Thursday, May 6, 2010

Estate agents shouldn't work with moneylenders

I REFER to Monday's report, 'Realty firms halt lending activities'.

As reported, there are currently some real estate agencies and agents who are licensed moneylenders. Although the moneylending business is typically constituted as a separate legal entity, the individuals behind it are essentially the same as those of the real estate group.

At present, there is no prohibition against a real estate agent holding a moneylender's licence and vice versa. However, when either scenario occurs, the likelihood of collusion between the credit companies and estate agents becomes real.

Already, the report mentioned 'black sheep' moneylenders cum estate agents who have abused the trust of cash-strapped HDB sellers and exploited them. The sellers who had hoped for a breather were smacked with exorbitant interest rates and possibly robbed of the lion's share of their sales proceeds in other 'hidden costs'.

Singapore Accredited Estate Agencies (SAEA) urges estate agencies and agents who are licensed moneylenders to exercise caution and ethical conduct in their professional relationships with their clients who are HDB sellers. Although legal, it is not advisable for the two businesses to mix.

We do not support the practice of estate agents working with moneylenders and referring their clients to them for introducer's fees or to take advantage of their clients' financial plight.

Estate agents should not introduce HDB sellers to moneylenders for a fee as this is not within the ambit of their job and the real estate brokerage service rendered. In fact, estate agents who do so stand in potential breach of fundamental ethical obligations to their clients and may be perceived as lining their own pockets rather than acting in the interests of their clients.

SAEA will not hesitate to act against such agents should they be accredited.

Instead, according to the HDB resale checklist for sellers, estate agents should, among other duties, help HDB sellers work out their estimated sales proceeds before selling, and upon resale, sellers must discharge their outstanding mortgage loan and refund the Central Provident Fund (CPF) monies used to buy the flat with interest to their CPF accounts. Estate agents should also advise sellers to plan for their next home before they sell their flat, and should the sellers wish to buy another HDB flat, they will need to know if they are eligible for an HDB or bank loan.

If HDB sellers are in dire financial need, there are other avenues of help to which estate agents can refer their clients so they do not lose the roof over their heads.

Dr Tan Tee Khoon
Chief Executive Officer
Singapore Accredited Estate Agencies

Source: Straits Times, 6 May 2010

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