SINGAPORE – Questions have swirled after a property agent was given a record sentence for faking offers in a private home sale, with the aim of getting a bigger commission from the seller at the expense of his client, the buyer.

How often does this occur, and can a property agent represent both the seller and buyer of a home, and get commissions from both?

Real estate experts told The Straits Times on Monday (Oct 21) that they believe the practice is rare and an agent generally cannot collect commissions from both a home seller and buyer.

But when there is no conflict of interest, agents can enter co-brokering deals in which the agents for the seller and the buyer share the fees, as long as the arrangement is disclosed.

On Monday, the Council for Estate Agencies (CEA) said that it had fined a property agent $30,000 and suspended him for 12 months for giving his client, a home buyer, fake offers from the seller to get a bigger commission. The agent was also getting a commission from the seller but did not declare it to his client.

It is the highest sentence meted out so far to a property agent by CEA, the statutory board that regulates the real estate agency industry.

The council said Ngu Ping Chuan James Ethan of PropNex Realty behaved unprofessionally and unethically while facilitating the purchase of a condominium unit in the eastern part of Singapore between 2016 and 2017.

The 39-year-old failed to represent his client’s best interest and instead prioritised his own profit from commissions, causing his client to suffer a disadvantage of about $20,000 to $30,000, CEA said.

The council said that under its code of ethics, Ngu should have declared in writing to his client the conflict of interest in getting a commission from the seller.

Experts said that in the resale market for Housing Board flats and private estates, the seller typically pays the commission to the property agent, although the buyer might choose to pay a commission too if he engages a property agent to help with his needs.

However, licensed agents know that it is illegal to collect commissions from both the buyer and the seller.

“If they did so, that would constitute a conflict of interest,” said Mr Nicholas Mak, who is head of the research and consultancy department at ERA Realty. He has been in real estate for 22 years.

Mr Mak said that all legal agents have to sit an examination which comprises an ethics module, with the key takeaway being that they must always represent the best interest of their clients.

But in some cases, agents can enter co-brokering deals, where the buyer’s and the seller’s agents share the commission paid by the seller.

For instance, this would happen for private resale homes since the buyer does not pay fees and only the seller pays the commission.

Agents who co-broke will need to declare their agreement to their clients so that all proceedings remain above board, said Mr Mak, who noted that such arrangements are “a fairly common practice in the resale market”.

Typically, agents representing the buyers will ask the home sellers’ agents to share half of the fees the sellers’ agents would get, said one expert, with 15 years of property experience who declined to be named.

“If these two agents are not relatives, and not working in the same team within the same company, it is assumed that there is no conflicts of interest,” he said. “The buyer and seller are usually aware of their agents’ fee arrangements.”

But co-brokering deals where there is a conflict of interest should be rare, said the expert.

“Once we are aware that there may be a conflict of interest, we will probably ask a colleague to step in and take over the case,” he added.

Although buyers and sellers may feel the need to get in direct contact with each other to prevent cases like Ngu’s from happening to them, Mr Mak said a fine line needs to be tread.

“Property agents are afraid of being cut out by the process too. Property agents are by and large a hardworking people but as with any large group, there are black sheep that need to be weeded out,” said Mr Mak.

“To maintain the high professional standard of the industry, discipline must be maintained.”

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