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09-04-12, 17:13
http://www.straitstimes.com/PrimeNews/Story/STIStory_784389.html
Property agents: Cancelling sale? Pay up
Some are taking steps to get compensation if a seller changes his mind
Published on Apr 2, 2012
By Elizabeth Soh
SOME real estate agents want to be compensated if a customer backs out of an exclusive agreement to sell the property.
Situations could include owners asking agents to do detailed valuations of their homes and arrange for viewings before changing their minds, or refusing to sell when a buyer willing to pay more than the asking price is found.
According to the Council for Estate Agencies (CEA), which regulates the conduct of agents, it is not illegal to insert exit clauses regarding compensation if the seller is agreeable.
'Since the property market started booming last year, every month, at least two to three sellers have backed out on me because they only wanted to test the market and didn't want to sell,' said housing agent Eric Ng, 38.
Since June last year, he has adopted exit clauses, in which the owner has to pay him for expenses in marketing the home.
At least 10 other agents have done the same, on top of getting the seller to sign the CEA's estate agency agreement forms.
These forms give the agent exclusive rights to sell the home and claim the commission agreed beforehand between agent and seller.
The exit clauses usually state that if the seller should back out without a valid reason, he has to pay consultation fees of between $150 and $250, and reimburse the sums spent on advertising and valuation reports. This works out to an average of $500.
'I started putting in this clause about four months ago to deter home owners who are not serious. We have to let them know that, for us, there is also an opportunity cost for the hours we put in selling their homes,' said real estate agent Dayangku Rozarita, who runs her own agency.
A CEA spokesman told The Straits Times that inserting exit clauses into estate agency agreements does not flout any regulation under the Estate Agents Act, as the clauses do not undermine the purpose of the agreement.
'If the consumer and the agent wish to include mutually agreeable terms and conditions that are not printed in CEA's prescribed estate agency agreement, they should include these as additional terms in the space provided or on a separate pink sheet of paper,' she said.
While the agent is not breaking any rule in pushing for exit clauses, the practice has riled some customers.
One home seller, who backed out of such an agreement and wanted to be known only as Mrs Ong, felt her agent had been unprofessional in introducing the cancellation fees.
'I backed out after only one week - it is fair for me to pay for the valuation report, but why should I pay $200 just because she did some paperwork for me?'
'She met me to discuss the house only once,' said Mrs Ong, who owns an executive flat in Simei. She dropped the agent who, she felt, was not trying hard enough to sell her home.
Property analysts said such a clause could hurt the agent's standing.
'It sends a wrong and negative signal to sellers - that you just have to pay up to back out. I would prefer to sit down to talk things out, so that the seller and I end on good terms. It is better for future business,' said Mr Chris Koh, a director of real estate agency Dennis Wee Group.
[email protected]
Property agents: Cancelling sale? Pay up
Some are taking steps to get compensation if a seller changes his mind
Published on Apr 2, 2012
By Elizabeth Soh
SOME real estate agents want to be compensated if a customer backs out of an exclusive agreement to sell the property.
Situations could include owners asking agents to do detailed valuations of their homes and arrange for viewings before changing their minds, or refusing to sell when a buyer willing to pay more than the asking price is found.
According to the Council for Estate Agencies (CEA), which regulates the conduct of agents, it is not illegal to insert exit clauses regarding compensation if the seller is agreeable.
'Since the property market started booming last year, every month, at least two to three sellers have backed out on me because they only wanted to test the market and didn't want to sell,' said housing agent Eric Ng, 38.
Since June last year, he has adopted exit clauses, in which the owner has to pay him for expenses in marketing the home.
At least 10 other agents have done the same, on top of getting the seller to sign the CEA's estate agency agreement forms.
These forms give the agent exclusive rights to sell the home and claim the commission agreed beforehand between agent and seller.
The exit clauses usually state that if the seller should back out without a valid reason, he has to pay consultation fees of between $150 and $250, and reimburse the sums spent on advertising and valuation reports. This works out to an average of $500.
'I started putting in this clause about four months ago to deter home owners who are not serious. We have to let them know that, for us, there is also an opportunity cost for the hours we put in selling their homes,' said real estate agent Dayangku Rozarita, who runs her own agency.
A CEA spokesman told The Straits Times that inserting exit clauses into estate agency agreements does not flout any regulation under the Estate Agents Act, as the clauses do not undermine the purpose of the agreement.
'If the consumer and the agent wish to include mutually agreeable terms and conditions that are not printed in CEA's prescribed estate agency agreement, they should include these as additional terms in the space provided or on a separate pink sheet of paper,' she said.
While the agent is not breaking any rule in pushing for exit clauses, the practice has riled some customers.
One home seller, who backed out of such an agreement and wanted to be known only as Mrs Ong, felt her agent had been unprofessional in introducing the cancellation fees.
'I backed out after only one week - it is fair for me to pay for the valuation report, but why should I pay $200 just because she did some paperwork for me?'
'She met me to discuss the house only once,' said Mrs Ong, who owns an executive flat in Simei. She dropped the agent who, she felt, was not trying hard enough to sell her home.
Property analysts said such a clause could hurt the agent's standing.
'It sends a wrong and negative signal to sellers - that you just have to pay up to back out. I would prefer to sit down to talk things out, so that the seller and I end on good terms. It is better for future business,' said Mr Chris Koh, a director of real estate agency Dennis Wee Group.
[email protected]