Comprehensive Review Of the Estate Agent’s Bill & Proposals To Improve Our Real Estate Industry by Yaw Shin Leong on Monday, November 28, 2011 at 3:42pm

On 14th November 2011, Hougang MP Yaw Shin Leong hosted an informal dialogue with a group of real estate agents (across agencies) to better understand the current issues and challenges face by real estate agents, after The Estate Agents Bill was passed on 15th September 2010 and the Council for Estate Agencies (CEA), a statutory board that oversees the measures and put forward in the bill. Below contains:

 

a) Executive Summary of the Informal Dialogue (14th Nov 2011)

b) Comprehensive Review Of the Estate Agent’s Bill (CROEAB)

c) Proposals To Improve Our Real Estate Industry (PTIOREI)

 

As the the review and proposals are still work in progress, the enthusiastic group is seeking out fellow like-minded estate agents (& legal professionals) to play a part in the review + proposal to further professionalize the industry. The gathered views will be complied in a finalized paper to be submitted to relevant channels. Please email yawshinleong@gmail.com if you are keen to be part of this journey.

 

A second informal dialogue will be hosted shortly and details are as follows:

 

Date: 12th December 2011 (Monday)

Time: 4 to 6pm

Venue: To be confirmed

 

If you are keen to be part of the 2nd informal dialogue, please email Ms Koh Wee Leng at kohweeleng@gmail.com to indicate your attendance. Thank you.

 

 

Executive Summary of Informal Dialogue (14th Nov 2011)

 

1) Applaud on the formation of a council to regulate the real estate industry, to eradicate rogue agents. However, CEA was formed hastily;

 

2) The People-in-charge at the CEA do not seem to possess the industry domain knowledge and do not understand the practical process of the works of the real estate agents, thus the rules set, are impractical and cause hindrances to the real estate agents in carrying out their professional duties instead;

 

3) The agents are not ‘protected’ by the Council when they encounter rogue property sellers, buyers, landlords and tenants. CEA seems to be out there to punish the real estate agents, than to objectively improve the professionalism of the real estate industry.

 

4) Apart from creating agreement forms that encourage agents to impose service fee on their clients, CEA must educate the public on the need to engage their respective agents, and the need to commission their respective agents.

 

Comprehensive Review Of the Estate Agent’s Bill(CROEAB)

 

The current rule – ‘No Dual Representation’

 

It is imperative for the Council to educate the public, for the potential buyers and tenants of properties, to appoint their respective agents prior to any viewing appointment. This means, only buyers’ and tenants’ representing agents will contact the listing agents for viewing appointments and thus, the respective agents will transact the deal, on behalf of their clients. This will resolve the ‘No Dual Representation’, as well as, ‘ No Co-broking’ issues.

 

One of the objectives of the Council as stated in their official web page is to engage in public education efforts to help consumers in property transactions. In respect to the objective and the above situation, the Council must educate the public that clients must commission their respective agents. This, also ensure the feudal duties of the respective agents are intact, and there will be no situation where, due to single paymaster, collaboration between two agents in favor of the paymasters or buyers. This is akin to the clients commission their respective conveyance lawyers, there isn’t a situation where the seller’s conveyance lawyer, splitting the legal fee he receives from his client, with the buyers’ conveyance lawyer.

 

The current rule – For Sale By Owners

 

The Council should not permit sellers, buyers, landlord and tenants to transact any property deals themselves, as they are not trained; they do not attend classes; they do not sit the examinations such as Common Examination for Housing Agents(CEHA), Common Examination for Salespersons(CES) etc, and they are not registered with the Council. Therefore, the seller, buyers, landlord and tenants are not licenced to transact any deal with regards to property transactions. If a seller who is not licenced, sells his property to a buyer, essentially, the buyer is not protected, he is not being served by a licence agent.

 

The current rule – GST

 

The Council provides an option to payment of Good and Services Tax(GST). Payment of GST to GST registered agencies is mandatory, not an option as stated in:

Form 1-Estate Agency Agreement for the Sale of Residential Property;

Form 2-Estate Agency Agreement for the Purchase of Purchase Property;

Form 3-Estate Agency Agreement for the Lease of Residential Property by a Landlord;

Form 4-Estate Agency Agreement for the Lease of Residential Property by a Tenant;

Form 5-Exclusive Agency Agreement for the Sale of Residential Property;

Form 6-Exclusive Agency Agreement for the Purchase of Residential Property;

Form 7-Exclusive Agency Agreement for the Lease of Residential Property by a Landlord;

Form 8- Exclusive Agency Agreement for the Lease of Residential Property by a Tenant

 

The current rule – No obligation to compensate agents on aborted deals

 

As stated in Form 1-Estate Agency Agreement for the Sale of Residential Property and Form 3-Estate Agency Agreement for the Lease of Residential Property by a Landlord. Sellers and landlords are not obligated to pay commission to the real estate agents if the sale and the leasing of the property fall through. The real estate agents must be compensated half of the deposit that is forfeited by the sellers and the landlords when deals are aborted, as the real estate agents have successfully secured the deals, and cost spent in marketing the property.

