I have dealt with many real estate negotiators (RENs) in Malaysia- to buy properties and to sell. I have also worked with a reputable real estate agency that adheres a high professional code of conduct. Sad to say a number of RENs, I have met are lacking professionalism and ethics. According to the Handbook on Real Estate Agency Standards published by The Board of Valuers,Appraisers and Estate Agents Malaysia (BOVEA) are merely sales people that are engaged by a registered Real Estate Agent.
Malaysian Estate Agency Standards (Standard 9)
9.1.1 Negotiators are not given explicit recognition in the Act or Rules but are informally recognised by the Board as assistants engaged by estate agents in their practice of estate agency. They are usually salespersons who themselves are paid a fee or commission based upon conclusion of a successful estate agency transaction. Negotiators can also be under the direct employment of estate agents and be paid salaries rather than fees of commissions
RENs They are required to attend a 2 day course organised by MIEA which than enables them to be certified by BOVEA. Certification does not mean that they are registered professionals.
It just means that they have been taught real estate basics by some real estate professionals. They are not assessed to ascertain that learning has taken place. The course attendee then applies to join a registered real estate company where he is asked to pay a sum of money i.e. RM500 towards a business account. The money from this account is used to pay for business cards, “For Sale” banners, advertisements in the media of choice of the registered real estate agent/Principal of the agency. He is then required to procure listings of properties for sale/let with little or no help from the agency. Some RENs resort to buying list of property owners from developers who have sold properties. They know that this is illegal and a breach of privacy but they are desperate, you see. They then start making phone calls and ask property owners if they have a property to buy or let.
If he makes a sale or rents out a property, the Principal takes a cut and the balance is paid to the REN to cover his costs and whatever is left is his commission for the sale. In most real estate agencies he does not receive a salary but relies on his commission to cover business and living expenses.
Is it a surprise then that the REN resorts to
1) Procuring a property to sell or rent through whatever means, legal or illegal;
2) Promising the property owner a higher than the market sale/rental price to encourage the owner to give him the right to list the property;
3) Advertises the property for a high sale/rental price regardless of the market value of the property;
4) Allowing the property to be on the market for a long time even if the owner needs to sell the property quickly;
5) Not presenting offers made by prospective buyers/renters if the RENs decide that their commission would be too low.
The lack of ethics and professionalism has led to high prices of properties that do not reflect the true value of a property. What is the true value of a property? The true value of a property is the price as determined by a professional valuer based on criteria such as location, building, size etc. It is not determined by bank mortgage officers that are keen on giving the buyer a loan as the values tend to be inflated.
It has also led to properties remaining unsold even though the owner needs to sell the property desperately. As a result if an owner defaults in his mortgage payments for 3 months or more, the lending bank will seize the property and put it up for auction.
Similarly, when a REN does not present to the owner offers for rental made by prospective tenants, the property remains vacant for some time even though the owner while wishing for the highest possible rental, is willing to accept a reasonable offer.
As I see it, the real estate industry in Malaysia does not need the services of a REN. What is needed are professional real estate agents who are registered with the BOVEA. Should a property owner or developer require the services of a real estate agent, they may approach them as they would approach a lawyer or doctor. This is how it is done in developed country and something that Malaysia should aspire towards.