Mar 2021 - 4 min read
In this case study, we review the actions of a salesperson who failed to convey offers received from a buyer-salesperson to his seller-client.
The owner of a property engaged a salesperson, G, to market and sell her property. She had also engaged another salesperson, A, for the same purpose, and instructed them to liaise with her friend, J, for all communications related to the sale of the property. Through J, the seller instructed Salesperson G to inform J of any offers that were received so that she could consider them.
A year later, Salesperson D, who represented a couple looking to buy a property, came across the property listings by Salespersons A and G online. Salesperson D tried to contact Salesperson A but failed and reached Salesperson G instead. Salesperson G subsequently conducted the property viewing for Salesperson D and his clients, and informed J that he had received and unilaterally rejected their offer of $1.27 million. On the same day, Salesperson G’s seller-client counter-offered $1.32 million for Salesperson G to convey to the couple.
Salesperson D subsequently informed Salesperson G of his clients’ second offer of $1.29 million and passed their issued cheque for the 1% option fee to Salesperson G as a show of sincerity. However, Salesperson G did not convey his seller-client’s asking price of $1.32 million to Salesperson D at any point in time.
Meanwhile, another salesperson, S, brought his client to view the property. Salesperson G told Salesperson S his seller-client’s asking price for the property upon Salesperson S’ request, and Salesperson S’ client made an offer of $1.32 million through Salesperson S. On the same day, Salesperson G informed J about the $1.32 million offer, and Salesperson D that his clients’ offer of $1.29 million was rejected.
Upon receiving Salesperson G’s update, Salesperson D conveyed his clients’ counter-offer of $1.3 million and tried to contact Salesperson G via calls and text messages the next day to get an update on the counter-offer. However, Salesperson G ignored Salesperson D’s attempts to contact him, and persuaded his seller-client to sign the Option to Purchase (OTP) for the sale of the property to Salesperson S’ client for the sum of $1.32 million.
During his meeting with his seller-client, Salesperson G did not disclose that her asking price of $1.32 million was not conveyed to Salesperson D, but told her that Salesperson D’s clients were “not genuine and not sincere”. He also did not convey Salesperson D’s clients’ latest offer of $1.3 million to her. Salesperson G’s seller-client eventually granted the OTP to Salesperson S’ client, and updated Salesperson A of this.
After the OTP had been executed, Salesperson G responded to Salesperson D’s request for updates vaguely, by saying that his seller-client preferred another offer, was not open to a higher offer, and that he did not know whether the property had been sold. Eventually, Salesperson D found out about the seller’s asking price of $1.32 million from Salesperson A.
Salesperson D then informed both Salespersons A and G that his clients would be offering $1.33 million for the property. However, as the signed OTP was already issued to Salesperson S’ client based on the offer price of $1.32 million, the seller decided to go through the sale of her property at $1.32 million.
As a result of Salesperson G’s failure to convey all offers to his seller-client, his seller-client’s interests had been prejudiced and she suffered potential loss in being deprived of the opportunity to consider all offers for the property, including the highest offer of $1.33 million. Salesperson G’s actions also harmed the reputation and integrity of the industry, and deprived Salesperson D’s clients the opportunity to compete in a fair and open manner to purchase the property.
Salesperson G was charged with the following:
- Breach of paragraph 6 of the Code of Ethics and Professional Client Care (CEPCC) for failing to act fairly towards Salesperson D, who had represented the potential buyers, when Salesperson G failed to disclose to Salesperson D the seller’s counter-offer of $1.32 million for her property when Salesperson D conveyed his clients’ first offer of $1.27 million to Salesperson G for the property.
- Breach of paragraph 10 of the CEPCC for failing to submit an offer of $1.3 million to his seller-client as soon as possible after receiving it from Salesperson D.
- Breach of paragraph 6(3) read with paragraph 6(4)(c) of the CEPCC for failing to act reasonably towards Salesperson D, by misrepresenting to Salesperson D that the seller preferred another offer to Salesperson D’s clients’ offer of $1.3 million for the property when Salesperson G knew that that was not true because the $1.3 million offer was not conveyed to the seller.
On 15 December 2020, Salesperson G pleaded guilty to the second charge, with the other two charges taken into consideration, before CEA’s Disciplinary Committee (DC). The DC sentenced him to a financial penalty of $5,000 and a 10-month suspension starting from 1 January 2021.
Expert view on the case
By Dr Tan Tee Khoon
Head of CEA’s Disciplinary Panel
Consequences of Salesperson G’s actions
In this disciplinary case which Salesperson G was indicted, it was plainly clear that the crux of the issue laid with his failure to convey all purchase offers for his client-seller’s property, particularly those from Salesperson D’s buyers (who counter-offered three times with a higher price each time), to his seller-client, and even that of his client-seller’s counter-offer to Salesperson D’s buyers.
This action by Salesperson G compromised his seller-client’s interest who could have sold her property at a higher price and also brought disrepute to the profession. He did not treat Salesperson D ethically, honestly, fairly and reasonably as required by the Practice Guidelines on Conduct Between Salespersons. Salesperson G was not truthful when he told Salesperson D that his client preferred another offer, was not willing to consider a higher offer and that he did not know whether the property had been sold although he knew the Option to Purchase (OTP) was already issued to Salesperson S’ buyers. Additionally, he also caused Salesperson D’s buyers to lose the opportunity to purchase the property. In fact, he had no apparent authority to reject any offer.
What Salesperson G should have done
Clearly, Salesperson G had failed in his fiduciary duty to his client when he could have averted such an undesirable outcome by simply conveying all offers to his client, including any counter-offers to prospective co-broking salespersons to ensure his client’s interests in the sale of property. He was in fact specifically instructed by his seller-client to do so. In summary, Salesperson G should have:
- Conveyed the first offer of $1.27m by Salesperson D’s buyers to his seller-client and await instructions. He should not have taken the liberty to reject the offer without first consulting his seller-client.
- Conveyed the counter-offer of $1.32m from his seller-client back to Salesperson D.
- Conveyed subsequent offers of $1.29m and $1.3m from Salesperson D’s buyers to his seller-client.
- Informed Salesperson S that there were existing offers made already to his seller-client and that he would communicate the offer from Salesperson S’ buyers of $1.32m to his seller-client.
- Kept Salesperson A informed of all offers received so that both of them would be on the same page.
- Rendered advice to his seller-client in the evaluation of all offers and assist in the issuance of OTP to the specific buyer(s) his seller-client decides to grant.
Information accurate as at 3 March 2021