 In negotiating the price of a property, the purchaser or the vendor sometimes asks the estate agent to reduce his commission. Sometimes the agent, in order to facilitate the deal, volunteers to reduce the commission. The following is a case of dispute arising from the reduction of commission.
In the estate agency agreement between a purchaser, Mr Lee, and the estate agent, it was provided that the commission shall be 1% of the transacted price. When signing the provisional agreement for sale and purchase with the vendor, Mr Lee asked the agent to reduce the commission from 1% to 0.5%. The agent agreed, but said that as he would honour his promise there was no need to amend the original estate agency agreement. Mr Lee did not insist. After the transaction had been concluded, Mr Lee received an invoice from the estate agency for the commission of 1% of the price, which differed from the oral agreement. Mr Lee tried at once to contact the agent but the agent had left the company. Meanwhile, the estate agency company denied having promised to reduce the commission. Mr Lee refused to pay. The agency then instituted proceedings against Mr Lee for recovery of commission, putting Mr Lee to a lot of hassles. Subsequently, as Mr Lee did not appear in court, the court ruled in favour of the agency.
The main point of the case is that Mr Lee did not insist on putting down in writing the agreement to reduce commission. Although an oral agreement is legally binding, it would be difficult to verify such an agreement in the absence of any documentary evidence or witness. Mr Lee also made a mistake in failing to appear in court, thereby completely forfeiting his right to defend himself.
In fact, it is no trouble at all to amend the provisions for commission in the estate agency agreement. One only has to cross out the original parts, fill in the amended amount or rate, and initial against the amendment. It can also be done by putting down on a separate piece of paper the parties' names, the address of the property, the amended commission, and the parties signing thereon.
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