This article was written in collaboration with the Council for Estate Agencies. All views expressed are the independent opinion of DollarsAndSense.sg
Unless you are a regular property investor, chances are, the process of selling, buying or renting a property in Singapore is not something you’re familiar with.
This is why some people engage the services of property agents when they are looking to buy, sell or rent a property. In addition to helping to source for or market the property, agents can also guide us through the legal requirements to complete a transaction smoothly.
When choosing a property agent, some may engage a property agent whom they know personally, such as a relative or friend, or by recommendation. These days, it is also possible to find a good property agent through social media platforms, such as property-related Facebook groups that allow property agents, buyers and sellers to connect with one another.
A Written Agreement Protects Both You And Your Appointed Agent
Regardless of how you choose your agent, you probably did so because you felt positive and comfortable with them.
Because of this feeling of goodwill and trust, some of us may be guilty of relying on verbal agreements with our agents, especially if they are someone we already know well.
It might feel unnecessary, or even rude, to ask for a written agreement, since logically both of you shouldn’t be working together if there isn’t mutual trust.
However, even if everything goes well, not having a written agreement means relying on just your collective memories of what has been agreed upon, which is not a sound idea, especially when it comes to a transaction worth hundreds of thousands or even millions of dollars.
You may also miss out on areas that were not discussed or discussed vaguely.
#1 A Written Contract Makes Everything Official
In Singapore, it’s an offence for individuals to be carrying out estate agency work without a valid license. This means you need to ensure that you are signing the agreement with a property agent who is authorised to carry out estate agency work in the first place. You can check the Council for Estate Agencies’ (CEA) Public Register to verify that your agent is registered.
If you’re selling or renting out, a written contract grants permission for your agent to be advertising the property on your behalf. This is important because a property agent should not advertise a property without the consent of its owner(s). Also, if you are not the sole owner for your property, you would need to get the consent of your co-owner(s) if you want to appoint an agent to market the property.
#2 Articulating The Duties Of Your Appointed Agent
The responsibilities of your agent should be clearly stated in the contract that you sign with your agent. For example, it should state that your appointed agent should be representing and advising you only and not any other party involved in the transaction.
Your agent should be doing their best in negotiating on your behalf to get you the best possible price, and keeping you informed about all expressions of interest.
#3 What’s The Commission Payable For A Successful Transaction?
Money can be a sensitive topic, so it’s always best to discuss and agree, in writing, of course, on what the commission payable would be for a successful transaction.
As highlighted in one of our previous articles, there are no fixed commission rates for property agents in Singapore. CEA and other government authorities do not provide commission guidelines. Consumers are free to negotiate and agree with their agents on how much the commission ought to be, basing this on the scope of work required by the agent.
The written agreement should also indicate if the commission rate payable is inclusive of GST so that you know exactly how much you will need to pay at the conclusion of your property transaction.
#4 Will This Be An Exclusive Or Non-Exclusive Arrangement?
There are typically two kinds of arrangements when engaging a property agent in Singapore: an exclusive or non-exclusive arrangement.
An exclusive arrangement means that your appointed agent will be the sole representative for your property for a defined period of time. If you are a seller and manage to find a buyer on your own within the validity period of the exclusive agreement, you will still need to pay the agent his commission fee. For up to three months after the validity period, if you close the transaction with a party that the agent introduced to you during the validity period, you will also have to pay the agent the agreed commission fee.
A non-exclusive arrangement means that while your appointed agent will represent you in selling the property, you are also free to appoint and work with any other agents if you wish, and you only pay the agent who successfully completes the transaction for you.
#5 Disclosure Of Any Conflict Of Interest Situation
Sometimes, your agent could end up in a conflict of interest situation. For example, an interested buyer for the property your agent is helping you to sell could be a relative of his.
This is not illegal, but your agent is required to declare in writing this conflict of interest to you as soon as possible. Upon disclosure, your agent can still continue to act for you, but only after with your written consent.
Use These Standard Templates and Forms For A Smooth Transaction
Besides the 5 areas highlighted above, there may also be other terms and conditions that you would want to include, which should be put down in writing.
With the extensive amount of information required to discussed and included in the contract, what is the best way to have a well-written agreement that effectively captures the important details required?
Prescribed Estate Agency Agreements
CEA has prescribed estate agency agreements that cover the sale, purchase and lease of residential property transactions. You can choose between the exclusive or non-exclusive agreement, depending on what works best for you.
All you need to do is to download the forms you need here and to fill it in with your agent.
Your agent will also ask you to fill up a Customer’s Particulars Form. This is a compulsory measure that property agents must take to prevent money laundering and counter the financing of terrorism. With this form, the agent will be able to verify your identity, record your essential particulars, and determine the true ownership of the property you are looking to buy or sell. If you are asked to fill one up by your agent, do your part as a responsible customer by cooperating and completing the form.
Tenancy Agreement Templates For Residential Transactions And Standard Contract Templates For Private Residential Resale Transactions
Whether you are renting, renting out, buying or selling a property, you can download standard templates for residential transactions from CEA’s website. These include:
- Tenancy agreement templates for residential rental transactions
- Option to Purchase for private residential property, and
- Agreement for the Sales and Purchase of Private Residential Property
With the abovementioned knowledge in hand, you are now ready to engage a property agent with confidence and assurance that all your bases are covered.
Read Also: 5 Things To Discuss With Your Property Agents Before You Engage Them