Real Estate Tips #19: Sell your property through a registered estate agent

By way of referral or advertisement, you may call up a registered estate agent to sell your property for you. On your first meeting, the following should be discussed:

(1) Joint inspection of the property
- Before the joint inspection, you might want to give the address of the property to the agent for him to gather some information on the market price. During the inspection, the owner should produce documents such as photocopy of the title or quit rent receipts as proof of ownership.

- The owner should clearly point out to the agent any renovation involved and any known defaults on the property.

(2) Formal written instruction to procure a purchaser
Any registered estate agent should have with themselves a an instruction form, normally known as " Appointment to act as an estate agent (to secure a purchaser) " . This form may vary from one agent to another, but the general information should be as following as prescribed under the Malaysian Estate Agent Standard:

(a) Vendor's (seller) details and contact.

(b) Type of property

(c) Property address.

(d) The permission for the agents to display signboards/advertise in the media/send out flyers and promote generally the sale of property.

(e) The general terms and condition of sales, which includes:
- Asking price
- Earnest deposit on acceptance of offer, which is normally 1%
- On signing of Sale & Purchase Agreement, which is the balance 9%
- After signing the balance to be paid within, which is normally 120 days
- With or Without vacant possession, it simply means the buyer can or cannot take over the occupying of the property after purchase
- Other terms and conditions include, such as 8% p.a. charged on any extension give to the completion period of the agreement.

(f) Types of agency, such as exclusive/sole/sole joint/joint/ad hoc agency. Further explanation can be found in my previous article named Types of Agency you may come across with an estate agent.

(g) Appointment period.
- It can vary from 2 months to 6 months or so.

(h) Agreed fee
- Commission payable as prescribed by the Valuers, Appraisers and Estate Agents Act
- Payable upon the creation of a binding contract for the sale and purchase of the property, i.e. the signing of a unconditional Sale & Purchase Agreement.

- Other reimbursement may include :
I. costs of printing, plans, copies of documents, lithography, traveling (only when the distance between the agent's office and the property is more than 40km) and other expenses actually incurred;
II. costs of media advertisements, signboards, brochures or other promotional materials;
III. costs of private auction, conductin a tender, open house , exhibitions and tele and electronics marketing services.
IV. the total cost of reimbursement is payable on receipt of a statement of accounts even in the event of the transaction not being successfully concluded.

(i) In the case of this appointment being aborted, the estate agent is entitled to claim 50% of the full fee or 50% of the forfeited deposit/ compensation received, whichever is the lower.

(j) The capacity of the instruction given, such as registered proprietor, attorney of the registered proprietor pursuant to a Power of Attorney or a trustee for the legal owner.

(k) Signatory and witness.

(l) Viewing arrangement need to be decided as some property may be tenanted , then special arrangement needs to be made with the cooperation of the tenant before viewing.

Again , the above may vary from one agents to another, but this is pretty much the terms needed to be agreed upon between the agent and the vendor at the stage of appointment.

Real Estate Tips #18: Getting a registered estate agent to source a house for you

Over the years in the real estate industry, I've noticed one phenomenon, i.e. many people tend to seek service from a registered estate agent (REA) without knowing exactly what they want! Here's a simple guide or questions rather, that can help you to determine what you want before looking for a REA, hence making things easier for a REA to work on your instruction more precisely.

Qualifying process:

(1) What is the purpose of this instruction?
- Investment
Then you are looking at tenanted properties, giving you consistent rental income with possible growth in capital value.

- Owner-occupier
Then you are looking for properties that can deliver vacant possession, i.e. that even if it's tenanted at the time of buying, but the tenancy can be terminated, giving back to you the right to use the property at a timely manner.

(2) Budget
What's the initial outlay and installment that you can afford? For a residential property, you should be prepare minimum 15% for the house price as initial outlay, i.e. 10% for the downpayment, balance 5% for the incidental costs such as legal fees and stamping. The monthly installment figure should not be more than 30% of your monthly net disposable income. Net disposable income is the balance sum of your monthly gross income less monthly commitment with financial institution, such as car loan or other mortgages.

