Imagine this situation: you have shortlisted your ideal home after few nights of intense discussion, and you finally decided to buy a new launch developer’s unit. Now, you learn that you can get a cashback from agent that is selling it to you. Is this true?
In any given new launch scenario, the agent that is assisting the buyer to purchase the unit sold by the developer. The agent is paid by the developers for assisting to sell a unit to the buyer. There are buyers and third parties that ask for the salesperson’s remuneration to be given to them if they choose to be serviced by that particular salesperson. What could go wrong in a situation as such?
Firstly, let’s look at legality issues of getting cashback from agent.
I have found 2 guidelines and notices from Council for Estate Agencies (CEA) and Monetary Authority of Singapore (MAS) respectively that disapproved of the behavior of getting cashback from agent:

The Council for Estate Agencies (CEA) was formed as a statutory board under the Ministry of National Development. Established under the Estate Agents Act, CEA is empowered to administer the regulatory framework for the real estate agency industry.
This is what it says under CEA’s regulations:
Point 1.10 Offering gifts and cash vouchers
1.10.1 Estate agents and salespersons shall not advertise or offer any benefit, in cash or kind, to any party in a transaction, so as to induce them to engage the services of the estate agents or salespersons. Estate agents and salespersons also shall not agree if any person initiates the request for them to offer such benefits. This practice of offering benefits as inducement is an unprofessional and unethical practice and brings disrepute and discredit to the industry.
On 12 July 2018, a new Practice regulation was also announced.
Circular PC 04-18
Practice Circular on the Offering of Benefits by Estate Agents and Salespersons via Third Party Entities
It quoted the same clause 1.10 from the Professional Service Manual and added, “Salespersons and estate agents who work with and/or use third parties to offer benefits, including any “cash back programme”, which results in the consumer engaging the services of the salespersons or estate agent will be in breach of this Practice Circular.
Moreover, it states that “Estate agents and salespersons are not to participate in any schemes where direct or indirect benefits are given to a consumer in a new development sale transaction that ultimately results in the consumer engaging the services of the estate agent or salesperson. This includes “cash back” schemes from third parties that offer benefits to consumers in new development sale transactions.”
In two places, CAS specifically identified “cash back programmes” to be illegal to entice buyers or encourage transactions.
Buyers and third party would also infringe MAS’s “Notice 1106 Residential Property Loans”. If they are taking a loan with a financial institution and fail to declare the “cash back”, this may result in the bank granting a loan higher than the loan at the valuation of the unit that the buyer bought.
Under 6. Declaration part (b) “A merchant bank granting a credit facility for the purchase of Residential Property shall obtain a written declaration from the Borrower on…whether any discount, rebate or any other benefit (including the payment of legal or stamp fees for the purchase) which has the effect of reducing the true purchase price has been or will be received from the vendor or any other party, and the amount of such discount, rebate or benefit;”
So with regards to the law, getting cashback from agent sure is a BIG NO NO!
Case Studies of Asking For Cashback From Agent – and Is It Ethical or Ideal?
Sometimes, clients work with their agents that have recommended, shortlisted and gone through the whole process. Right before the final step, they suggest that if the agent does not offer the cashback, they would not make the purchase.

This has happened, and this is a lack of respect to the agent’s hard work in analyzing based on suitability to recommend and shortlist developments that match what the clients are looking for.
In other cases, clients are asking for a discount so that they can afford the development’s downpayment. I will suggest that the buyer re-evaluate the decision with his or her agent. If the buyer is financially stretched too thin, it is not suitable for the buyer and the agent should suggest a different unit.
What should be done then?
Buy only if you feel that the property matches what you need or want. Shortlist developments that have prices that you feel are fair and match the level that you are comfortable in paying. If not, move on to another property.

To summarise, firstly, it is not legal to engage in such an act. Regardless whether this is initiated by the buyers, the salesperson or any other third parties, we have to support CEA’s in that the practice of offering benefits as inducement is an unprofessional and unethical practice and brings disrepute and discredit to the industry.
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