Monday, May 7, 2012

Housing, Property, Real Estate Agent Scams - "No Commission" Scam

Recently, an irresponsible advertisement posted online by a real estate agent (also known as property agent or housing agent) has caused a stir within among agents in the industry. This is because all the housing agents have felt the danger of their "ricebowl" being destroyed by the black sheep in the market.

real estate agent scam

Buyers DO NOT need to pay COMMISSION!!!!!

This very unethical and irresponsible advertisement is misleading property buyers because they have to pay agent fee if they were to engage any real estate agent. A real estate agent's main job for the buyers is to educate them on their affordability, source for desired houses within budget, negotiate with the sellers or their agents, settle the documentations and give appropriate guidelines as when needed. All these require time and effort.

The superior of this real estate agent has been notified and has instructed the agent to take down the advertisement.

In the market practice, sellers of HDB flats would have to pay housing agents 2% of the selling price as commission; buyers would have to pay 1% to their housing agents.

A few years back before CEA was established, unethical housing agents used to use this tactic to lure direct buyers to contact them. If the buyers were interested in the houses, the agents would make the buyers accept them as their housing agents in order to earn another 1% of commission from the buyers. Buyers would have to pay the unethical agents since they did not know the exact procedure. Even if the buyers were not interested in the houses, the unethical housing agents would sweet-talk the buyers to entrust them as their housing agents to find other flats.

When a housing agent was representing both buyer and seller of the flat, the housing agent could get 3% of commission in total from both sides. However, it became complicated due to conflicts since the housing agent of the seller was supposed to push the selling price up while the housing agent representing the buyer had to push the selling price down.

Hence, a new law is imposed such that an agent is not allowed to represent both the buyer and seller in a transaction.

However, some property agents would continue to use such tactic to attract buyers without an agent representing them. The unethical agents could easily get their friends or team-mates to represent the buyers as to earn the extra 1% of commission even if they needed to split the amount.

It is best that you can find a real estate agent who can represent you and act in the best of your interest. We do know of some trustworthy agents born in Singapore. If you are in need of advice or help regarding buying, selling or renting of any residential or commercial property, we would be glad to share their contacts with you voluntarily - we will not even claim any cent from the agents.

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