For example,
Gross Monthly salary = RM5000
Car Installment = RM1000
First house Installment = RM1000

Then your net disposable income is equals to :
RM5000 - (RM1000 + RM1000) = RM3000

Monthly installment that you can afford now = 30% @ RM3000 = RM1000

Based on the above calculation, your loan approval should be hassle free, provided you are not blacklisted under CTOS or CCRIS. This is how the banks look at your financial standing as to how much you can afford to pay monthly.

(3) Buying a house for owner-occupier purpose
After decided your budget, few things you need to determine here:
- Location
- Landed or highrise
- Number of rooms
- Prefer house with renovation or without
- Value added features such as gated and guarded
- Orientation , if that's of importance to you

By now, you should be able to know clearly what sort of house that you are looking for. The REA can now work effectively as per your instruction.

Real Estate Tips #17: What are the types of agency you may come across with Registered Estate Agent?

There are few types of agency as noted under the Malaysian Estate Agent Standard :

(1) EXCLUSIVE AGENCY - This refers to the instruction from a client to a single registered estate agent to act on his behalf. The client may make introduction but will leave the closing of the transaction to the registered estate agent. The principal must pay the appointed estate agent the agreed fee even if the estate agent was not the effective cause of the transaction.

(2) SOLE AGENCY - Just as in exclusive agency, a single registered estate agent is engaged. The client may, however, wish to reserve the right to close deals in addition to making introduction and the client may plays an active role. The principal must pay the appointed estate agent the agreed fee.

(3) SOLE JOINT AGENCY - This is a variation of the Sole Agency. The registered estate agent works together with the client as a team and the fee is divided on a pre-agreed formula. The client has the flexibility to compensate additional registered estate agents and at the same time maintain the advantage of having one registered estate agent in control.

(4) JOINT AGENCY - This is where more than one registered estate agent is appointed and only the registered estate agent who closes the deals gets paid. The number of agents appointed is limited and each is aware of the appointment of the others.

(5) AD HOC BASIS OR COMMONLY REFERRED TO AS OPEN LISTING - In this case, the principal can engage an unlimited number of estate agents on an ad-hoc basis and fees are paid only on successful conclusion of the estate agency transaction.

If you ask me from the perspective of a registered estate agent, they will definitely opt for Exclusive Listings. Very often, how much effort an agent will put in one particular listing for sale, is very much dependable on the types of agency he's getting. The higher the hierarchy, the harder he will try to dispose the property for you in the shortest time possible.

Real Estate Tips #6: How to identify a Registered Estate Agent from those illegal brokers on a newspaper advertisement?

Whenever you open the page for the classified ads on a newspaper, you tend to see many ads on properties to let or for sale, how do you distinguish the Registered Estate Agent's (REA) or those from an illegal brokers?

The answer is simple, look for four (4) elements:

(1) Company name
e.g. Tiram Realty
(2) Company registration number
e.g. E(3)0077
(3) Company contact number
e.g. 607-3558877
(4) All advertisements by REA must be specific
e.g. Double storey house at Taman Johor Jaya selling at RM150,000, NOT Double storey house at RM150,000 , which is too general.

Look for the abovementioned elements, then you will know whom to call (the REAs), whom you shouldn't call (the illegal brokers). Refer to Real Estate Tips #1 on why you should always engage a REA in malaysia.

Real Estate Tips #3: Malaysian Institute of Estate Agents (MIEA)

Unlike Bar Council for lawyers or MIA for the accountants, MIEA doesn't act like a regulatory body for Registered Estate Agent (REA). However, as a proud member of MIEA, i'm happy to say that it does provide a platform for ALL REAs to come together to lobby for our rights and welfare for the same industry.

I salute to all national councillors, whom have been sacrificing their time and efforts for the Institute, even when they are always on the receiving ends of various critics/comments from members. I must congratulate you all for your patience and hardworks, for making the 2007 MIEA National Convention a great success.

