Regulation. Good or Bad?

Recently I've realised that there are 2 very distinct industries whereby our regulators have not done a very efficient job of setting up good licensing requirements. They are namely the real estate and financial planning industry. Let me start with the problem of real estate regulation.

Basically there is almost ZERO regulation set in place in the real estate industry. With the recession, many individuals have come in to try to ply the real estate trade. This is a rather easy task as they do not have to have a minimum education level nor do they have to attend any compulsory training. The bigger real estate firms do have their local in house training but then this is no industry standard for training. Every firm boasts to have the best training course when in actual fact they should have a standardised training course. In fact, there are thousands of real estate firms and some are simply one or two men shows and in these firms joining them would just be a matter of registering with them and paying an annual subscription fee and making some namecards. This then comes to the question: Is this the standard we are endorsing? I would like to hear a categorical NO from both the regulators as well as the owners of the real estate firms. However this does not seem to be the tone that they are singing to.

A common reason for the lack of regulation would be that if regulation were to be set in place, most of the producing agents would go out of a job. Let's be realistic here. We are dealing with an asset class in excess of a few hundreds of thousands of dollars. In some cases it may be in the region of a few millions. Everyone is affected by real estate. It is a phase in life that us humans have to go through to find a place to live. If everyone is affected by it, shouldn't the regulators and the real estate companies be as regulated and stringent about the people practising as say the medical or legal professional bodies are with their members? I believe errant doctors and lawyers will have to face a ban on their license should they fail to dispense of their duties in a professional manner. Shouldn't the real estate be closer to the level of such professions rather than be at the very end of the barometer of unprofessionalism and unethical sales practices? I would like to highlight this very certain point that Singaporeans need to be protected against unethical practices. If a real estate agent were to be caught doing unethical practices like say brokering a cash back deal, the agent would still be allowed to practice in the industry. If his firm does not want to continue the association with him, he can certainly just move on to another real estate firm and continue practicing his unethical business there.

Perhaps the most shocking fact which I tell most of my friends is that there is no minimum education level to be a real estate agent. A person with a primary school education as his highest qualification can also become a real estate agent. This then borders on where this industry veering towards. I believe that there MUST be a certain level of minimum education required to practice as a real estate agent. Contract law is something whereby the agent must be familiar with and also licensing has to come in. Currently there is the apparent weakness of the real estate industry to come together and come up with a formal examination requirement. Last year they spoke of making the Common Exam for Housing Agents compulsory for all real estate agents. As of today this is still not implemented. Now they are talking of lowering the requirement. Yes you heard it! LOWERING. Basically they have come up with the idea that there should be a simplified examination called the Common Examination for Salespeople or CES for short.

Real estate is a profession which encompasses everyone. It affects every Singaporean just as any CPF changes affects the local population. In fact real estate is more important than CPF! It affects even foreigners who come to Singapore to invest in a property. I previously came across some real estate agent who claims to be a top producer and a director in one of the top real estate firms in Singapore. When I queried him on what was the differece between a condominium and an apartment he told me that a condo had facilities and an apartment did not. I was shocked, appalled and disgusted. He did not even have an 'o' level education and he did no attempt to find out the facts before committing to a fact which he wasn't sure of. A condominium is a property whereby there the owners collectively are given a share of even the common property and thus they do not just own the air space in their homes like in a property with an apartment status. Also, foreigners are not allowed to buy apartments. Can you imagine that a top real estate firm will actually allow someone like this to advise the general public? Imagine an investor buys the unit and then realises the difference not what the agent said. Where is the fudiciary duty to the purchaser? If the client cannot get the facts right with his real estate agent, then who is he to get the facts right from?

When we see a doctor, the doctor is perhaps the best person to accertain whatever health problems the patient might have. So should a real estate with regards to real estate advice. When the medical, legal, architect and accountant professions are increasing their regulations to keep raising the bar to ensure that the level of ethics and professionalism is kept high, the real estate industry has failed to do the same. I say "shame on you" to all who have vehemently objected or delayed real estate regulation. CEHA COMPULSORY by end 2009!!!