Property agents urged to be responsible in light of “scare tactics”

With the property sector showing signs of a slowdown, concerns have been raised over how some real estate agents are employing scare tactics to close deals.

Emails forwarded to MediaCorp detailed how some agents are highlighting the government’s recent land sales as a bargaining tool to lower their clients’ expectations on property prices.

One agent disclosed that a deal was closed after telling the client that the “market is going to crash”.

Industry observers said the gap in expectations between buyers and sellers is widening due to mixed sentiments in the market.

On the one hand, the economy is strong and the interest rate is low. But on the other hand, there are concerns over the debt crisis in Europe and the government land sales.

But observers also pointed out that no one can predict whether the market will crash.

ERA said it did not have specific guidelines on how agents should communicate with clients – so long as the information presented is factually correct.

In any case, agents have to communicate the facts to their clients.

“It’s a matter of perspective. A person’s impression that if the market drops by 10 per cent, the market is crashing. Another person (would think) a drop by 10 per cent is nothing,” said Eugene Lim, associate director of ERA Asia Pacific.

He added: “Most of the sellers today are very well-informed, and because of the availability of information from the media and the government, I think most people would have sufficient information to form an opinion.”

But some said such language is not condoned.

“By telling the seller that the market is going to crash, it will make the seller worry, and ultimately they will sell at a price below their expectation. This conduct is not condoned by the industry. Instead, the agent should provide more comprehensive analysis of the market condition,” said Steven Tan, advisory committee member of the Singapore Accredited Estate Agencies.

The advice to buyers and sellers is to be armed with information.

When contacted, the Ministry of National Development (MND) said it’s setting up a new statutory board – the Council for Estate Agencies – to implement a new regulatory framework for the real estate agency industry, so as to better safeguard consumer interest and to raise the professionalism of the industry.

The new framework will include a Code of Ethics and Professional Conduct, which estate agencies and agents must adhere to.

Unethical pressure sale tactics or using unsubstantiated information about the property market will constitute as misconduct under the Code.

Consumers who feel they have been disadvantaged or misled by estate agencies or agents can report to the CEA, after its formation.

CEA will investigate into the complaint and take disciplinary action if warranted.

Sentiment on property prices remain mixed. Some observers said prices may slide by 5-10 per cent if transaction volume and demand continue to ease over the next quarter, while others point to a gradual uptrend with property prices rising in tandem with the economy.

Source: Channel News Asia, 31 May 2010