RES Suspended and Fined for Bypassing a Seller’s Salesperson to Close the Sale and Represent the Sellers in the Transaction

25 March 2022

This case is about an RES who was sentenced to a six-month suspension and $5,000 financial penalty for bypassing the initial salesperson for the sellers of a property.

CEAnergy article: RES suspended and fined for bypassing a seller’s salesperson to close the sale and represent sellers

March 2022 - 4 min read

In March 2020, Bernard Goo Wee Chieh, who was a salesperson with SRI Pte Ltd at the time, came to know of a property available for sale through an advertisement on an online property portal. He contacted Salesperson A, who listed the property, and got to know that the listing actually belonged to Salesperson B, who is Salesperson A’s brother.

Salesperson B was engaged by the sellers to market the property for sale on an exclusive basis. The sellers had signed an exclusive estate agency agreement with Salesperson B’s estate agent, for the period from 1 March 2020 to 29 May 2020, and agreed to pay 2% commission to Salesperson B’s estate agent for a successful sale. By signing the exclusive estate agency agreement, should the sellers find their own buyer or sell the property through another salesperson, the sellers would still be liable to pay commission to Salesperson B’s estate agent.

On 13 March 2020, Goo contacted Salesperson B about the sale of the property and asked to co-broke with Salesperson B. He arranged for two viewings of the property, both of which Salesperson B was not present for as he was busy. Instead, the latter had arranged for a tenant of the property, Tenant C, to facilitate the viewings. Between 13 and 22 March 2020, both salespersons corresponded via WhatsApp about the property, and discussed the floor plan, valuation and potential offers. After the second viewing, Salesperson B asked Goo if there was any offer made, to which Goo replied that he would try to push for an offer.

On 6 April 2020, the second group of buyers which Goo brought to view the property made an offer to purchase the property. Instead of conveying this offer to Salesperson B, Goo requested that Tenant C convey to the sellers that Goo had an interested buyer for the property. He also provided a contact number for the sellers that was different from the one used to contact Salesperson B. On the same day, the sellers contacted Goo about the offer but ended up rejecting it as they found it too low.

Between 9 and 11 April 2020, Goo continued to contact the sellers regarding the sale of the property and proposed a tiered commission structure where he would receive a higher commission with a higher selling price. The sellers agreed to Goo’s proposed commission structure.

During this time, Goo did not inform Salesperson B about his communications with Tenant C and the sellers.

To induce a higher offer from the buyers, Goo said that he would waive any commission from them, and the buyers increased their offer on 12 April 2020. At the same time, to induce the sellers to accept this offer, Goo offered to lower his commission to 1.5%, and also to absorb the Goods and Services Tax payable. The sellers then accepted the offer.

Goo met the sellers to hand them the option fee and explain the resale procedure to them, before they signed an estate agency agreement, documenting the agreed commission rate, with Goo’s estate agent.

On 18 April 2020, the buyers exercised the Option to Purchase (OTP) issued by the sellers. During this time, Goo did not inform Salesperson B about the sale of the property that he had brokered directly with the sellers and the buyers.

After some time, Salesperson B had contacted the sellers to inform them of a potential buyer who wanted to view the property. It was only then that Salesperson B found out from the sellers that the property had already been sold through Goo.

On 27 April 2020, Goo helped both the buyers and sellers to submit their resale applications to HDB for the sale of the property. Goo indicated that he was the buyers’ salesperson in their application, even though he represented the sellers in the resale transaction.

The sale of the property was completed on 30 July 2020.

Charges

Goo was charged with the following:

Bypassing Salesperson B and closing the sale of the property directly with the sellers and representing the sellers in the sale instead, in breach of paragraph 7(1) of the Code of Ethics and Professional Client Care (CEPCC).
Misrepresenting himself as the salesperson acting for the buyers of the property in their resale application to HDB, when he was in fact acting for the sellers of the property, in breach of paragraph 6(3) read with 6(4)(c) of the CEPCC.

Goo pleaded guilty to the first charge, with the second charge taken into consideration for purposes of sentencing. On 22 November 2021, a CEA Disciplinary Committee sentenced him to a financial penalty of $5,000 and a six-month suspension.

INDUSTRY PERSPECTIVE

By Adam Wang
President, Singapore Estate Agents Association

Goo undercut Salesperson B when he asked Tenant C to convey the offer to the seller and bypassed Salesperson B, who was the exclusive agent appointed by the seller to market the property.

In most transactions, buyers pay approximately 1% of the sale price as brokerage fees to the salesperson representing them in a resale HDB transaction. To earn more in commission fees, Goo forwent representing the buyer and chose to represent the seller because the latter agreed to pay him 1.5% in commissions. During the submission of the HDB resale application, Goo indicated representing the buyer instead of the seller. He wilfully chose to obfuscate the truth, and did not have the seller’s and buyer’s interests in mind.

How these breaches could have been avoided
In addition to communicating closely with Goo, Salesperson B should have attended the viewing personally rather than allow Goo to conduct the viewing on his own. This would have ensured that Salesperson B would be kept in the loop and not bypassed through Tenant C.

The seller should have been aware of the fact that signing an exclusive agreement with Salesperson B meant that regardless of whether he successfully closed a deal on his house on his own or with another salesperson, he would still have to pay commission to Salesperson B. Had he known this, the seller would have rejected Goo’s offer to represent him in the sale.

Regardless of whether the seller had signed an exclusive or non-exclusive agreement with Salesperson B , Goo should have honoured the arrangement and made the buyer’s offer through Salesperson B.

The penalties Goo received serve as a reminder to all salespersons not to bring discredit or disrepute to the industry. Only when all salespersons work diligently and respectfully with their fellow co-broke salespersons can we engender trust and create a reputable real estate agency industry.

Information accurate as at 25 March 2022