Complaints from Agents Call for License Fee Reform
Last month, the Estate Agents Authority (EAA) released a PSA giving home buyers tips on purchasing first-hand residential properties, in which buyers were advised to make agents set out promises of incentives in writing. This has attracted a great deal of frustration from many industry practitioners as they suspect, the EAA is implicitly encouraging buyers to request commission rebates from their agents. Agents were even rallied to send complaint letters to the EAA, demanding the withdrawal of the PSA.
I don't think the EAA would harbour any intention to encourage the practice of commission rebates—it wouldn't benefit the Authority's regulatory work in the slightest. The EAA is simply reminding buyers to get any promise of discounts, gifts or rebates down in writing because in the past there have been buyer complaints that oral agreements of incentives were not honoured after the sale.
In fact, the bane of the EAA'S recent PR disaster lies in its ignorance of the industry's view on commission rebates. In the property market, there's a group of agents who operate like street gangs: they stay closely together outside show homes and bait prospective buyers with promises of commission rebates.
For such rogue agents, their operations don't involve real costs. All they have to do is sign contracts with clients and developers without providing any pre- or post-sale services. In other words, the only thing they are good for is giving rebates. Meanwhile, other real estate agents—who work for proper agencies and have good professional ethics—may have spent a lot of time and effort accompanying buyers to check out various developments. So it's understandable that they would feel frustrated if just before making the sale, rogue agents steal their clients with rebates. With commission rebates already a sensitive topic for agents, the EAA'S advice lit the fuse to an explosion of dissatisfaction and resentment.
If you pay extra attention to online critique, you'll notice that the issue of license fees is also embroiled in this controversy. Many agents think that by charging license fees, the EAA should assist the agents with their work and not make their lives harder. Of course, the EAA is a regulatory body whose main responsibility is to supervise and monitor agents, but its role can get murky when all its expenses are paid for by the subjects of their supervision.
I suggest the EAA take a leaf out of the insurance industry's book and collect levies from those willing to pay. Even if the fee is set at 0.02% of the property price, the EAA would still be amassing over HK$100 million, and it won't take a lot of convincing for consumers to fund the Authority in exchange of quality services and better regulations. It would make much more sense for the EAA to supervise property agents on behalf of consumers with their money. In addition, lowering license fees will incentivise more agents to get licensed, which in turn offers more options and competition for consumers and agencies. In the end, a well-regulated industry providing high-quality services will no doubt benefit both home buyers and agents.
Eric Lee 李峻銘 Chairman and Chief Executive Officer Century 21 Goodwin Property Consultants世紀21奇豐物業顧問行 - 主席及行政總裁