Landmark Case: Independent Buyers Sued For Not Willing To Pay 1% Comm

[zirhk3355 1]

April 29, 2008

PropNex takes home buyers to court over fee dispute

Case hangs on whether flat buyers who deal without agents should pay a commission, too

By Tan Hui Yee

A COUPLE who bought a home and refused to pay the seller's agent the 1 per cent commission are being taken to court by a property company.

PropNex associate director Ricky Low Yong Sern is seeking about $4,000 in commission or a service fee in a case that is likely to turn the spotlight on the issue of whether home buyers should pay a fee to sellers' agents.

He was the exclusive agent handling the sale of a terrace house in Whampoa built over 30 years ago and classified as a Housing Board flat.

Marketing specialist Loh Yi Min, 29, and his wife, polytechnic lecturer Ariel Wee, 33, bought it for $400,000 in April last year. They had acted on their own without engaging an agent.

In documents submitted to court, Mr Low claimed that he had a right to collect a commission as he had exclusive rights to market the property. He also claimed that he had provided services to the buyers.

However, the couple refused to sign the commission agreement when they inked the sale last year. They claim they had made no deal to pay him a fee in the first place.

Both sides will attempt to reach an agreement when they attend a court dispute resolution session next month.

This is the first lawsuit of its kind started by eight-year-old PropNex.

The issue of commissions payable by independent buyers, or buyers who deal without agents, has been hotly debated in recent years.

While there is no law fixing the fees payable, property sellers typically pay their agents a 2 per cent fee, while buyers pay their agents a 1 per cent fee.

Many agents marketing HDB flats also charge independent buyers a 1 per cent fee, but this is not practised in private property deals. Property veterans said this disparity was due to the lower prices of HDB flats, which amount to a lower commission for agents.

Some independent buyers have complained that sellers' agents inform them that they have to pay a commission just before the purchase documents are signed, leaving them with little time to find out about their rights.

Once the buyers sign the commission agreements, they are bound to pay the fee.

However, agents have countered that independent buyers often leave the paperwork to the sellers' agents but refuse to pay a service fee.

Major real estate agencies contacted by The Straits Times have varied responses to such situations, although all maintain that independent buyers of HDB flats should pay a fee.

HSR property group chief executive Patrick Liew said his company takes three to four independent buyers to the Small Claims Tribunal each year for similar claims and has won payment each time.

ERA Singapore's assistant vice-president Eugene Lim said his company does not take independent buyers to court when no commission agreements are signed.

Meanwhile, the Consumers Association of Singapore has, in recent years, questioned the practice of agents taking commissions from both buyer and seller in the same transaction, citing a possible conflict of interest.

tanhy@sph.com.sg

Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access

[zirhk3355 1]

Major real estate agencies contacted by The Straits Times have varied responses to such situations, although all maintain that independent buyers of HDB flats should pay a fee.

What the ...??

Hey, have they forgotten that this should have been a MUTUAL AGREEMENT? Since the buyer did not agree, then no payment. Period.

Under any contract laws ALL OVER THE WORLD, payee of any commission would owe a fiduciary duty to the payer. So if both seller and buyer pay you, how do you act in the interest of BOTH??

Have anyone ever seen a lawyer standing in court and acting for both the defendent and the plaintiff? It would be the greatest joke, isn't it?? but this joke seemed to be a norm for our property agents' industry...haiz...

[yokine9a 1]

Yeah, very true, if an agent acts on behalf of both seller and buyer, how would he act for the interest of both ?

The agent for the resale flat I bought told me he had several offers all willing to pay higher COV than me, but if I could give him extra commission fee, he would reject those offers and get the owner to take my offer. He was supposed to act on seller and achieved as much as possible biggest returns for selling the flat, yet he just wanted to get higher commission and ignored seller's interest. What a bad apple

Really need to revise this so-called mutual agreement that buyers need to pay agent fee.

[sepultura 0]

There was no signed agreement that the buyer would pay the agent a commission. Hence, no case. If the resolution of this case favours Propnex, there's something really really wrong with singapore law. They expect independent buyers/sellers to roll over and enjoy getting violated by these mobsters?

[kastlekonfusion 1]

When we were looking for resale flat, we asked a friend who is a property agent to help us keep a look out for what we wanted. We aren't familiar with the paperwork involved and thus, we felt that it's best that we have a friend who can represent us to make sure we are doing the right thing. We'd let our friend know whenever we spot an ad that might be interesting and he would try to arrange a viewing. However, many a times, our friend told us that sellers' agent do not wish to deal with buyer's agent.

