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Agent Horror Story: Money Lost To Poor Due Diligence!


Introduction


In April 2018, the owner of 6 units in a Kaki Bukit industrial building was looking to make a sale. They eventually crossed paths with a salesperson that was sourcing for potential clients within the same building. Seeing a mutual business goal and outcome, the pair began working together to sell these units.


On 25th April 2018, the salesperson conducted a title search to confirm that the units were rightfully owned by the client - which would be the only process of due diligence that was fulfilled.


The very next day, a potential buyer reached out to the salesperson with an offer to purchase the property for $1,392,300 - which was then agreed upon. An option fee of 1% (of $13,392) was paid on 26th April 2018 and a subsequent option to purchase (OTP) was signed on 18th May 2018.


The buyer then exercised the OTP and paid the exercise fee of $55,692.



The OTP being signed meant that the transaction was completed on the seller's side and was entirely up to the buyer to close.

The Issue Arises


On 21st May 2018, as part of the conveyancing process, the seller’s lawyers then informed him of the 5% seller’s stamp duty (SSD) that he was liable to pay as the date that the OTP was exercised within the three year holding period that the unit was originally purchased (29th May 2015). This stamp duty payable would amount to a whopping $69,615 - which is no pocket change.


This was a direct result of the salesperson not conducting the due diligence required regarding stamp duty matters. This turned the transaction messy, as the agent tried to convince the buyer to move the OTP date to 1st June, effectively negating the payable SSD rate, which was refused by the buyer.

To make matters worse, he then decided to go MIA to avoid the sticky situation that he got his client in.


The seller had to eventually make arrangements to meet with IRAS, the buyer as well as the estate agent to resolve the matter. The buyer and seller eventually agreed to allow the sale of the property to proceed - thereafter paying the necessary stamp duties and aborting (and refunding) the stamp duties paid by both parties.


Reversing the mistakes of his agent was an arduous process and eventually lost the seller $24k due to his poor due diligence.

The Damage


This still led to a loss of $24,100 for the seller in IRAS refund fees, as well as bank loan cancellation and legal fees. Due to the seller’s agent's neglect in doing the due diligence for stamp duty matters, the seller lost a catastrophic amount of money and was unable to move their property.


While the salesperson was appropriately sanctioned and banned from working by the CEA, with the case study made public to draw attention to the malpractice of doing incomplete due diligence, the monetary losses suffered by the client were unable to be recuperated and left them with a traumatic experience in what was meant to be a simple property transaction that would earn, not lose them money.


What Can We Learn From This?


When looking to engage in a salesperson for your property, there are a few considerations:

  • The reliability of the salesperson

    • Their portfolio and track record

    • Do they have sufficient experience selling your property type?

    • Are they well endorsed by their previous clients?

  • The quality of their service

    • Do they take initiative in attending to you?

    • Do they keep you up to date with the market trends and customer interactions?

    • Do they go above and beyond to ensure their due diligence is done in a flawless manner?

  • And lastly, the cost to hire a salesperson.

    • How much commission do you have to pay them?

    • Do they have any additional incentives they are working for? (such as promoting and providing any pre/post sale services)

Want to avoid a horror-story like experience like the client in the mentioned story? Consider selling your property with MOGUL.sg where you can enjoy quality service at 0% commission - meaning your dedicated salesperson is there to help you move your property as fast and seamless as possible!


Try now at www.mogul.sg/sell




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