Should I buy land?

I have been asked this question by property investors. My reply is always ” What is your objective?” You have to be clear of what you hope to achieve.

Buying land and holding it for the long term  is a good strategy. This is because land is limited( unless you create more habitable land through land reclamation). However, there are a few questions to ask yourself before you buy yourself a nice plot of  land:

1) How will you finance the purchase of the property?

2) Do you have sufficient cash? If you are taking a bank loan, do bear in mind that for land purchases the margin of financing provided by banks is typically 70% or less This means that you have to have sufficient cash to pay the difference in addition to all closing costs.

3) Do you have sufficient cash flow to meet your monthly repayments? Bear in mind that if you can lease the land to someone you may be able to recoup some of your cash outflow. If the land is not leased out the market monthly negative cash flow may put a strain on your finances until such time it is sold with capital appreciation.

Leasing of land often results in lower returns compared to a building.  A lot depends on the location and use of the land as well.

Buying a bungalow plot

My search for a suitable family home which met my criteria ended in vain. There was nothing that met my full requirements.Bear in mind I went house shopping with a list  in hand. I knew what are the must have criteria  and  nice-to have  features. No ambiguity there.After one year of house hunting I could not find my dream house. Should I settle for something that fills most of my requirements and renovate to have the rest? I did the math – it was just too expensive. So I did the next logical step and bought a plot of land and built my own house.

Firstly I had to find a suitable plot of land in a location that is good and familiar to me. I chose a piece of land that was slightly raised,facing east and close enough to Kuala Lumpur with good road connections and MRT in the future. I negotiated the price for a significant reduction because the market was soft and I understood that the pool of buyers in that location was still limited as the township was not fully developed and the margin of financing low.

Then there was the search for an architect.Through recommendations I found an architect to design my home. Time and energy was spent discussing my wish list for the house. A  sizable garden  and kitchen was a must. A swimming pool was optional but I later included one because it would provide good exercise and good feng shui. Besides, a pool party was on my list of nice- to- have items. Approval and building permit was duly sought.

Then there was the matter of financing the construction itself. A few tenders were received. The prices quoted were quite shocking and out of my budget. Even if I had the money for it, it seemed to me that I was being overcharge for what was to be a fairly simple house. After much looking around and negotiation, I found a decent contractor who was willing to reduce his margin of financing.  An agreement was signed using a contract prepared by the Malaysian Institute of Architects. So began my experience in construction.My building contractor, an engineer himself, was competent and reliable.He knew his job. I didn’t. So I trusted him and the architect to do the needful.

When constructing, a house it is important to know what you want.  Fickle mindedness leads to variance orders in the construction. Variance orders can be positive( costing more) or negative (costing less).So when construction costs deviate from the original,typically more, it is most likely due to the fact that property owners request changes that cost an additional sum.

However, if changes are necessary, making them as early as possible in the construction process will save time and money. If too many changes are made from the original, it is necessary to resubmit plans for reconsideration and approval.

The finishing for the house and the choice of accessories are purely personal. From imported marble to  simple tiles, the choices are unlimited.Again bear in mind budget and practicality so as not to regret.


Other types of land

Land usage is clearly stated on the title – for agriculture, industrial,commercial,recreational etc. When buying these types of land, be mindful of what is needed to develop the land for specific use. Apart from capital,necessary permits have to  to be obtained.

If the intention is to buy and hold, there should be no concerns beyond paying quit rent and assessment charges while waiting for a profitable sale. Your neighbours and local council would appreciate it if you kept the land clean and clear  of overgrown bushes and mosquitoes.
















Looking for a property to buy


When looking for a property to buy, it is important to list down the criteria and budget. Otherwise you will be shooting in the dark with no idea and wasting a lot of time and money.
List down the criteria and budget. Look into possibilities of increasing your budget if you find something you really like that does not fit your original budget.You could even take your payslip and list of commitments to the mortgage officer and ask what is the maximum loan you can get. The bank will also run a credit check on you to know if you have defaulted on any loans or are a poor are likely to be told that you will be eligible for 70-85% of the value of the property you are buying.However, you should ask for a written letter from the bank that states given your income and commitments, you are available for X amount of loan that requires a monthly mortgage of XX for the stated number of years. That way you can calculate the down payment you have to fork out and the property that you can actually buy. Also take the time to shop for a bank loan that offers the best interest rates and other terms.In short, before you shop for a property, shop for a loan.


