By Ku Swee Yong and Janice Chin (guest contributors)
Infographic 1: Summary of the key points in the article (Image credit: HugProperty)
In today’s competitive services market, real estate agents are not only caught in the strife of industry competition, they also have to grapple with being made redundant by technology. To say that there are many real estate agents in Singapore is an understatement — there are more than 28,000 licensed agents or about 1 agent serving every 140 residents; and this is probably the principal cause of the stiff competition in the industry. The competition is exacerbated by the growing number of buyers, sellers, landlords and tenants who opt for self-service through web applications. We are concerned that some agents have compromised their integrity and their “duty of care” for their clients in order to trump the competition.
So, buyers, sellers, landlords and tenants: beware! We want to highlight to you that many of the listings on property portals and websites are not real. Those seemingly attractive and enticing deals may just be potholes for you to step into. We have encountered several of these unfortunate events ourselves, and in this article, we highlight some red flags that you should keep a lookout for. It is vital that you take precaution to ensure that you do not fall into the traps created by a few crafty agents.
Scenario A — Fake news and listings are increasingly common: The agent you call does not have
an actual listing of the property you saw online.
A property listing is an advertisement of a property that is put up for sale or for lease. Listings may appear on property portals or in traditional print media, such as the classified ads in the newspapers. Sellers and landlords may appoint one or more licensed real estate agents to list the properties to attract buyers and tenants. Conversely, buyers and tenants may also engage real estate agents to source for suitable properties that meet their budgets and needs.
To think that all listings of properties are genuine and available at any point in time is to picture a world of sunshine and rainbows. The sad truth is: there are many cases of fake listings put up to bait direct buyers and tenants.
We term these fake listings “imitations”. Why so? They look almost identical to other real listings, but upon careful inspection, something may be amiss. These imitations sometimes use photos or descriptive information copied from listed properties posted by other property agents. Sometimes, even after a property has been sold, unscrupulous agents might copy the property’s photos for use in their fake listings. We have experienced several of such cases and we have highlighted these imitations to the owners of the apartments. These agents would quickly remove the imitations after the owners have called to inquire if the agents were given the permission to represent them for sale or for rent.
Usually, imitations use very attractively low prices to entice buyers and tenants because they look like “good deals that should not be missed”. Then when direct clients call these agents to enquire, the usual responses are that the property is “sold” or “taken” or “no longer available”, and the agents will immediately ask, “May I show you another apartment in the same block?” If the agent received calls from other property agents who are representing buyers, they either do not pick up the calls or they do not return calls. This is commonly seen in districts 9, 10 and 11 where transaction values are higher and the probability of attracting unsuspecting foreign buyers and tenants is likewise higher. Higher value properties also translate to a higher quantum of the 1% agent fees, which is sufficiently rewarding for the agents to put in efforts to pull such tricks.
We estimate that up to 20% of the listings posted online are not genuine. The percentage could be higher for luxury developments. Buyers who receive such replies from agents should immediately congratulate the agent that the property is already sold or leased out, and then hang up the phone. To avoid being further prospected by that agent, buyers would do well to appoint a trustworthy agent to do their home search. Let your agent represent you and let him sieve out and deal with the numerous imitations in the property portals.
Scenario B — The agent has actual properties to list, but the information is misleading
Fake-lister agents deliberately post listings of properties with incredibly low prices to attract direct buyers and tenants. Unsuspecting buyers and tenants will then ring the agents up because they may reflect the lowest dollar per square foot price ($psf) or rental for that condominium unit. The $psf may give a different impression in different contexts. For example, if a buyer wishes to compare prices in the same district or perhaps properties with similar attributes but in different condominium blocks, $psf will be a key metric in measuring the relative value of the properties.
Merely showing the buyers how cheap a property is based on $psf comparisons without describing much about the size and layout of the property does not reveal much about whether the property is really well-priced.
The buyer may see an advertisement for a 750 sqft apartment for sale at $980psf (i.e. $735,000) in a condominium where the average transacted prices in the last year were around $1,200 psf. It gives the impression of a $220 psf discount from the recent transacted average. However, only when the buyer views the apartment will he realize that the very “cheap” 750 sqft apartment is a shoebox unit with 450 sqft of built-in area, a 260 sqft patio and another 40 sqft air-conditioner ledge. Or it could be a “penthouse” unit with 400 sqft of built-in area, a 300 sqft roof terrace and a 50 sqft stairwell. The low $psf price is deliberately highlighted to create the impression that the property is a great buy. Buyers and tenants, do take note! Many other variations of the same pattern exist. Most times, information that is not revealed is more important than information that is highlighted.
While some agents withhold information, other agents offer a lot of information about the properties to show how knowledgeable they are about a particular condominium or district. They would purposely post many listings in a particular district they claim to be active in, to impress upon prospective buyers and tenants that they “specialize” in that neighborhood. Unsuspecting clients may be dazzled by these agents, but tell-tale signs could be seen from their overenthusiasm. For example, in a listing for a condominium in Sentosa Cove, the agent included a description “near HarbourFront MRT Station”. An agent who understands the needs of the residents in Sentosa Cove will not highlight the MRT station, and will certainly not say that HarbourFront Station is near.
While we would love to believe that some agents are really familiar with certain districts or market segments, we need to be mindful that many of them just want to create that impression so that they have a higher chance of being contacted by prospective clients.
We have merely touched on a handful of examples of the many patterns we have encountered. To discuss all the cases we regularly see will require too many pages. The ultimate aim of these agents is simple: to cut out other agents in order to get direct clients to call them, to swing these clients to their own actual listings or to get the clients to appoint them as a buyer’s representative.
Unfortunately, in trying to outwit the competition, they create misinformation in the market. In the speech on Budget 2017, the Minister of State for National Development Dr Koh Poh Koon spoke about how “it may be more important for property agents now to hone their skills in servicing clients and building up their credentials rather than just competing on marketing and closing transactions.” We wish that more agents will adopt this attitude and compete on service, rather than conjuring smoke and mirrors.
We at HugProperty are deeply concerned about the clients’ interest and we wrote this piece to raise awareness about the patterns displayed by dodgy agents to fend off competition. We recommend clients to carefully select an agent that they feel comfortable with and to appoint the agent exclusively to represent them, whether it is for a property search (for purchase or rent), or to list a property (for sale or let). The appointed agent will be fully motivated to represent the clients’ best interests and diligently assist clients in marketing or searching for properties.
More importantly, your exclusive agent will be able to ward off the dodgy agents with colorful patterns.
Postscript: While we were researching and preparing this article, the Council for Estate Agencies published a disciplinary case in their 02/2017 newsletter titled “Cost of misleading and false ads – $17,500”. The CEA highlighted several cautionary points arising from the errant property agent’s actions: placing fake or dummy advertisements, placing advertisements without property owners’ consent and omitting mandatory details in advertisements. Readers who are keen to know more about the case may refer to the online newsletter here.
Co-authored by Mr. Ku Swee Yong, Co-founder of HugProperty with Janice Chin Li Ping, undergraduate from the Department of Real Estate, National University of Singapore. Posted courtesy of www.Propwise.sg, a Singapore property blog dedicated to helping you understand the real estate market and make better decisions. Click here to get your free Property Beginner’s and Buyer’s Guide.