Educating First-time Home Buyers or Sellers on Non-exclusive Agreements

Mr Speaker, Sir, an Estate Agency Agreement (EAA) is a contract between a consumer and a property agency and agent for the performance of estate agency work. The agreement protects the interests of both parties by providing contractual clarity in the property transaction.

Under the Council for Estate Agencies (CEA)'s Code of Ethics and Professional Client Care, a property agent must explain the meaning and consequences of the agreement to the client and give the client sufficient time to read and understand the content, so that the client can make an informed decision whether to enter into the agreement with the agent. Property agents who fail to do so may be issued a warning letter, imposed with financial penalties of up to $100,000 and/or have their registration suspended or revoked. There is no specific requirement for a property agent to advise the client on the options between an exclusive and a non-exclusive agreement.

In addition, CEA actively promotes consumer education. CEA continues to work with relevant agencies, for example, HDB and CASE, and the real estate agency sector and online property portals to educate property consumers about the purpose of signing an estate agency agreement, the differences between an exclusive and a non-exclusive agreement, and consumers' obligations under each type of agreement. Consumers are advised to choose and sign the type of estate agency agreement based on their needs and preferences.

Mr Speaker, I thank the Senior Minister of State for his answer. My Clementi resident told me that she signed an exclusive agreement with an estate agent, but she was not told about the option of other types of agreements, including non-exclusive agreements.

Sir, can I ask the Senior Minister of State two supplementary questions. Firstly, I note that the Senior Minister of State mentioned the phrase "it is a contract between a consumer and an agent". So, can I ask the Senior Minister of State if MND has studied best practices from other Ministries. For example, under the Consumer Protection Fair Trading Act, the Second Schedule, Part 1, item 23, mentions omitting a material fact might be considered an unfair practice. So, can the Senior Minister of State tell us: is the option of a non-exclusive agreement a material fact when a customer is going to sign an exclusive agreement?

Secondly, can I also ask the Senior Minister of State to elaborate on how MND sees the fiduciary duty of estate agents regarding sellers? Does it include some measure of requirement for informed consent when signing an exclusive contract, especially for first-time sellers who are not experienced and may require additional support and clarification?

Mr Speaker, I thank the Member for the two supplementary questions. Let me take them in turn. Let me first clarify that the use of EAA is not mandatory. Consumers are encouraged to sign the agreement with their property agencies and agents to protect the interests of both parties, but it is not mandatory. In fact, many property sellers and buyers DIY, and do it themselves, and do not appoint an agent.

To Dr Tan Wu Meng's question about best practices and informed consent, CEA takes seriously, its responsibility in upholding the professional standards in the real estate agency industry and its primary responsibility of safeguarding consumers' interests. That is why I mentioned in my reply earlier, that an estate agent or the real estate salesperson, the technical term, is expected and required to explain the content of the agreement to the buyer or seller before the agreement is signed. A breach of that can be investigated and penalties can be imposed against the real estate agent.

On consumer awareness, I mentioned it earlier, but allow me to elaborate and set in context Dr Tan's case about his resident. I appreciate and empathise where Dr Tan is coming from, but in context, we have received very, very few complaints against real estate salesperson on the use of an exclusive or non-exclusive agreement – less than 1% of all the cases we received over the last five years. So, very few complaints against real estate salesperson, on this particular point.

There are other complaints and they are the more egregious ones about conflict of interest or inappropriate handling of the client's money, which are important other considerations that we have in investigating the real estate salesperson.

Financial investment in a property or buying and selling properties is a big financial investment for many families. Please do take time to look at the various resources on CEA's website. They have a very comprehensive guide, in four languages, guiding the consumers on deciding if you need an agent; how to ensure your agent is properly registered with CEA; how to negotiate agent's commissions; how to look at the various agreements, including what agreements needs to be signed between the real estate salesperson and yourself; and understanding the agent's responsibilities and obligations, and how money is to be handled.

So, I encourage those who are buying or selling properties, especially those doing for the first time, please do go to CEA's website and check out the different resources.