Armed with the knowledge and confidence that you can buy a property, shop for something in your preferred location. if it is out of your reach look further away.When you find something that you like ,make an offer and negotiate the price. you do not need to hesitate as you know what you want and how much you can afford. In Malaysia, i have come across property buyers who offer a ridiculously low price hoping that the owner is desperate enough to sell or has no idea of his property value. That may work occasionally but not all the time.
In most cases, property owners have the holding power. They will consider refinancing before reducing the price. They may even wait for the property to be auctioned of by their lending bank before reducing the price,not realizing that it is to their detriment to do so.
More about auction properties later.

If the price is fair, you will succeed in purchasing it. The real estate negotiator and your lawyer will help you with the next steps.


Dealing with emotions
Although properties are innate objects made of bricks and mortar, they have their own energy. Also ,people tend to get very emotional when selling or buying properties.

John and wife went shopping for a property close to the wife’s work place. They found a lovely house which they liked. The problem was it was out of their budget.So they sought to borrow money from relatives.The relatives were good people who were ready to help if there was a need but some questioned the need to buy a house that was clearly out of the couple’s budget. Furthermore, the couple already owned a house and were merely upgrading. it is one thing to loan money to someone who is starting out and needs a rood over their heads. it is another to loan money to someone who wants to get a property he can barely afford. Would you loan money to someone who wants to upgrade from a Myvi to a Toyota Camry. I know I wouldn’t.
Buying a property is important and a big commitment so one has to be rational not emotional.


Charles and wife had lived in a spacious home with a big garden for most of their adult live. When their children left the nest and with old age making it difficult to maintain the place, the most logical thing was to downgrade to a smaller home. That involved selling the current home. Unfortunately, they had to many fond memories in the house to be able to sell it. Furthermore, moving to a smaller house was perceived as “losing face” and selling a house implied that they could no longer maintain it. When dealing with a matter as personal as this, I can only say ” to hell with what people say or thing”. You are responsible for your life and your property. selling a property you have difficulty maintaining and moving to a smaller home that suits your needs is not a sign of defeat but of practicality and sensibility.Proceeds from the sale of the bigger house can be used to buy/rent a smaller house and enjoying your golden years.


Sam was single and very house proud. He owned a home which he had painstakingly renovated and maintained in a manner worthy of home decor magazine. He stayed there alone and frequently entertained guests in the spacious dining room and patio. Two years later, he was offered a good job overseas. He did not want to rent out the property for fear of the damage that would be done. He decided to put the house up for sale. Buyers came and were pleased with the location and the condition of the house. They checked the value of the house and offered a price accordingly. But Sam could not bring himself to accept any of them because he thought his house was worth much more than that. The truth is while the value of a property increases with renovation, it does not increase to the amount the property owner THINKS it should. A buyer may offer fair value and proceed with his own renovations if he wishes too. Sam’s renovations may mean a lot to him but not to the valuers and the purchasers. So that is something that house owners should consider when they renovate their homes with the intention of selling in the near future.

Middle Class Housing

Maria (not her real name) went shopping for a house. Nothing fancy, just a decent middle class home to meet the needs of her family of four. With two working adults in the family,she figured they could afford a house costing RM 700,000.
A double-storey link house in the suburbs was what she had in mind. It would take her and hubby about 30 minutes to commute to their place of work. The children could go to the neighborhood school. A baby sitter could be arranged for after school hours until the parents got home.
So every weekend they would bundle into their car and go house hunting. Here is what they found out:

