High-profile agent misconduct cases belie high professional standards in real estate agencies

/ EdgeProp Singapore |

February 7, 2020 11:00 AM SGT

SINGAPORE (EDGEPROP) - Two widely publicised cases of agent misconduct made news headlines last year, and threw the spotlight on the professional and ethical standards among real estate agents in Singapore.

There were 19 disciplinary cases involving real estate agents in 2019, but only four of those cases pertained to dishonest or unethical behaviour on the part of the agent. The bulk of the cases involved relatively minor regulatory infringements and there were two cases of unregistered estate agency work.

While some errant individuals may have tarnished the industry’s reputation, the overall professional standards of real estate agents in Singapore continue to be high, thanks to the good track records of property agencies as a whole as well as the efforts of the industry’s regulator, the Council of Estate Agents (CEA).

Malpractice cases in 2019

CEA has been the industry watchdog since the Estate Agents Act was passed in 2010. The regulator administers the industry’s regulatory framework, licensing regime for estate agents, and promotes the competency of estate agents. A Disciplinary Committee within CEA also conducts disciplinary proceedings on offences or misconduct in relation to estate agency work.

The number of registered property agents in Singapore jumped to 30,073 as of Jan 1, 2020, compared to 29,146 a year ago.

The most recent ruling on a case that involved a breach of ethical behaviour by a salesperson occurred in December last year. It involved a property agent who made unauthorised alterations to documents to collect additional commissions amounting to $55,879, on top of co-broking fees of $8,785.09, from three lease transactions. He did this by altering his agency’s “Commission Agreement for Lease (Tenant)” document to a “Property Management Agreement” without authorisation.

According to CEA’s investigation, the agent received $64,664 from these transactions, which was about seven times more than what he would have otherwise received. He also failed to declare the additional commissions to his agency. The investigation found that the agent’s actions were “deliberately planned and premeditated”, adding that his “disreputable behaviour resulted in multiple parties being defrauded”.

The agent was handed a financial penalty of $27,000, on top of a 10-month suspension of his CEA registration as a property agent.

CEA also handed down its ruling on a separate case of malpractice in October last year. It involved a property agent who failed to convey to his client the seller’s offer to sell a property at a minimum price, failed to declare his conflict of interest in getting a co-broke commission, and failed to convey to his client a counter-offer to sell the property, with his commission to be paid by the client.

The CEA investigation found that the agent’s client suffered a loss or disadvantage of about $20,000 to $30,000. The agent received a 12-month suspension of his CEA registration, and was fined $30,000 for his unprofessional and unethical conduct. It is the heaviest sentence that the CEA Disciplinary Committee has ever meted out to a property agent to date.

Service lapses outnumber ethics cases

However, statistics from CEA show that these types of malpractices are uncommon. According to a CEA spokesperson, “over the past few years, we have observed a decrease in the number of complaints related to property agents’ conduct that infringed [on] CEA’s rules and procedures, as well as those involving agents not acting ethically or against their clients’ interests. These form a small proportion of the complaints that CEA receives”.

Most complaints that CEA has received involve service lapses, such as tardiness at viewings and poor communication, rath- er than regulatory infringements. It says that property agencies are responsible for ensuring that their agents conduct their estate agency work properly.

“We found that property agencies are generally prompt in addressing the issues raised. Some agencies have also put in place measures to ensure greater accountability for their agents’ actions,” says the CEA spokesperson. “This service-oriented and customer-centric approach has helped to build trust and confidence with consumers who have become more discerning in the level of service they expect from their agents.”

Continuous learning

Eugene Lim, key executive office of ERA Realty Network, says that the standard of professionalism in the real estate agency industry has improved over the years. “The Estate Agents Act and the regulator have been around for 10 years, and over this time the industry has transformed for the better. Before the days of regulation, there was no barrier to entry for persons entering the industry. But today, salespersons who pass the Real Estate Salesperson (RES) course are assured of a certain professional standard,” he says.

ERA’s Lim: The leadership in real estate agencies plays an important part in emphasising and educating on the importance of high professional standards to all members in the company. (Picture: Samuel Isaac Chua/The Edge Singapore)

Lim adds: “The RES examinations cover a broad syllabus with the depth expected of a professional real estate agent. As a result, aspiring real estate salespersons have to be willing to learn and keep themselves abreast of the latest industry news, regulations, procedures, calculations and policy changes.”

According to Steven Tan, managing director of OrangeTee & Tie (OTT), “the [RES] course certainly helps build a strong foundation for the new salesperson”. But he also believes that continuous training is essential to better equip salespersons. Thus, like many other agencies in Singapore, OrangeTee & Tie organises a compulsory, introductory course for new salespersons to deepen their skill-sets to provide practical and professional services to customers.

Customer satisfaction on the rise

Consumers have reacted positively to improvements in service quality, even as the number of registered property agents in Singapore has been on the rise. This year, the number of registered agents in Singapore stood at 30,073 as at Jan 1, 2020, and this is higher than the 29,146 agents recorded as at Jan 1, 2019, and 28,571 agents the year before.

Based on CEA’s Public Perception Survey of the real estate agent industry, held every three years and which was last published in 2018, consumer satisfaction with property agents has increased since 2012. About 85% of polled consumers in 2018 were satisfied with the service provided by their property agent, compared to 79% in 2015 and 81% in 2012.

About 72% of consumers polled at the time also indicated that they would engage the services of a property agent for future transactions, compared to 60% in 2015 and 66% in 2012. Also, consumers were “significantly” more likely to be satisfied with their agents if the agent uses technology tools, such as electronic forms, property apps with financial calculators, or online information on property trends.

