Case 1: Solicitation/Acceptance of Illegal Commission from ClientsAn estate agent of an estate agency was tasked to procure sale and purchase transactions of properties, including negotiating with vendors and purchasers about property prices and agency commissions to the estate agency. In the sale and purchase of a property, the estate agent represented both the vendor and purchaser (i.e. dual agent) and solicited a financial reward from the vendor for negotiating with the purchaser for a higher property price. The estate agent eventually procured the property transaction at a higher property price and accepted the financial reward from the vendor.
Case in Perspective
An estate agent should protect and promote the interests of his clients. In this case, however, the estate agent acted in favour of the vendor to the detriment of the purchaser. His act also affected the reputation and hence the interest of the estate agency.
An estate agency should lay down appropriate procedures and safeguards to prevent staff from receiving any illegal commission from clients. For example,
Lay down the company’s procedures for handling commission payable by clients including the negotiation of commission with clients and receipt of commission from clients.
If acting as a dual agent in a transaction, ensure that the amount/rate of commission charged is disclosed to both parties, and require staff to obtain the approval of the company and a written consent from both parties to the transaction if there is any subsequent change.
Prohibit staff from soliciting or suggesting additional commission (or other advantages such as tea money, gift) other than the amount stated in the estate agency agreements or provisional sale and purchase/tenancy agreements.
If additional commission or any other advantage other than that specified in the agreement is offered by clients, require staff to report the case to designated supervisory staff according to the laid down policy and procedures. If acting as a dual agent in a transaction, ensure that prior consent has been obtained from all parties to the transaction before accepting any additional advantage.
- Other tips/references are provided on the Estate Agents Authority's website
- Best Practice Checklist on Governance and Internal Control of Estate Agencies
- Service Request Form
- Contact us for corruption prevention advice