1) You can find a landed 2 storey house in the region of RM700,000
2) The houses are located a good distance  away from any big city.There are small towns located nearby
3) The sizes of these houses are 20×70 or smaller
4) The conditions of these houses are not always good
5) The surroundings are not always pleasant
6) There is insufficient space to store things ie books,toys,bicycles,suitcases etc.
7) Just not suitable for  a middle class family

The typical houses had 3 bedrooms and 2 bath rooms on the top floor. There is usually one bedroom and bathroom  on the ground floors with hardly a patch of land to call a garden.
In Maria’s words, “In few of the newer houses I looked at, the bedroom downstairs was the size of a broom closet without space to place a bed. Where should my relatives or friends stay when they visit? I can’t make my mother-in-law sleep on the couch when she visits!
As for the bathrooms,there is hardly room to move  in it. The kitchen is small and narrow and just not big enough for a family.”

I have met others who share Maria’s lamentations. So what do they do?  Well, Maria decided to move even further away from her place of work in order to afford living in a decent sized house.”If I am going to spend my hard earned money paying for a house for the next 25 years, I should be happy and comfortable with my choice”. She does not see a way out of the long commute and the fact that she will hardly see her kids except on weekends.

She accepts things as they are.

My question to you is do you accept this? Is your life about making long commutes in order to own a home and decorate it as you please? Is the middle class being short changed by property developers and the government that does not regulate the housing needs of the people enough?

I would like to see decent housing for all levels of society. I understand that property developers are in the business  to make money but there is a fine line between running a business  and being greedy. Government regulation is needed not just for low income housing but also for the middle class. Really it is a win-win situation for all, not just for property developers.

Can You Afford Not to Buy a Property?

I was at a Chinese New Year Party recently when a young man of about 30 years old named Paul asked me about property prices. He wanted to know if they are going down any time soon. I gave him a truthful answer that is I have actually seen property prices lowering due to various reasons. However, in some areas in, the Klang Valley prices of landed property has not been affected by the doom and gloom that we read and hear about.
He lamented that young people like him would never be able to afford to buy a house today. He was a university graduate, working for a few years in a multinational company and got to travel a bit with his work. On week-ends he conducts martial arts classes because that is his passion. Besides, the money is good too!
He is a good Asian son who still lives with his parents and recently took them on a holiday abroad. There was no sign of a girlfriend. My guess is he is happy with his present lifestyle and living arrangements. He is comfortable and does not need to think of much besides his work and hobby. As long as this is the way you think, then you will not own a property.
However, if you consider the following, then you may not be satisfied:
  1. Will I be contend staying with my parents for the rest of my life?
  2. Will I stay with my parents after I get married? Will my spouse agree to that arrangement?
  3. When my parents pass on, what will happen? If the property is sold or shared between my siblings what will I do?
  4. Am I happy to stay in a rented house for the rest of my life?what happens if my landlord increase the rental or chooses to sell the property? Will I be able to find another house to rent in the same location? At what price?
The reality is owning a roof over your head is not a luxury regardless of what people may tell you. You need to buy a property (house/apartment) no matter how small because a roof over your head is an absolute necessity. Granted you may not want to live on your own right now but it is still yours to do as you please, when you please. No one can take that away from you, unless you fail to make mortgage payments.
The price of property is dependent on location, size, landed or not. History has proven that the value of property increases over time simply because land is scarce and building costs rise over time.
So bite the bullet, invest some time and money in choosing the best property for you and just do it. Otherwise you might find that your money has been spent and you do not own a property simply because you were waiting for the right time. The right time, young man, is now.

To Borrow or Not to Borrow?

I have actually met people who do not buy property because they do not want to be indebted to a bank. They wait until they can afford it, usually when they are close to retirement or even retired. They then withdraw their savings, gratuity and EPF to purchase a house. Not a wise move considering that the life expectancy for Malaysians is in the region of 75 years and they still need a considerable sum of money to retire on. There is such a thing as good debt and bad debt. Property loan certainly qualifies as good debt provided you are able to make your monthly obligations.