Anyway, our friend weren't in town when we went to view the flat we bought. We were made an offer for the flat and we accepted it as we felt that the price was right. Upon acceptance, we were made to sign an agreement which state that we have to pay the seller's agent a percentage as a buyer's agent's fee.

We felt that it would definitely post a question of conflict of interest. However, the seller's agent highlighted that it's a common practice. We requested that we wanted our friend to act on behalf of us but the seller's agent said we cannot bring our friend in as an agent to represent us. And also, if we didn't want to sign, the seller's agent said we can't buy that flat.

Is there a ruling that state an agent cannot represent the seller and the buyer at the same time in order to protect the interest of all parties involved?

[inix 0]

When we were looking for resale flat, we asked a friend who is a property agent to help us keep a look out for what we wanted. We aren't familiar with the paperwork involved and thus, we felt that it's best that we have a friend who can represent us to make sure we are doing the right thing. We'd let our friend know whenever we spot an ad that might be interesting and he would try to arrange a viewing. However, many a times, our friend told us that sellers' agent do not wish to deal with buyer's agent.

Anyway, our friend weren't in town when we went to view the flat we bought. We were made an offer for the flat and we accepted it as we felt that the price was right. Upon acceptance, we were made to sign an agreement which state that we have to pay the seller's agent a percentage as a buyer's agent's fee.

We felt that it would definitely post a question of conflict of interest. However, the seller's agent highlighted that it's a common practice. We requested that we wanted our friend to act on behalf of us but the seller's agent said we cannot bring our friend in as an agent to represent us. And also, if we didn't want to sign, the seller's agent said we can't buy that flat.

Is there a ruling that state an agent cannot represent the seller and the buyer at the same time in order to protect the interest of all parties involved?

I'm not sure about the ruling but since he played punk, why would you bother. I would contact the owner directly (probably pay them a visit the next night), explaining to them the situation, and then ask them if they are willing to sell to you, essentially, forcing the agent to sell, and NOT signing any documents which the agent provided stating that you'll pay commission.

[zirhk3355 1]

I think the conflict started for this case because you went to view the flat without your friend. I supposed you did not say that you have an agent to represent you, right?

So the seller's agent would be thinking that you are "playing" him by *suddenly* bringing in an agent. This is actually a no-no in their market practice, although I think its stupid lah.

Anyway, have you signed the OTP and paid any deposit yet? If yes, then dun care lor; the seller's agent can't stop the deal just because you refused to sign the commission agreement. Also, as long as you did not sign the commission agreement, you do not have to pay him anything.

But if you had not signed the OTP and/or paid any deposit, then like what inix said, quietly go contact the owner directly and make a deal. Maybe can ask your friend to get the OTP from HDB and sign it with the owner. But of course dun cut out the seller's agent lah, give him his due commission, ie the seller will still have to pay him.

[666 0]

Heard the case above was settled out of court..****..wished a judgement was made & judge dun allow agent to collect from buyer too..

I find it veri silly, to pay seller agent too. few cases i can say.

1.My frd OTP was cancelled by agent because he refused pay seller commision.

2.I refused to pay commision bcoz i onli met agent like once. I told him not gg to pay a cent..he say against the "law",can sue me..hehe.

3. Another 1 i say dun 1 2 pay, he sneered at me say..u knoe how to do the paper work ah,like i idiot..till i described to him in detailed..he tiam2.

Need less to say, my offer was rejected..knn.

[kastlekonfusion 1]

We bought the flat liao leh. We blur blur lah....didn't tell the seller's agent about us having an agent friend that we want to represent us. It was only when we rang him back to accept the seller's offer that we told him of our intention but he told us it's not possible. Anyway, Tom and I decided that it's the most ideal flat at the location where we want and we felt very comfortable in the flat when we viewed it. We just accepted the seller agent's explanation and signed the buyer's commission agreement so to avoid any delays.

I think the conflict started for this case because you went to view the flat without your friend. I supposed you did not say that you have an agent to represent you, right?

So the seller's agent would be thinking that you are "playing" him by *suddenly* bringing in an agent. This is actually a no-no in their market practice, although I think its stupid lah.

Anyway, have you signed the OTP and paid any deposit yet? If yes, then dun care lor; the seller's agent can't stop the deal just because you refused to sign the commission agreement. Also, as long as you did not sign the commission agreement, you do not have to pay him anything.

Uh, I didn't know we could do that! Ok, noted liao.

But if you had not signed the OTP and/or paid any deposit, then like what inix said, quietly go contact the owner directly and make a deal. Maybe can ask your friend to get the OTP from HDB and sign it with the owner. But of course dun cut out the seller's agent lah, give him his due commission, ie the seller will still have to pay him.

Edited July 21, 2008 by kastlekonfusion