Agents must truthfully convey offers in price negotiations
An estate agent who serves both sides of a transaction is required to handle the negotiation of property prices in a fair and transparent manner. The Practice Regulation clearly stipulates that the agent should truthfully indicate the price as instructed by either party to the other party and that failure to do so will attract disciplinary actions.
A vendor listed his property through an estate agent and the asking price was $1.6 million. At the same time the agent also represented a prospective purchaser who was interested in the property. The prospective purchaser asked the agent to inform the vendor that he would like to offer $1.55 million, although he would accept a price of $1.6 million if the vendor would insist. The agent then reported the offer of $1.55 million to the vendor. The vendor found it unacceptable but since he had an urgent need to sell the property, he told the agent that his commission would be cut by half if the deal were to be made at $1.55 million. The agent did not convey this to the prospective purchaser for fear that his commission might be jeopardised. At the same time he told the vendor that the prospective purchaser would be willing to go up to $1.6 million.
When the two parties were finally aware of what had happened, the agent explained that he did not want his commission to be cut and therefore did not convey the vendor's acceptance of $1.55 million on condition that commission payable would be halved. He finally brought the deal to a close as the purchaser indicated willingness to accept $1.6 million. The Disciplinary Committee, when examining the details of the case, noted that what the estate agent had done was in breach of section 11 (e) of the Practice Regulation. It held that the agent should have been frank and honest about the prices. Commission arrangement could have been openly negotiated with the parties concerned and the agent should not have done anything to prevent the prospective purchaser from purchasing the property at the best price. As a result, a letter of warning was issued to the estate agent by the Disciplinary Committee.