 

The current rule – Annual license fee

The Council imposes an annual licence fee of $246.10 including GST should be amended to a one-off license fee, as agents are paying fees for courses, examination as well as the yearly Continuing Professional Development (CPD). The fees of these courses, examination and CPD amount to more than $500. Currently, if a new agent obtains the relevant certification, say in October 2011, upon registration with CEA, he has to fulfill the full amount of $246.10 for the entire year of 2011. Come January 2012, which is just 3 months after his registration on October 2011, the same agent has to fulfill another payment of $246.10 for the entire 2012. The new agent should only make a full payment of $246.10 as a one-off licence fee regardless the date of registration.

 

The current rule – Fines & jail terms

 

The Council imposes punishments in the form of heavy fines and imprisonment which are outrageous. One of the many examples is the fine of $10,000 and jail term of 1 year for not wearing the agent name tag. To cite an example of a simple, economical and effective approach would be suspending the agent’s licence for about 1 month for this incident.

 

The current rule – Renewal of Tenancy Agreement

3rd party agents are not allowed to take over renewal of lease irrespective of the 3rd party agents relation to the landlords or appointed agents. Landlords must honour the efforts of the existing agents, unless the latter is proven to have failed his/her duties.

 

 

Proposals To Improve Our Real Estate Industry(PTIOREI)

 

1) Implementing a minimal service fee on customers prior to engaging the real estate agents. This will protect the real estate agents from being abused and taken advantage of their time and efforts. Such implementation of minimal service fee will eliminate pseudo property buyers and sellers. For lower income households, a similar set-up such as the Legal Aid Bureau which they can seek help from.

 

 

2) The Council should provide a crystal clear distinction between disbursements and professional fees. Items such as valuation reports, title searches, submission/registration fee to HDB etc should be clearly stated as disbursements and not part of agents’ professional fees.

 

 

3) The Estate Agents Act (Gazetted) Part II, Section 25 denotes that ‘The Council may invest its money in accordance with the standard investment power of statutory bodies as defined in section 33A of the Interpretation Act(Cap. 1)’. As depicted in The Council website:

 

‘CEA’s principal functions are to license the estate agents (referring to the estate agencies) and register salespersons (referring to the property agents), promote the integrity and competence of estate agents and salespersons and engage in public education efforts to help consumers in property transactions.’ The Council should stay very focus in promoting integrity and competence of estate agents and salespersons, but not engage in any form of investments. Perhaps the annual licence renewal and the imposition of outrages fines, are the source of funds for the future investment plan of the Council.

 

4) Estate Agents (Appeals) Rule 2010 depicts that an appeal to the Appeals Board shall be made by lodging a notice of appeal. A non-refundable fee $1,000 when lodging an appeal. This is another hefty cost imposed upon the agents.

 

5) The Council’s principal functions are to licence the estate agents and register salespersons(formally known as property agents), promote integrity and competence of estate agents and salespersons.

 

To promote competency, we suggest the Council to provide a truly professional training center or, outsource to truly professional certified training centers, which focus on:

1) Residential Property training course;

2) Commercial Property training course;

3) Industrial Property training course;

 

not when property buyers manoeveur their investments to Commercial and Industrial Properties, we witness companies marketing their Commercial and Industrial Properties training programs.

 

Truly professional and certifications from:

1) National University of Singapore

- Bachelor of Science (Real Estate);

- Bachelor of Science (Estate Management);

- Bachelor of Real Estate(Property Management);

- Bachelor of Real Estate(Valuation);

 

2) Ngee Ann Polytechnic and Singapore Polytechnic

- Diploma in Building Management;

- Diploma in Building and Real Estate Management;

- Diploma in Real Estate Management;

- Diploma in Real Estate Business;

- Diploma in Property Development & Facilities Management;

- Diploma in Building & Property Management

 

In Summary

The Council cited it had worked with the industry key stakeholders prior to formulating the rules and the penalties. There is an urgent need for the Council to re-look into the rules and penalties seriously and conscientiously, amend and or abolish the unacceptable ones.