Fee dispute: PropNex drops lawsuit against couple

May 8, 2008

Fee dispute: PropNex drops lawsuit against couple

By Tan Hui Yee

PROPERTY company PropNex is dropping its lawsuit against a couple who refused to pay the seller's agent the 1 per cent commission after buying a home.

Both sides reached an agreement after a mediation session on Tuesday, which PropNex said yielded a 'win-win' conclusion. They declined to disclose the terms of the settlement.

If the case had gone to trial, it would have turned the spotlight on the contentious issue of whether home buyers should pay a fee to sellers' agents.

PropNex associate director Ricky Low Yong Sern, who was the only agent handling the sale of a terrace house in Whampoa last year, had sought about $4,000 in commission or a service fee from the buyers, marketing specialist Loh Yi Min, 29, and his wife Ariel Wee, a 33-year-old polytechnic lecturer.

The couple bought the house - built over 30 years ago and classified as a Housing Board flat - for $400,000 in April last year. They did so without hiring an agent.

According to court documents, PropNex's Mr Low claimed that he had provided services to them.

But the buyers refused to sign the commission agreement, saying they had not agreed to pay him a fee.

PropNex chief executive Mohamed Ismail said of the first such lawsuit initiated by his company: 'It has been amicably settled, so we are withdrawing the case. PropNex initiated this on the grounds that a fair amount of work has been done by the agent to start off with. This negotiated settlement takes into consideration both parties' views.'

Ms Wee, however, called for rules requiring property agents to state clearly what services they were providing independent buyers that would justify the commission.

'And we really need to see whether the same agent can represent both the buyer and seller - it's a complete conflict of interest,' she added.

The issue of commissions payable by buyers who deal without agents has been hotly debated in recent years. The law does not fix agents' fees, but most property sellers pay their agents a commission of 2 per cent of the selling price, while buyers foot 1 per cent.

Many agents marketing HDB flats also charge independent buyers a 1 per cent fee, but this is not practised for transactions involving private property.

This difference, say agents, comes from the lower prices of HDB flats, which translates into a lower commission. The sale of HDB flats involves more paperwork, they add.

Disputes arise when sellers' agents tell independent buyers about the commission only just before sale papers are signed.

Agents, on their part, say independent buyers often leave the sellers' agents to handle the paperwork but refuse to pay a service fee.


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