What is an Estate Agency Agreement in Real Estate?

During real estate transactions, clarity, trust, and legal protection are paramount. This is where an estate agency agreement plays a critical role, as it ensures that both the property agent and client understand their rights and obligations, fostering a transparent working relationship.

What Is an Estate Agency Agreement?

An estate agency agreement is a legally binding contract between a client (typically a property owner or buyer) and a licensed property agency in Singapore. It outlines the scope of work the property agent will perform and sets the expectations for both parties.

What is the Purpose of an Estate Agency Agreement?

An estate agency agreement can outline the following:

Define the responsibilities of the property agencies and agent
Disclosure of any potential conflicts of interest
Establish terms for commission and payment
Noting whether the commission includes GST

This formal agreement promotes ethical conduct and accountability, aligning with Singapore’s Council for Estate Agencies (CEA) guidelines.

Differentiating Exclusive and Non-Exclusive Estate Agency Agreements

One of the most important aspects of an estate agency agreement is choosing between an exclusive and non-exclusive arrangement. Each type has specific implications for both the client and the property agency.

1. Exclusive Agreement in Real Estate

An exclusive estate agency agreement grants one agent the sole right to represent the client for a specific period, usually 3 months.

Key Features:

Sole Representation: The client cannot appoint other agents during the exclusivity period.
Commission Guarantee: Even if the client finds a buyer or tenant independently, the appointed agent is entitled to commission.
Extended Obligation: If a deal is concluded within 3 months after expiry with a party introduced by the agent, the commission remains payable.

This type of agreement is ideal when the client values a dedicated, focused marketing effort. It also incentivises agents to work harder, knowing they’re guaranteed commission if successful.

2. Non-Exclusive Agreement in Real Estate

A non-exclusive agreement allows clients to engage multiple property agents at the same time.

Key Features:

No Sole Representation: Several agents may promote the property concurrently.
Performance-Based Commission: Only the agent who closes the deal earns the commission.
More Exposure, Less Commitment: This can widen the pool of potential buyers or tenants but may lead to duplicated efforts and inconsistent messaging.

While it offers flexibility, a non-exclusive model may dilute accountability and reduce the effort any one agent is willing to invest.

CEA’s Prescribed Estate Agency Agreement

The Council for Estate Agencies (CEA) in Singapore has developed standardised forms to streamline and professionalise the real estate process.

These agreements are designed to promote ethical conduct, minimise disputes, and protect the interests of both property agents and consumers throughout the transaction process.

What is a CEA Prescribed Estate Agency Agreement?

The CEA prescribed agency agreement is a standard template created to ensure legal clarity and consumer protection. These agreements are tailored for various transaction types, including sales, purchases, and leases of residential properties, and they are available in both exclusive and non-exclusive formats.

Types of CEA Prescribed Agreements

There are eight official templates available on CEA, each suited for specific transaction scenarios:

Agreement for the Sale of Residential Property
Agreement for the Purchase of Residential Property
Agreement for the Lease of Residential Property by a Landlord
Agreement for the Lease of Residential Property by a Tenant
Exclusive Agreement for the Sale of Residential Property
Exclusive Agreement for the Purchase of Residential Property
Exclusive Agreement for the Lease of Residential Property by a Landlord
Exclusive Agreement for the Lease of Residential Property by a Tenant

When to Use a CEA Prescribed Agency Agreement

While the use of the CEA agreement is not legally mandatory, it is highly encouraged for all real estate transactions in Singapore, particularly those involving residential properties. It’s recommended that you get a CEA Prescribed Agency Agreement in the following scenarios:

When you want comprehensive documentation that captures all necessary terms and legal requirements
When you seek protection in the event of misunderstandings or disputes
When you wish to access the CEA’s Dispute Resolution Scheme, which provides mediation and arbitration services to resolve disagreements amicably and affordably

Do You Need to Use CEA’s Prescribed Estate Agency Agreement?

While not legally mandatory, using the CEA’s prescribed estate agency agreement is strongly encouraged by the authorities. This is because it provides the following benefits:

Legal Protection: Each agreement incorporates industry best practices and legal safeguards to protect both clients and agents.
Transparency: The agreement clearly defines each party’s duties, agent commission terms (including GST inclusion), exclusivity period, and more.
Dispute Resolution Access: Only agreements using CEA-prescribed formats qualify for the Council’s official Dispute Resolution Scheme, which offers a structured process to resolve issues without going to court.

Can You Use Your Own Agreement?

Yes — clients and property agencies may draft their own estate agency agreements, provided they do not contradict the CEA’s Code of Practice for Estate Agents or violate any laws. However, custom agreements may:

Be harder to enforce in disputes
Omit important clauses that offer protection
Disqualify users from the CEA dispute resolution process

While flexibility exists, the prescribed estate agency agreement could offer a safety net for both consumers and real estate professionals in Singapore.

Discover More About Singapore’s Real Estate Landscape at Real Centre Network

Whether you’re buying, selling, or leasing, signing a well-structured estate agency agreement is more than just a formality. It’s a critical step that ensures transparency, protects your interests, and clearly defines the working relationship between client and agent.

If you want to gain deeper insights into the local property landscape or are considering a career in real estate, Real Centre Network (RCN) offers comprehensive training to help you get started.

Our Real Estate Salesperson (RES) course equips aspiring professionals with the knowledge and skills required to become licensed property agents in Singapore. The course covers essential topics, including estate agency law, property regulations, ethical practices, and real-world transaction processes. You’ll gain a solid understanding of the industry’s latest developments and compliance standards, including the importance of using the CEA prescribed estate agency agreement.

Beyond the RES course, Real Centre Network also offers entrepreneurship training and presentation skills training as part of our continuous professional development (CPD) offerings. These programmes are designed to empower real estate professionals with the business acumen and communication techniques needed to thrive in a competitive market.

Whether you’re starting your real estate journey or looking to enhance your professional edge, RCN provides the education and support you need to succeed.

For more real estate insights, check out our guide on how to handle common residential tenancy disputes and how to buy property in Singapore.