MAY / JUN 2016

Five things to know about Prescribed Estate Agency Agreements

Consumers often ask what Prescribed Estate Agency Agreements are. Is it a commission agreement? CEAnergy highlights five things you should know about these agreements.

What is a Prescribed Estate Agency Agreement and why should I use it?

A prescribed estate agency agreement is more than just a commission agreement. It is a binding contract between you and your property agency/agent for the performance of estate agency work.

We strongly encourage you to use the prescribed agreements even when your property agent is someone you are familiar with.

CEA has eight Prescribed Estate Agency Agreements for the sale, purchase and lease of residential property transactions. You can choose to use either exclusive or non-exclusive agreements for each type of transaction.

The agreement protects the interests of both parties by bringing clarity to details in the property transaction including:

Your property agent should prepare the agreement based on their discussions with you. They should explain the agreement to you and give you sufficient time to read it before you sign the document. They should give you a copy of the signed agreement.

Besides protecting the interests of parties involved in the property transaction, signing CEA's Prescribed Estate Agency Agreements allows you to make use of CEA's Dispute Resolution Scheme should you encounter any subsequent contractual disputes with your property agent. The Dispute Resolution Scheme offers a choice of mediation or arbitration through centres approved by CEA.

What is the difference between exclusive and non-exclusive agreements?

In an exclusive agreement, the appointed property agency is likely to devote more time and resources to look after your interests

For exclusive agreements:

For non-exclusive agreements:

You can appoint a few property agents to help market your property or search for one in a non-exclusive agreement

Should I use exclusive or non-exclusive agreements?

You can choose the type of agreement depending on your needs and preferences.

Generally, property agents engaged on an exclusive basis are likely to devote more resources and time to look after your interests.

From July onwards, you can also request your property agent to add on a "Commitment to Service" document to the exclusive agency agreement with the property agency. In this document, you discuss and agree with your property agent on the level and extent of services offered, such as frequency of advertisements and 'open house' sessions. You can choose to terminate the agreement if your agent does not meet the commitment to service.

If you choose to use the non-exclusive agreement, you can appoint multiple agents to help market your property or search for one. You need to coordinate the efforts of the property agents introducing the other party to you so that their efforts do not overlap. You may not have the complete picture of all the offer prices at any one time as agents might update you at different timings.

To avoid conflict, you should clarify in advance which property agent can collect commission from you if more than one introduces the other party in the transaction to you.

At which point in the property transaction do I sign the agreement?

It is advisable that you sign the agreement with your property agent when you decided to engage his/her services.

You should be given a copy of the signed agreement immediately or as soon as possible. Do request a copy from your agent if they do not extend one to you.

Can I include additional terms or edit the terms in the prescribed agreement?

You can include additional agreed clauses at the end of the prescribed agreement. If there is insufficient space, you can write or print the additional terms in black ink on a separate sheet of pink paper. The font should not be smaller than the font of the original prescribed agreement. These additional terms must not conflict with, vary, or limit the prescribed terms of the agreement.

In addition, you should not strike out any of the existing clauses in the prescribed agreement. Property agencies should not pre-type any matter that they have to negotiate with you on nor pre-select options for you. Both parties should date and initial beside any amendments made to the additional terms, information filled in the blanks, and changes to choices in the prescribed agreement.

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