| The Freshman |
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| Submit offers as instructed, disclose commission as stipulated |
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 Through the introduction of an estate agent, Mr Wong inspected a flat with a view of the race course and liked it. The owner of the flat asked for $3.2 million but Mr Wong told the agent that he hoped the owner would reduce the price to $3 million. He added, however, that, if the owner was firm, he would also consider $3.2 million. The agent was a dual agent and disclosed in the estate agency agreement entered into with Mr Wong that the rate of commission payable by the owner was 1% of the transacted price.
The next day, the agent got hold of the owner, Mrs Kwok, and told her that Mr Wong was interested in her flat but was ready to offer only $2.8 million. Mrs Kwok said that was too low, and the agent at once suggested that he might be able to talk the purchaser into making a higher offer, perhaps bringing it up to $3.2 million. He also said, "If the purchaser is to pay $3.2 million, I may have to make a concession by waiving the commission he is to pay. But according to the policy of our company, we have to receive 2% commission on each property deal. Therefore, unless you are willing to pay 1% more, it would be difficult to sell the flat for the price you demand." Mrs Kwok figured that to pay 1% more in commission would mean only $32,000, but it would bring up the selling price by $400,000. She then agreed to the agent's proposal.
In that same evening, the agent told Mr Wong that the owner would not reduce the price. Mr Wong really liked the flat, and he had indeed said that $3.2 million was acceptable. So he agreed to conclude the deal. Upon taking possession of the flat, Mr Wong incidentally mentioned to Mrs Kwok about the commission, and both realized that they had been cheated by the agent.
In the above incident, it was clear that the agent had seriously breached the Practice Regulation. She failed to submit to the owner every offer by the purchaser. On the contrary, he induced the owner to pay 1% more in commission by withholding the purchaser's final offer. Under the Estate Agents Ordinance, dual agents have to disclose to each of their clients commission receivable from the other side. Disclosure is not only required at the time of signing the estate agency agreement but also as long as the agency relationship subsists. The agent's failure to disclose to the purchaser, Mr Wong, the fact that he was receiving double commission from the owner, Mrs Kwok, was also an act of contravention of the Ordinance.
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