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Understanding conflicts of interest

Under CEA's guidelines, property agents have a duty to avoid situations in which their personal or professional interests compete with their clients'.

When we engage a property agent to help us buy, sell, or rent a property, we would expect him or her to offer independent and unbiased advice.

However, there may be some instances when an agent’s personal or professional interests compete with, or are different from ours as clients.

Under the Council for Estate Agencies’ (CEA) guidelines, all property agents have a duty to avoid any potential conflicts of interests. If there are any conflicts of interest, agents must declare them to their clients in writing. Clients can then decide if they still wish for these agents to represent them.

What are the situations when conflicts of interest with property agents could arise? What are your agents’ duties and your responsibilities when such situations arise?

Typical conflict of interest scenarios

Conflicts of interest in a transaction can arise when your agent:

  • is personally or professionally connected with the other party and/or his agent
  • receives payment or benefits from other parties because your agent has represented you or has recommended a party’s service to you

Some examples include when your agent:

  • is a family member or business associate of the other party/the other party’s agent
  • is from the same property agency as the other party’s agent
  • receives referral fees from a company whose services are recommended by the agent to you e.g. bank, renovation company
  • is collecting a co-broke commission from the other party’s agent (e.g. when you are the potential buyer of a private property and will not be paying commission to your agent)
  • is receiving an “angbao” or other benefits from the other party who has not engaged an agent and has asked your agent to help with some paperwork

Do note that your agent cannot represent you and the other party in the same transaction. This is an offence known as dual representation. An agent cannot collect a fee or commission, including a co-broke commission, from more than one party in a transaction.

When must an agent inform me of any conflicts of interest?

Agents should disclose to potential clients any conflict or potential conflict of interests before they are formally appointed by their clients to act for them.

Your agent must provide you a written disclosure of the conflict of interest – just telling you about it verbally is not enough.

The disclosure in writing could be in the form of a letter, e-mail, or mobile text communications e.g. SMS or whatsapp message.

If you accept and agree for the agent to represent you, you should similarly provide this approval to the agent in writing.

There could be occasions where a conflict of interest arises midway during the transaction. In these circumstances, your agent should declare the conflict once it arises or when he is aware of it. This should also be disclosed to you in writing. He can continue to act for you only if you give your consent in writing.

What information should I be looking out for in the disclosure on the agent’s conflict of interest?

The disclosure should explain the nature of the conflict and how it could potentially impact the agent’s professional relationship with you. This will enable you to make an informed decision on whether you would like the agent to continue to work for you.

You should try to obtain as much information as possible given that any conflict of interest could ultimately have some bearing on the final transacted price of the property.

Your written consent for the agent to continue represent you in spite of the conflict of interest may be legally binding. Hence, if you are unsure of the contents of the written disclosure, you should seek legal advice.

I am looking at selling my HDB flat. Can an agent who is interested to buy my flat also represent me?

There is a clear and direct conflict of interest if this agent seeks to represent you in the same resale transaction. As a seller, you would want the highest price for your flat, while the agent, i.e. the buyer, would want the lowest. As you can see, there are conflicting vested interests involved. The agent who is buying the resale flat thus cannot represent you.

If an agent is a party to any property transaction, he can only represent himself. He cannot collect a commission or co-broke commission from the other party or the other party’s agent.

Advice to consumers

While your agent has a duty to promote and safeguard your interests in the property transaction, you can also do your part to ensure a smooth and hassle-free experience.

Be cooperative and truthful with your agent by providing accurate and current information. This way, your agent can help assess if there is any potential conflict of interest to act for you in the property transaction.