Time to regulate property agents

I refer to the letter, ‘Time to regulate property agents’ (ST, July 11), by Mr Teo Cheng Peow.

Mr Teo’s rhetoric of unscrupulous and greedy estate agents who do not act in the interests of their clients is laudable and one can’t agree with him more on the necessity for improved regulation of estate agents in Singapore.

Certainly the boom in the property market has also brought with it the bane of opportunistic agents who are drawn only by the lucrative commissions that can be earned as a result of the property price hikes.

However, Mr Teo’s letter also brought a sense of disquiet if all his views expressed were left unchallenged.

Firstly, it is simplistic generalisation that agents who do not co-broke and those who earn commission from both parties (seller and buyer) are greedy. If an agent is able to fetch a bona-fide deal for his client without having to work with another agent, is such conduct unbecoming?

Perhaps the best judge is not co-brokerage or the absence of it; rather, it is the satisfaction of the client. It is also not unethical to collect commission from both seller and buyer provided this is made known to the parties.

Mr Teo would definitely be aware that neither the Institute of Estate Agents (IEA) nor Singapore Accredited Estate Agencies (SAEA) prohibits their members from the collection of commission from seller and buyer but that double commission be declared.

Secondly, while improved regulation of estate agents is beneficial, excessive regulation may hamper true commerce and can be structurally oppressive for any profession to thrive.

The problem of commission does not dissipate with a fixed scale of fees. Fixing professional fees means remote or no room for negotiation. It may not be always equitable to pay the recommended scale. It can also take away the sovereign right of consumers to ascertain reasonable remuneration for service providers who exceed their expectations.

In this regard, IEA has a recommended scale of professional fees which the body is apt to add in its document posted on the website (www.iea.org.sg) that ‘this scale of professional fee/commission is not intended to restrict or interfere with any private arrangements which agents/agencies may have with their clients’ (clause 1.3). In fact, the document is so well-crafted that it goes on to clarify in clause 1.4.2 that ‘agencies and their clients and agencies among themselves shall document/communicate at the outset, their agreement on commission, costs and disbursements’.

These clauses presuppose that agent’s commission is a matter that can be negotiated between consenting parties and that the agreed commission take precedence over the scale of recommended fees as the latter is not intended to restrict or interfere with such private arrangements. Besides, other costs and disbursements can also be separately negotiated from commission. Are these workings of free enterprise foreign and/or untenable to Mr Teo?

Moreover, IEA is not the only body representing estate agents in Singapore. A visit to its website (by clicking About Us) will show that it is a body representing estate agents and not ‘the industry’s association’ as Mr Teo claimed using the definite article.

Perhaps Mr Teo could visit the websites of SAEA and the Singapore Institute of Surveyors and Valuers (SISV) as well if he has not done so.

Not all estate agents are members of IEA and the nature of membership in IEA is individual and not corporate, that is, agency. Thus, Mr Teo’s remark of regret about the online letter, ‘IEA not the only body regulating estate agents in Singapore’ (Online forum, June 23), is misleading.

The large property agency Mr Teo alluded to could very well be abiding by the rules of the association it belongs to.

In reality, no buyer or seller is at the mercy of any real estate agent. Using an agent is a matter of personal choice and the fact that agents receive more commission relatively speaking in a boom market is hardly a yardstick of their professionalism.

Dr Tan Tee Khoon

Source: The Straits Times, 13 July 2007