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Dos and don'ts on co-broking

Co-broking, a common practice in the real estate agency industry, refers to a situation when two or more property agents (representing counterparties to the transaction) are involved in the same property transaction. The agents work together to achieve the best possible outcome for their respective clients.

The agents representing both sides would have to agree to the co-brokerage fee upfront having regard to their duties to act in their respective client’s best interests. The sharing of commission in a property transaction is strictly an agreement between the two agents.

However, according to Clause 1.8.3 of the Professional Service Manual, an agent cannot collect commission from his client and another co-broke fee from the agent representing the other party in the same transaction.

Simply, the sharing of the commission is allowed only for property transactions where only one party is paid a commission. For example, in the sale of a property where only the seller’s agent is getting commission from his client, the buyer’s agent can receive a co-broke commission from the seller’s agent as the buyer did not pay commission. If the buyer’s agent is already getting a commission from his client, he/she cannot collect a co-brokerage fee from the seller’s agent.

What to note about other types of fees

Fee from developer ➞ Buyer pays commission Buyer does not pay commission

In private property transactions, an agent may collect a fee from the developer under two circumstances:

  • if he is not representing the buyer
  • if he is representing the buyer, he may enter into a commercial agreement with the developer to collect a fee, but he must not collect any commission from the buyer

Fee from landlord ➞ Tenant pays commission Tenant does not pay commission

Similarly, in the case of rental transactions, if the agent representing the tenant is not paid commission, he may turn to the landlord for a fee for introducing the tenant to him, subject to this condition:

The tenant’s agent has to enter into a commercial agreement with the landlord. It must be stated clearly in the commercial agreement that the agent is not acting for the landlord, and that the payment of the fee is solely for introduction of the tenant to the landlord. The agent also has to declare in writing to the tenant that he is receiving a fee from the landlord.

Since the agent is representing the tenant, this scenario is not considered as dual representation. The agent must be careful in his dealings with the landlord. He must avoid giving the landlord, through his words or actions, any impression that he is acting for him as well.

Management fee from landlord ➞ Agent only manages the property Agent provides estate agency work

If an agent representing the tenant is asked by the landlord to manage the property, the agent can enter into a commercial agreement with the landlord to manage the property and collect a management fee for his services.

The agent must declare this conflict of interest in writing to the tenant and get the tenant’s consent before he can act or continue to act for the tenant. For transparency, the agent should also inform the landlord that he is representing the tenant.

For this scenario, the tenant’s agent cannot conduct estate agency work for the landlord as his client. This is considered as dual representation and is prohibited.

The don’ts for co-broking

#1: No blocking of other agents

If you are representing the seller, you should not deny co-broking opportunities to other agents.

For example, if you receive a call from other agents, you should not tell the other party that you are not sharing your commission, which is indirectly blocking the other party from co-broking.

As co-broking exposes the property to a wider pool of interested buyers, the greater exposure could attract a higher offer and eventually a higher price. By rejecting to co-broke with other agents, you are not acting in the interest of your client.

#2: No bypassing listing agent

If you come to know of a property available for sale or lease through another agent’s listing, or you have contacted the listing agent and agreed to co-broke the transaction with him, you should work with him to close the transaction.

You should not request the contact details of the listing agent’s client, or approach his client directly to communicate any matter relating to the potential property transaction. Approaching the owner directly would be bypassing the listing agent. Such an act may constitute a breach of the relevant provisions of the Codes of Ethics & Professional Client Care (CEPCC).

#3: Do not mislead, deceive, or make any misrepresentation to other agents

You should not act in a manner that may mislead or deceive fellow co-broke agents. You also should not make any misrepresentation to other agents such as misrepresenting the availability of access to show or view a listed property. Such an act may contravene the relevant provisions of the CEPCC.

Refer to the Practice Guidelines on Conduct between Salespersons for other info on co-broking.