PROPERTY company PropNex is dropping its lawsuit against a couple who refused to pay the seller's agent the 1 per cent commission after buying a home.
Both sides reached an agreement after a mediation session on Tuesday, which PropNex said yielded a 'win-win' conclusion. They declined to disclose the terms of the settlement.
If the case had gone to trial, it would have turned the spotlight on the contentious issue of whether home buyers should pay a fee to sellers' agents.PropNex associate director Ricky Low Yong Sern, who was the only agent handling the sale of a terrace house in Whampoa last year, had sought about $4,000 in commission or a service fee from the buyers, marketing specialist Loh Yi Min, 29, and his wife Ariel Wee, a 33-year-old polytechnic lecturer.
The couple bought the house - built over 30 years ago and classified as a Housing Board flat - for $400,000 in April last year. They did so without hiring an agent.
According to court documents, PropNex's Mr Low claimed that he had provided services to them.
But the buyers refused to sign the commission agreement, saying they had not agreed to pay him a fee.
PropNex chief executive Mohamed Ismail said of the first such lawsuit initiated by his company: 'It has been amicably settled, so we are withdrawing the case. PropNex initiated this on the grounds that a fair amount of work has been done by the agent to start off with. This negotiated settlement takes into consideration both parties' views.'
Ms Wee, however, called for rules requiring property agents to state clearly what services they were providing independent buyers that would justify the commission.
'And we really need to see whether the same agent can represent both the buyer and seller - it's a complete conflict of interest,' she added.
The issue of commissions payable by buyers who deal without agents has been hotly debated in recent years. The law does not fix agents' fees, but most property sellers pay their agents a commission of 2 per cent of the selling price, while buyers foot 1 per cent.
Many agents marketing HDB flats also charge independent buyers a 1 per cent fee, but this is not practised for transactions involving private property.
This difference, say agents, comes from the lower prices of HDB flats, which translates into a lower commission. The sale of HDB flats involves more paperwork, they add.
Disputes arise when sellers' agents tell independent buyers about the commission only just before sale papers are signed.
Agents, on their part, say independent buyers often leave the sellers' agents to handle the paperwork but refuse to pay a service fee.
Split Property Sales Commission In Two Parts
ReplyDeleteSource : The Straits Times, May 10, 2008
IT IS heartening to learn that the court dispute between PropNex and Mr and Mrs Loh Yi Min has been settled amicably.
We can learn something from this incident. When a property agent undertakes work for either the seller or the buyer or both, he does it for a remuneration. It is therefore only correct that the type of work to be carried out by the property agent be properly described in the document most property agents require their clients to sign before he starts work. The document is often called the commission agreement and it records how the property agent is to be remunerated.
The Housing Board conducts public briefings on:
# Policies and procedures relating to buying and selling of flats;
# Financial planning for buyers and procedure for HDB and bank loan; and
# Option to purchase.
According to the HDB, it invites a guest speaker from the CPF Board to talk about use of CPF funds to buy resale flats. The next talk for which seats are still available is on July 5.
For more information, visit www.hdb.gov.sg, Home Owners, Selling Your Flat, HDB Resale Seminar.
Given that the HDB makes public the requirements in the resale process, the role of the property agent can be limited to connecting the seller and the buyer if the two parties handle the documentation themselves.
Perhaps the remuneration, often fixed at 2 per cent of the agreed price for the seller and 1 per cent for the buyer, can be broken into two distinct components:
# The first, which can be percentage-based, is for connecting the parties and arranging the best price for either party; and
# The second is for handling documentation, attending appointments and reminding parties of their obligations.
In that way, even if the buyer has to pay the property agent, he is clear that he is paying for services that are not related to getting him the best price, if the property agent also represents the seller in the same transaction.
Patrick Sio