This was felt across all age groups of consumers polled in 2018, and shows that technology adoption by agents enables them to better satisfy consumers’ demands and expectations, says CEA.

More than half of the complaints against agents last year were about service-related lapses, rather than dishonest or unethical behaviour on the part of agents. (Picture: Samuel Isaac Chua/The Edge Singapore)

According to Tan, “salespersons today are expected to play many roles, and have to broaden their knowledge in various aspects of the transaction, such as upgrading their financial literacy skills”. Thus, agencies must keep abreast of changes such as market trends, policy updates, and consumer behaviour, in order to enhance training, technology and market insights that prepare their agents to keep up with rapid changes in the industry, he says.

A CEA spokesperson says: “However, as with any other industry, there will always be errant individuals and companies. CEA will not hesitate to take the necessary and appropriate disciplinary action against such individuals and companies.”

Leaders set the tone

ERA’s Lim says that the leaders of real estate agencies play an important part in emphasising and educating on the importance of high professional standards to all members in their company. He adds that “the leadership must also be the first upholders of integrity and ethics. This will trickle down to senior managers, and team leaders, and then to the individual salespersons”.

According to OTT’s Tan, “top management of the company plays a crucial role to constantly reinforce core values in their day-to-day operations and decision-making. Most importantly, they must live and lead by example so that the staff and salespersons fully embrace the company’s core values”.

OrangeTee’s Tan: Salespersons today are expected to play many roles, and they have to broaden their knowledge in various aspects of the transaction, such as upgrading their financial literacy skills. (Picture: Samuel Isaac Chua/The Edge Singapore)

Last year, each of the top four real estate agencies in terms of number of salespersons – PropNex Realty, ERA Realty Network, Huttons Asia, and OrangeTee & Tie – all saw at least one disciplinary case brought against an agent in their company.

The largest real estate agency in Singapore, PropNex Realty, saw several of its agents taken to task by CEA’s Disciplinary Committee last year.

CEO Ismail Gafoor says “PropNex takes a serious view of salespersons who are not acting or conforming to the various guidelines, beyond those that were being set by CEA. For example, guidelines on project marketing set by Controller of Housing, HDB guidelines on Minimum Occupation Period, URA, Ministry of Finance – Anti-Money Laundering and PDPC [Personal Data Protection Commission] requirements.”

Gafoor adds that it is not easy for salespersons to keep upto- date on all these guidelines, but the company has several programmes to help its agents. These include an induction programme for all incoming salespersons that covers the company’s core values and expected professional conduct; it also highlights recent charges of unacceptable behaviour in the industry to its salespersons. The company also organises training and legal seminars to update salespersons and leaders on their roles and responsibilities.

“We are mindful that as Singapore’s largest real estate agency with over 8,400 salespersons, we emphasise the importance of trust and integrity in our business and course of work. The management will not hesitate to take disciplinary action against any of our salespersons for any failure [in these aspects],” says Gafoor.

The way forward

In the real estate agency industry, which is mostly represented by self-employed individuals, Lim emphasises the importance of instilling an ethical culture across the board. “While the professional standards of the industry have improved in the decade since the enactment of the Estate Agents Act, regulation and customer service standards must continue to improve in the future,” says Lim.

Property agencies are responsible for ensuring that their agents conduct their estate agency work properly, and these companies have been generally prompt in addressing the issues raised, putting in place measures to ensure greater accountability for their agents’ actions, says CEA.

Tan of OTT suggests two ways the industry can enhance the service standards and ethics conduct of salespersons.

“First, the industry should undergo a mindset shift from a transactional experience to a relational customer experience,” he says. This means equipping salespersons with financial tools, market insights, and marketing platforms to provide one-stop and personalised services to customers.

“Second, the industry should empower the customer with honest, open and transparent information for them to make essential decisions,” says Tan. In 2016, OTT was the first real estate company in Singapore to introduce a public review portal of its salespersons. “The review portal is an effective way to enhance the service standard as it motivates our salesperson to go the extra mile to raise the service standards,” says Tan.

Last October, CEA set up a workgroup with industry representatives, consumer associations, and academia to develop a framework for consumers to rate property agents. It will offer some best practices for agencies looking to set up their own review portal for consumers to rate property agents.

This follows the roll-out of the Property Agents Transaction Records Initiative last year, where records of public residential transactions facilitated by property agents are made available on CEA’s Public Register on its website. From 2Q2020, CEA will publish property agents’ transactions records involving the renting out of HDB flats, as well as private residential sale/purchase and lease transactions.

These initiatives are aimed at supporting the industry in its effort to strengthen professionalism, and build consumers’ confidence and trust, says a CEA spokesperson.

PropNex’s Gafoor: We emphasise the importance of trust and integrity in our business and course of work. PropNex management will not hesitate to take disciplinary action against any of our salespersons for any failure [in these aspects]. (Picture: Samuel Isaac Chua/The Edge Singapore)

ERA’s Lim says: “The initial years [following the Estate Agents Act] saw a number of tough-handed measures, and the management in CEA at the time did much of the heavy-lifting to clear the industry of the so-called ‘bad hats’. As a result, CEA today can focus on collaborative efforts with the industry to carry on the journey.”

The CEA spokesperson says the council “holds regular dialogues with industry associations and key executive officers of the property agencies. These sessions allow us to gather ground feedback from industry practitioners on practice issues, explain our policies and regulations to facilitate better compliance, as well as seek input on future plans and industry improvements”.

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