Now that you have made a decision to buy a property, the next step is to decide on a mortgage. For some there is a question of whether you should make a cash purchase or take on a mortgage. A cash purchase is fine if you are cash rich and the property is for your own stay. However, if you are buying a rental property as an investment or for your own business purpose, it is better to consider a mortgage for the following reasons:
1)   For cash flow
2)   For higher yield and leverage
3)   To  acquire  leverage  and enable you to buy more property in the near future.
When you place a large sum of money into one property it is an opportunity cost in the sense that you are unable to use the money for any other good investment, education expenses, medical expenses. You should also make sure you have at least 6 months  worth of mortgage in hand to pay for mortgage and property related expenses in the event the property is not rented out or if your business is not doing too well.
For example you purchase a property at RM 500,000. Legal fees, stamp duties and loan agreement will add up to about RM 50,000. This means that your total cost is RM 550,000.
If you rent it out at RM 1500, your yearly  income would be RM 18000.That would mean that you will be earning 3.6% on your capital of RM550,000. It would take 27.7 years to recoup your capital.
On the other hand if you took a loan for 90% your initial capital outlay will only add up to RM100,000. With the same rental you will be receiving a return of 18%.In addition you stand to gain from capital appreciation when you sell the property in the future. Assumption: the price of the property rises significantly enough to cover your capital outlay,mortgage and other holding costs.
As you can clearly see by taking a loan of 90% of the purchase price you are getting better returns on your property.
With the extra cash that you have in hand you can go ahead and buy another property and repeat the process of getting higher returns on your investment instead of cash purchase. By leveraging on other people’s money (OPM) you can invest in more properties.
However, be careful that you do not stretch yourself too thin. For every property that you buy you must set aside a reserve of about 6 months mortgage and property related expenses to tide you over in times when you do not have a tenant. For that reason also when buying a rental property only do so in areas that are easy to rent out. Not all properties for sale are worth the risk of purchasing and borrowing.

Is This a Good Time to Buy Property?

I have been asked this question a lot, especially in 2015.  Heck, even my tailor asked me to look out for a good property for him in his location of choice. He said that he trusted me not to hike the price up as other RENs sometimes do. I was flattered. Unfortunately, his location of choice was out of his budget. So I suggested some areas close to his place of work where he could get good value for money.

The property market in 2015 has been what industry experts call “cold”. What that means is that there have been fewer transactions. What does that mean?
It means that fewer people have been buying properties. The reasons are many: from not confident enough to speculate, loss of jobs, poor business, higher cost of living and therefore less money to take on a mortgage, lack of confidence in the way the country is run and   poor investor sentiments. I could write paragraphs about this but I think you get my drift.
I have also seen many properties being sold below market value because the owners can no longer afford to hold them. It could be because they were speculators who hoped the rental would help cover at least some of the mortgage. Neither could they sell the property at fair market value.So as a last resort they dropped the price. It is either drop the price or risk an auction.Not wanting to lose out on all payments made to date and wanting to save themselves the embarrassment of having a property auctioned, dropping the price seems like a good option.
Or they may have lost their job and can no longer afford to maintain one or more properties. Maybe they have to move in with the parents in order to meet all other financial obligations.
The fact remains that buying a property is a long term investment. As such you should clearly determine your purpose and budget. (Please refer to blog post on ‘Buying for your own stay or for investment” dated Nov. 11).
Yes, now is a good time to buy property if you can find one that suits your purpose as you are more likely to find one that is fairly priced or even below market value. Remember that property owners in choice locations have higher holding power and are not likely to lower their prices too much- only if they really need to sell.
Now is not a good time to sell your property as it is likely to stay on the market for a long time. Purchasers are likely to want to negotiate more too. But if Lady Luck is on your side   and you have a good property to sell, you might just get your asking price. All the best!

Buying From The Developer

Everyday our newspapers and magazine advertise all sorts of new property development. The pictures are colourful and glossy, the details perfect. If your attention was captured, you may care enough to go for the open day and visit the showroom. Refreshments and perhaps a barbecue await you. Friendly sales staff are there to attend to all your queries. The show unit is lovely, the furniture and décor just to your taste. Free legal fees are provided for your Sales and Purchase Agreement and mortgage officers eagerly await to give you a loan, if you qualify of course. What more can you ask for?
I hate to be the party pooper but really there is plenty to ask.
Here are some questions you may wish to ask when buying from the developer?

