From 1 June 2013, the practice of collecting "blank" cheques from property buyers will come with tighter safeguards.
The practice is often used to book private properties before they are launched.
Property agents will no longer be allowed to collect cheques unless there is a request in writing from the developer directly to the agent.
Any issued cheques must be crossed and made out in the name of a payee, like the developer or the project account. It should also come with an authorisation letter setting out clear terms to safeguard the buyer's interests.
Many industry players say the practice of collecting cheques, including "blank" ones, in the private property market have many grey areas and differing perceptions.
With tighter controls kicking in, many say it will reduce impulse buying.
Lim Yong Hock, senior vice president at PropNex Realty, said: "It will help consumers make more informed decisions, rather than writing cheques impulsively without knowing the price of the property. It's a positive change for buyers."
Steven Tan, managing director of property firm OrangeTee, said buyers who give blank cheques to agents often do not have full understanding of the development.
"It's often an impulse purchase," he said.
With the new guidelines, he believes developers will provide more information to buyers, like the concept, floor plans and even the price range, before buyers have to make any decision.
The tighter controls are part of a slew of new rules for the industry.
Issued by the Council for Estate Agencies (CEA) in a professional service manual, the guidelines also require property agents to be extra careful when working with vulnerable consumers, like those who are financially unstable or illiterate.
CEA said it is the first time property agents have a manual that guides them in detail from the start to finish of a transaction.
Chan Mun Kit, director of regulatory control at CEA, said: "Even for those already in the industry, it helps to highlight to them certain practices perhaps they can do more professionally, and certain things they should not be doing anymore."
If the guidelines are flouted, property agents can be fined up to $75,000, and have their licenses suspended or revoked.
Speaking at a consumer seminar on Saturday, Acting Minister for Manpower Tan Chuan-Jin said the real estate service is not just about closing the deal.
He said: "I think it's important for us, those of us who're in the real estate business, to think about not just closing the deal, but I think to remember that the people we're servicing and helping, are making a very big step. For many of them who are homeowners, it's not just buying a physical property; it's buying a place where they're trying to build a home.
"The onus is on those who are in the industry, who understand the landscape better, to advise individuals to understand what it means, to invest, how much loan to take and so on, rather than think about how much commission you might get with a bigger deal done. That's values in action. That's something we appeal to everyone who's involved in the industry to spare a thought, not only from a professional standpoint but from a values standpoint to think about their responsibility to the people around them."
The consumer seminar is part of an effort to educate the public on their responsibilities as well. Those in the industry say there is often a mismatch of expectations between the consumer and the property agent on what their respective duties are.
In tandem, authorities have also launched a brochure to help consumers out.
Lim Biow Chuan, president of Consumers Association of Singapore, said: "Reading this consumer guide gives you some background knowledge, some basic knowledge so that if you transact with someone else you don't go in blind."
With regulation only able to go so far, authorities are also urging consumers to do their part.
Source: Channel News Asia
The wife and I had participated in the "blank cheque" exercise before and from what we can recall, it was nothing overly scary. The cheque was not exactly "blank" as the marketing agents will insert the developer's name (in your presence) once you hand it to them. And if you decide not to proceed with the purchase during the stipulated period of time (which is usually over the next day or two), you can always ask for your cheque back.
Having said that, the last time we went "blank" was quite some years back so the practice may be substantially different these days.
While the wife and I are no proponents of tightening control measures ALL the time, this is one that we can certainly agree with.