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CEAnswers: Providing advice on price trends and collecting cheques from prospective buyers

In this segment of CEAnergy, we answer questions property agents often ask, and address common concerns you may have.

Q:   As a property agent, what should I note when I offer my own opinions to my clients on property price trends and how this may influence that of their properties?
Under the Code of Ethics and Professional Client Care, property agencies and agents should offer opinions that can be justified by making reference to verifiable facts and sources of information.
For example, property agents should draw data from reliable sources of information such as from caveats lodged and the Housing & Development Board’s (HDB) resale transaction records when advising their clients.
When advising a client on the prices or monthly rental of properties, a property agent must ensure the following:
  • The data provided on prices or rentals are current and accurate.
  • The properties quoted are comparable to the client’s property or what the client is interested in.
  • Where available, prices or rents must be supported by a reasonable amount and recent range of comparable data of similar properties in the vicinity.
  • The range and amount of data, if available, is reasonably comprehensive and the client is not misled on the value of his property.
In addition, property agents are required to recommend that their clients seek professional advice where appropriate and where there are matters or issues that are beyond their knowledge or expertise. This includes but is not limited to solicitors, bankers, and valuers.
Do refer to Section 2.1 of the Professional Service Manual for more details.
Q:   Can property agents collect cheques from prospective buyers to show their “sincerity” in a property?
Property agents should not be collecting cheques from prospective buyers, be it to demonstrate their interest in a property, to be given priority in the selection of units of their choice, or to use the cheques to induce other buyers to offer higher prices for a property.
Section 3.7 of the Professional Service Manual provides detailed guidance on what property agents should be mindful of when collecting and handling cheques from prospective buyers, for both uncompleted and completed properties.
A summary of the advice is presented in the table below.
Can agents collect cheques from prospective buyers for…
Completed properties

No.

Cheques can only be collected if it is supported by proper documentation relating to the purpose of the cheque. Examples of proper collection of cheques:

  • Payment of an option fee in exchange for the Option to Purchase from the seller.
  • Payment of the deposit to exercise the Option.
Uncompleted properties that…
Have not been approved for sale by the authorities Approved for sale by the authorities

No.

No.

Cheques can only be collected if there is a request in writing by the developer to the property agency that the agent represents.

The agent must also do the following:

  • Prepare an authorisation letter to be signed by the prospective buyers when they collect cheques from them.
  • Ensure that the letter states key information such as:
    • Details of the project.
    • Conditions under which the property agency or agent is authorised to hand over the cheque to the developer.
    • Procedures for the cheque to be returned to the prospective buyer in the event that he decides not to proceed with the purchase of the unit.
  • Provide copy of the letter to the prospective buyer on the day it is signed.