When a pretending buyer wants to sign the SPA directly without booking fee, adakah udang sebalik batu?
I met a prospective buyer. He came to view the property and confirmed verbally buying it. However, he does NOT want to pay booking (earnest) deposit. Nevertheless, he insisted signing of Sale and Purchase Agreement (SPA) directly. Why is it so?
There are 2 possible reasons.
1. He is not the actual buyer. He is just a broker.
2. He does not trust an agent.
Many a time, this character points to a pretending agent. Who is a pretending agent? Someone who is appointed to buy for his principal. The advantage to go straight to the SPA stage is to bypass the listing agent. In such scenario, he could collude with his lawyer to directly contact the seller at time of gathering information on property details. He then proceed to negotiate a new deal with the seller.
Without paying a booking fee, he can still negotiate. This means, a prospective buyer can wait and see, so as to hit a rock bottom price. Furthermore, by going direct to SPA stage, the buyer can prove to the seller that he is rich and has experience with legal matters. Therefore, the seller is likely more respectful of the buyer.
In the first scenario, what can an agent do?
Well, ask the buyer to sign the Letter of Confirmation of Sale or in MEAS 2014 “Agreement to Purchase”. In this letter, state that the agent’s commission will be deducted from the down payment or the proceed of the sale (if without bank loan). Get both seller and buyer to sign this letter of Confirmation of Sale. Use S.22C(1)(d) below to recover the fee:
“be entitled to recover in any court any fees, commissions, charges or remuneration for any professional advice or services rendered as an estate agent.”
If the pretending buyer does NOT want to sign this letter. Then, at least just the seller (principal) signs it alone. Give it to the lawyer (who prepares SPA), and in such manner, the parties can proceed to SPA without having booking deposit.
If the reason is No.2 – a strategy to hack the price, well… anything is possible. In fact, even during SPA signing, the seller can still refuse to accept the offer by the buyer. No good price, just walk off!
S.22C(1)(d) VAEP Act, 1981.