Couple refuses to pay seller's agent fees

Tue, Apr 29, 2008
As published in The Straits Times

A COUPLE who bought a home and refused to pay the seller's agent the 1 per cent commission are being taken to court by a property company which is claiming a fee.

PropNex associate director Ricky Low Yong Sern, who is in his late 30s, is seeking about $4,000 in commission or a service fee, in a case that is likely to turn the spotlight on the issue of whether home buyers should pay a fee to sellers' agents, The Straits Times reported.

He was the exclusive agent handling the sale of a terrace house in Whampoa built over 30 years ago, which is classified as a Housing Board flat.

Marketing specialist Loh Yi Min, 29, and his wife, polytechnic lecturer Ariel Wee, 33, bought it for $400,000 in April last year. They acted on their own without engaging an agent.

In documents submitted to court, Mr Low claimed that he had a right to collect a commission as he had exclusive rights to market the property. He also claimed that he provided services to the buyers.

However, the couple refused to sign the commission agreement when they inked the sale last year. They claim they had made no deal to pay him a fee in the first place.

Both sides will attempt to reach an agreement when they attend a court dispute resolution session next month.

This is the first lawsuit of its kind started by PropNex.

The issue of commissions payable by independent buyers - or buyers who deal without agents - has been hotly debated in recent years.

While there is no law fixing fees payable, property sellers typically pay their agents a 2 per cent fee, while buyers pay their agents a 1 per cent fee.

Many agents marketing HDB flats also charge independent buyers a 1 per cent fee, but this is not practised in private property deals. Property veterans say this disparity is due to the lower prices of HDB flats, which amounts to a lower commission payable to agents.

Some independent buyers have complained that sellers' agents inform them that they have to pay a commission just before the purchase documents are signed, leaving them little time to find out about their rights.

Once the buyers sign the commission agreements, they are bound to pay the fee.

However, agents have countered that independent buyers often leave the paperwork to the sellers' agents but refuse to pay a service fee.

Major real estate agencies contacted by The Straits Times have varied responses to such situations, although they all maintain that independent buyers of HDB flats should pay a fee.