1) What are the actual dimensions of the show unit? Is it the same as the actual dimensions of the property on sale?
2) In the event that the property is not completed as scheduled, what is the compensation that you the purchaser is entitled to?

3) What is the value of the property according to a professional valuer? In this instance, you may wish to check the value of the property with an independent valuer, not one engaged by the developer. If the property has yet to be built, the valuer may use similar neighbouring properties for comparison before providing a value. Banks today ask for at least two valuers who should concur on the value of the property. It is better to be prudent then sorry as neither the bank nor the buyer should be dealing with loans on overvalued properties.
4) If free items such as kitchen cabinets, air conditioning units and zero moving cost have been provided by the developer, has the cost of these offer items been added to the price of the property?

5) If the price of the property is already higher than the provided by the value provided by the independent valuers , what are the chances of property price appreciation? Should the you decide to sell the property, will you make a profit after taking into account your payment for legal fees, stamp duties on both the S&P Agreement and the loan agreement, balance of mortgage payable to the bank and Real Estate Property Gain Tax(RPGT)?

6) If the you intend to rent out the property, will the rental be sufficient to cover mortgage payment, quit rent and assessment fees, maintenance and repair fees if any? If not how do you intend to meet your property expenses in addition to other financial obligations you might have?

7) If you intend to stay in the property, does the location, size and surroundings suit the needs of your family and your extended family if they intend to stay with you? Don’t by a property just because it is cheap of free gifts are given. You are better off renting until you find a property that meets your needs and budget.

Property developers are in the business of building to provide housing that meets the needs of the clients they serve. Good developers seek to provide quality buildings that are safe in a suitable pleasant environment. Unscrupulous property developers give you poor quality building in a location with poor access while promising you an access road and school in the future. However, both good developers or unscrupulous ones have something in common in that they seek a healthy profit margin. That is among the reasons why developers build three storey houses with special offers because they are able to charge the client a higher price for a larger built up space. A discerning buyer would ask himself if he would be able to climb up to the top floor of the house in his old age. He would also ask if the room on the ground floor is large enough for him or his aged parents. Is the maid ‘s room provided large enough for the live in maid to fit in a bed and a closet. Most of the maids’ rooms built in houses today are fit for brooms and mops and perhaps an ironing board. Maids are people too who deserve decent living quarters too.
In recent times there have suggestions by the developers to bring back the Developer Interest Bearing Scheme (DIBS) to make houses more affordable to first time house buyer. In reality the DIBS only serves to delay the time in which the purchaser starts making his first mortgage payment ,while the price of the property remains unaffordable. It is obvious to me just bring back the DIBS is not going to solve the question of affordability. Isn’t it obvious to you?

Buying Versus Selling Properties

Have you bought or sold a property? I have and it amazes me how you can be told things that are absolutely contrary when you are buying and selling.

