Property agents – they’re not quite as conniving as they’re made out to be!
If done right, their role is actually very important in the property market. And if you find the right agent, they can help you nab a great deal – both for buyers and sellers alike.
The issue is that we’ve all either heard horror stories from friends or read about them in the newspaper.
Part of finding the right agent is understanding the rules of the game… how they are regulated, the difference between Real Estate Agents and Real Estate Negotiators, understanding who they workfor, what fees they can charge and how they can advertise property in general.
I’ll run you through five key things you must know before dealing with any agent in Malaysia.
#1 Anyone calling themselves an estate agent, house agent, house broker, property agent, land agent or property consultant needs to be regulated under BOVAEA.
The regulation for property agents in Malaysia is pretty clear and all-encompassing.
In Malaysia if you:
- Offer any property (land, building or interest in any land or building) for sale, rent or lease; OR
- Invite any offers to purchase, rent or lease any property
… you need to be registered with the Board of Valuers, Appraisers and Estate Agents (BOVAEA).
In fact, even if you imply you are a property agent by referring to yourself as an “Estate Agent”, “House Agent”, “Property Agent”, “Land Agent”, “House Broker” or similar, or share any marketing materials that imply you are a property agent – you are likely to be caught be the rules.
There are some minor exceptions which I’ll get on to, but the rules are pretty clear. And not complying carries from harsh penalties!
So, what does BOVAEA do?
BOVAEA is the body that regulates valuers, property managers and estate agents in Malaysia.
They were formed under an Act of Parliament in 1981 and they are broadly responsible for (source):
- Managing professional conduct of agents
- Conducting examinations
- Prescribing fee levels
- Holding disciplinary hearings
- Approving and rejecting applications, and
- Maintaining a register of authorised Real Estate Agents (REAs), Real Estate Negotiators (RENs), Valuers, Appraisers and Property Managers.
So you might be wondering, how can someone market their own home if anyone inviting offers to purchase, rent or lease a property has to be registered with BOVAEA?
This is where the exceptions come in (source):
- If you’re the rightful owner of the property and want to sell it or rent it out, you don’t have to be registered with BOVAEA.
- Similarly, if someone has power of attorney for you, they are also entitled to sell your property or rent it out.
- Additionally, a licensed auctioneer who holds the right to auction off a property in a public auction also does not need to be registered with BOVAEA.
#2 Why you need to understand the difference between Real Estate Agents (REAs) and Real Estate Negotiators (RENs)
At first instance, the abbreviations in the property industry can be pretty confusing. Even for seasoned investors, it’s not always clear.
So, what is the difference between Real Estate Agents (REAs) and Real Estate Negotiators (RENs)?
RENs – Real Estate Negotiators
At the simplest level, RENs tend to be more junior. They are not specifically ‘recognised’ by the BOVAEA but are certified to act for people that are – i.e. REAs.
That means in order to practise, they are required to work for a REA at an authorised firm. They cannot work independently or work for multiple firms.
RENs are often in training, gaining the necessary practical experience in order to become a REA.
As a result, RENs have fewer formalities to complete in order to start dealing in property; RENs attend a workshop, receive a certificate and complete a basic set of paperwork in order to start working in a company.
REAs – Real Estate Agents
REAs are fully certified and registered under BOVAEA. They can open up their own real estate agency and employ up to 30 RENs to work under them.
As a result, REAs have a more complex procedure in order to get licensed as compared to RENs. There is a more comprehensive set of examinations and they require at least two years working experience working under the guidance of another REA.
I’ve summarised the key differences in a nifty little table below (source):
Colour of ID tag
|Licensed and Certified||Certified||n/a|
|Can own and operate firm, employ up to 30 RENs||Has to be employed full time by a single firm||n/a|
|Multiple exams and practical experience||Basic training with certificate||Work on probation for a minimum of two years|
* PEAs are simply provisional estate agents.
And, in case you’re wondering what the ID badge looks like…
Here’s some key tips on how to read the tag to ensure it’s genuine.
Now that you’ve got the key differences between RENs and REAs down, it’s also worth learning about Valuers and Appraisers here.
PropertyLife Tip: All RENs and REAs must be registered with the Board of Valuers, Appraisers and Estate Agents (BOVAEA) and carry formally issued ID. If their ID is red, it means they are a REN or a probationary REA. If they are blue then they are a registered REA. REAs will have an E number (E 0000) and RENs a REN number (REN 000000)
#3 Property Agents may act for buyers OR sellers, as long as it’s not both within the same transaction
In practise, it’s often ambiguous as to who the agent is actually working for, and sometimes asking them upfront may be awkward.
But, it’s extremely important to understand before you get too invested in a deal. After all, you don’t want to get an additional 3% agent fee whacked on when you’re about to close a deal!
The rules state that property agents and their firms are only allowed to work for one party in a transaction – either the buyer or the seller.
And the truth is, if you are looking for properties in iProperty, PropertyGuru, PropSocial or any other property portals, in most cases the agent has been ‘retained’ by the seller to market and sell their property.
Even if they spend 30 minutes with you on the phone to ask about your requirements or spend time showing you around the property – don’t feel indebted to them!
The only exception to this is if you’ve made a general enquiry with an agent who positions themselves as area or condo expert.
Quite often these agents are mandated by buyers who are interested in buying a specific property or in a particular area – in which case, they are not acting on behalf of any particular seller and you may be left footing the bill. So do double check!
If you’re ever in doubt, just ask yourself “who’s paying the agent’s bill?” and you’ll usually find the answer pretty quickly.
PropertyLife Tip: Some agents may post false or misleading classifieds in order to build buyer lists. In this case, the property may not really be for sale, or may have “just gone” if you enquire. In such situations, as there isn’t really a property for sale, they wouldn’t have been engaged by a seller and they may try to charge you fee.
#4 Almost all agent correspondence, adverts and marketing material must carry the REN number and REN name.
Ever in doubt as to whether a property advert you see is from a legit property agent? Knowing these basic rules will help you avoid getting lured in by rogue brokers.
Quite simply, all property advertising must contain the real estate agent’s E registration numbertogether with the RENs name and registration number.
And if they don’t, they’re breaching the rules and they probably aren’t a legitimate agent!
Moreover, ads on tree trunks and lamp-posts are strictly forbidden by the Government.
For more detail, see the BOVAEA FAQ section here.
#5 Agents are allowed to charge up to a maximum of 3% on any sales transaction, regardless of whether that’s charged to the buyer or seller.
Agents can charge up to 3% of the property sale price as commission; that’s the maximum limit. This includes land as well as buildings.
So if the property is sold for RM 500,000, then the maximum commission an agent can charge is RM 15,000.
They are entitled to a minimum fee of RM 1,000 though. You should also know that agents are allowed to charge the commission on anything that’s included in the sale – such as fixtures and fittings, appliances and any furniture you choose to purchase as part of the transaction.
The agent may also charge additional costs for disbursements such as marketing materials, transport costs etc. but generally the client should have prior notice of this.
And lastly, the 3% fee scale does not apply to foreign properties marketed in Malaysia, or indeed Malaysian properties marketed abroad.
If you are buying foreign properties or indeed buying a Malaysian property from abroad, this little piece of insight should at least help you get a benchmark for fees.
There you have it…
Whether you’re a buyer, seller, investor or an existing property-owner, it’s important to understand the rules of the property agent game.
Be sure to let us know if you’ve got any agent stories!