Our industry are in need of MORE dedicated and diligent personnels like YOU to join MIEA, to jointly enhance our service quality and to lobby the rights and welfare for the Registered Estate Agents.

Feel free to visit MIEA's website, i.e. www.miea.com.my.

Real Estate Tips #2: How do you identify a Registered Estate Agent?

To answer the questions i posted yesterday, i'm going to share with you few easy steps to identify a registered estate agent (REA):

(1) Namecard
- identify their position, if it says negotiator, it means he/she is a real estate sales person engaged by a REA, if it says principal, meaning he/she is the license holder themself.

- Check their E Number. Basically in this industry, we are made compulsory to put in our company registration number under Ministry of Finance, which we call E number. There are 2 types of E numbers you may find, i.e. one company E number (e.g. E(3)0077 for Tiram Realty) and also personal E number ( e.g. E1690 for Lim Boon Ping).

(2) Call the office
Do call up the office number on the namecard to verify the personnel is the actual employee from the real estate agency

(3) Search the E number with the Board of Valuers' Website
You can always do a Search for E number for verification at the Board of Valuers's website, i.e. www.lppeh.gov.my, as some registrant's licensed might have lapsed or suspended for many reasons.

Whenever you deal with a registered estate agent or negotiator, ALWAYS write your cheques in favour of the COMPAMY'S NAME only. I repeat, NEVER write your cheques, be it earnest money, commission or other kinds of payments related to the transaction in favour of PERSONNAL NAME, this is to safeguard your interest and to ensure all your money is well indemnified by the insurance company.

Real Estate Tips #1: 8 reasons why you should always engage a Registered Estate Agent

Over the years chairing the Malaysian Institute of Estate Agents Johor Branch, i always get dumbfolded everytime i receive complaints from the public against illegal real estate brokers. Huge question occurs to me, why do people still sourcing for services from the illegal brokers while there are so many registered estate agents around in the market?

After much contemplation, I find *education* is the main cause. Here i am, going to share with you all why you should always choose a registered estate agent (REA):

(1) a REA is a professional personnel recognized and governed by the Board of Valuers, Appraisers and Estate Agents Malaysia (known as the Board for the following column), under the Ministry of Finance.

(2) a REA is a certified professional by the Board, who has undergone 12 papers examination (minimum 2 years), and minimum 2 years of Test of Professional Competence training under a registered person. Therefore, for a REA to get registered, he/she shall need a minimum 4 to 5 years of professional training.

(3) a registered estate agency is made compulsory by the Board to indemnify all clients against negligence through Professional Indemnity Insurance. Hence, your earnest deposit or client's money will always be indemnified and safe with us. Do not attempt however, to write the cheque in favours of the individual negotiator, you shall write all payment ONLY in the COMPANY'S Name.

(4) a REA has to regularly improve themselves through what we call a Continuous Professional Development (CPD) programme on a yearly basis, in order to renew our licence. Therefore, you can be assured that all REA shall always have the most up-to-date property information and knowledge to serve you.

(5) a REA is bound to work under the professionalism framework set by the Board, and to follow the ethical conduct, rules and regulation, for which, any adverse actions or omissions will result in diciplinary actions from the Board against the offender.

(6) a REA is accountable to all their negotiators' (real esate sales personnels) conduct, henceforth, you can always rest assured that all negotiators are well controlled and managed by the REA. Should there be any issues arrise with the negotiators, you can always bring the matters up to their principal, i.e. the REA.

(7) you will NEVER be overcharged by a REA because the professional fees schedule has been clearly spelled out in the Valuers, Appraisers and Estate Agents Act.

(8) All REAs belong in a big family, sometime we do compete, but most often than not we are actually co-operating amongst ourselves (co-agency) in order to sell/rent out your properties in the best price and shortest time possible.

So, why still use an illegal broker where there's no guarantee on the services rendered and security against your money?

Meanwhile, some of you might start wondering, how do you differentiate between a REA and an illegal broker? I'll answer to this question on my next post.