My first property was a 2sty link house, leasehold numbered “4” and located by the cemetery. I bought it because it was affordable to me and I was not superstitious nor afraid of ghosts. I lived there for eight years with my family and had no problems except for a few incidents of attempted burglary. That was resolved by installing an alarm system.
After 8 years, my family and I decided it was time to move to be closer to the children’s school. Selling the property took a long time. I was not surprised that Malaysians are generally a superstitious lot. I engaged RENs to sell the property for me, one at a time and each time giving  them an exclusive listing. Each time I was told that the location and number were not good and that leasehold properties were difficult to sell. Thankfully the property was sold at double the price I paid for it as it was a good property, all things considered. In true Malaysian spirit it was sold by a Malay REA to a Chinese buyer. This buyer was a born again Christian who feared God more than ghosts and superstitions and rightfully so.
Since then I have enquired and purchased a few other properties and attempted to sell   a property or two. When I wanted to negotiate the price on a property that was leasehold, I was told that leasehold was no different than freehold properties and that the lease can be renewed upon expiry.
It should not matter to me or prospective buyers. When I pointed out that the property number was not favourable, I was told that I could make an application to change the house number. When I pointed out that the vacant land behind a certain property would create opportunities for burglars to enter I was told that I could build a high wall at the back of the wall. Changing the house number and building a wall should be made at my own expense and inconvenience with no discount in price.
I also learnt that a house buyer can demand any price he wants for his house simply because he overpaid for his purchase. It cannot possibly be sold below the developers price even though the actual valuation of the property is much less. And the RENs concur with him because he pays their fees.
The fact of the matter is the price of property is determined by location, supply and demand. Location plays a major part. Good location obviously commands a higher price. Quality of materials for the building do too. Nobody really cares about the renovations you have done as it may not be to their taste so it is really optional and adds some value but not much to the property.
The lease on the land where the property stands can be renewed in most cases unless the local government has earmarked the land for developmental purposes. This involves a premium to be paid. Therefore, this cost should be considered in the transaction price.
This and other information are not made clear. I don’t wish to assign blame. I merely seek honesty and professionalism when transacting properties.

Buying Properties for Investment or for Your Own Stay

In the book “The Richest Man in Babylon”, George Samuel Clason wrote the importance of owning the roof over your head. After that is achieved, a wise move would be to acquire rental properties to provide passive income. This wisdom holds true for the Babylonians on the banks of Mesopotamia as for us today in our modern homes.

My paternal grandparents were poor, illiterate immigrants who saw the potential or owning their business and investing in real estate. No longer poor and academically qualified, I humbly follow in their footsteps.
However, there is a difference in buying a house for your own occupancy and buying a house for  investment or rental purposes.
If you are buying a property for your own occupancy, the things to consider would be:
1) Affordability
Do consider your income and expenditures and liabilities and decide how much mortgage you can afford. Remember that in addition to the   asking price of the property, you would need to set aside another 5% of the price to cover costs of legal fees and stamp-duties. Then there is the cost of renovations, repairs and any extras such as landscaping that you might want to have. Buy the best house you can afford to meet your needs.
2) Location
Is the location convenient to you and your family in terms of access to your place of work or school, hospital, shops etc. I have seen enough people suffer because they chose to stay far away from the place of work or school that needs to be reached daily. Why do they do this? For some it is because houses in faraway places such as Rawang, Semenyih and Seremban are cheaper and therefore cheaper even though they may be working in the Klang Valley. Others choose to stay near their parents homes. Yet others prefer to stay near malls or entertainment outlets. Do consider travel time,petrol and toll costs when choosing the best location for you.
3)  Apartment or house
Again it depends on   your needs. Apartments/Condominium are typically preferred when security is a concern. When you need more space for a growing family, then a house is obviously better.
When buying a property for   investment, there are two types to look out for:
Category 1 : Properties that are likely to appreciate in value but with little or no rental income Category 2 :Properties that provide both rental income and capital appreciation.
A smart investor would choose   Category 2 and would not settle for less. Despite what  people may tell you, it is possible to find this type of investment. However, you must be prepared to do your own research   and negotiation or pay someone to do it for you.
Properties that fall into Category 2 more often than not are commercial properties. Not any commercial property but carefully selected commercial properties.
The commercial properties that generate good returns are often:
1)1/2/3 storey shops that do not need a lift
2) ground floor of a building
3) land that can be used as parking bay
4 )located in a densely populated area with limited commercial buildings
5) occupied by a business that is doing well.
Many property investor buy apartments/condominiums as they are cheaper. As I have mentioned before, buy value not price .It is better to save up and buy a property with good value that generates good returns than to buy just because it is cheaper. Furthermore, there is currently a glut in  apartments/condominiums that result in low rental or no occupancy.
This can be avoided by doing sufficient research before investing ,Property is an illiquid investment and the purpose, location, holding capacity  and returns have to be given due consideration.
Better to be prudent than sorry . . .

Real Estate Negotiators in Malaysia

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.