specialising in the industry; and introducing a demerit points system for errant agents.

MND will consolidate views from various channels when refining the regulatory framework - with the key elements expected to be announced early next year.