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Agent acted unethically and unprofessionally in a sale and purchase transaction

In this issue of CEAnergy, we review the actions of a property agent who failed to act ethically and professionally in the course of facilitating a sale and purchase transaction.

In November 2015, an HDB flat owner engaged an agent (Agent A) to find a buyer for his property. Within a week of marketing the property, an offer of $430,000 was made and accepted. The Option to Purchase, however, was not exercised as the buyer was unable to secure a bank loan in time. The flat was then relisted online.

Around 9 December 2015, a new buyer contacted the agent to arrange for a viewing of the flat. Upon confirming the appointment, the buyer received a call from Agent B who said that he was Agent A’s colleague and would be arranging the viewing of the flat.

On 13 December 2015, Agent B met the buyer at the flat, and offered to represent the buyer for a one per cent commission fee if the buyer was interested to make an offer. The buyer said that he did not intend to engage an agent for this transaction.

After the viewing, at which the seller was present, the buyer asked Agent B several questions about the property, including the last offer price. As Agent B was unable to answer, he called Agent A, who erroneously replied that the last offer price was $438,000.

Based on this information, the buyer made an offer of $440,000, and prepared an option fee of $1,000 in cash. Agent B, however, told the buyer to issue a cheque for the option fee.

The buyer then spoke to Agent A on the phone, and when he asked what the last offer price was, Agent A repeated that it was $438,000. Agent A also insisted that the buyer issue a cheque for the option fee, and suggested that he return for a second viewing to negotiate the price since the buyer did not have his cheque book with him.

The buyer was puzzled as to why he could not make the offer right then, but he eventually, albeit reluctantly, agreed to a second viewing on 15 December 2015.

Agent A, however, did not convey the offer to the seller. Instead, when asked if there had been any offer of interest, Agent A only said that there was one party brought by Agent B who “may have interest”.

On 15 December 2019, Agent A told the buyer that the seller was not available for the second viewing despite not having even told the seller about the viewing. The buyer, believing that Agent A was withholding his offer from the seller in favour of potential buyers who would be willing to engage Agent B’s services, decided to visit the property anyway.

When the buyer met the seller, they discovered that latter had not been informed of the second viewing nor about his offer of $440,000.

The seller called Agent A, who admitted having withheld information about the offer. The seller then said that he would be selling the flat to the buyer and both parties agreed on a sale price of $438,000. The buyer based his offer on what he understood was the last offer price, while the seller based his acceptance on his understanding from Agent A that the prospective buyer in November had received a valuation report that valued the property at $438,000. The OTP was issued that evening.

On 21 December 2015, the buyer received a valuation report of the property, indicating that the flat was valued at $455,000. This corresponded with the valuation report the prospective buyer had obtained, but contradicted what Agent A had told the seller about the valuation amount. The buyer proceeded with the purchase, which was eventually completed in April 2016.

Agent A, however, continued to list the property on an online portal, relisting it 17 times between January and March 2016, despite being fully aware that the property was no longer available. She also reactivated the listing on 14 June 2016, after the completion of the transaction.

Agent A eventually received a commission of $8,600. The commission amount was based on the OTP issued to the prospective buyer in November, which she erroneously submitted to her property agency as being the relevant OTP.

Agent A was charged with the following:

  1. Breached paragraph 6(3) read with paragraph 6(4)(c) of the Code of Ethics and Professional Client Care (CEPCC) for failing to act in a reasonable manner by misleading the buyer that the last offer price for the property was $438,000 when in fact the last offer price was $430,000.
  2. Breached paragraph 10 of the CEPCC for failing to inform her client of the offer made by the buyer of $440,000.
  3. Breached paragraph 6(1) read with paragraph 6(2)(d) of the CEPCC for failing to render professional service to her client by not informing the seller of the second viewing by a prospective buyer.
  4. Breached paragraph 6(3) read with paragraph 6(4)(c) of the CEPCC for failing to act ethically, honestly, fairly and in a reasonable manner, by misleading the buyer into believing that the seller was not available for the second viewing when the seller had not even been made aware of the second viewing.
  5. Breached paragraph 6(3) read with paragraph 6(4)(c) of the CEPCC for failing to act in a reasonable manner by knowingly submitting an incorrect Option to Purchase to her property agency for the sale of the flat.
  6. Breached paragraph 5(1) of the CEPCC for failing to conduct her work in compliance with all laws and in particular paragraph 3.8 on the Practice Guidelines of Ethical Advertising (PG 2/2011), by posting a new advertisement even though the property was no longer available for sale.

On 19 August 2019, the agent pleaded guilty to the first and fourth charges before CEA’s Disciplinary Committee. The Committee sentenced her to a total financial penalty of $6,000, and a four-month suspension starting from 2 September 2019.

Expert view on the case
By Mrs Ong Choon Fah, member of CEA’s Professional Development Committee

Agent A had failed to act in a reasonable manner by misleading the buyer that the last offer price for the property was $438,000 when in fact it was $430,000. She subsequently failed to inform her client of the $440,000 offer made by the buyer.

In addition, she failed to serve her client professionally as she did not inform the seller of the second viewing by a prospective buyer. In so doing, she failed to act ethically, honestly, fairly, and in a reasonable manner. She misled the buyer into believing that the seller was not available for the second viewing when the seller had not even been made aware of the second viewing.

Agent A then failed to act in a reasonable manner by knowingly submitting an incorrect Option to Purchase to her property agency for the sale of the flat. Finally, she breached regulations by posting a new advertisement even though the property was no longer available for sale.

As property agents, we have an important role to play in our community. We owe our clients a duty of care to service them professionally with honesty, fidelity, and integrity at all times. We should be familiar with the various regulations and be knowledgeable in our field of work. Attending Continuing Professional Development courses helps and when in doubt, we should check with our line supervisor or KEO.

To build a career in property, we must move away from just closing the next deal at all costs, to building a personal brand as a valued advisor. This will ultimately attract more clients to us because they trust us to act in their best interest.