The general public often hear of real estate agents who turn out to be “not really” agents.  Sounds like a Samuel L. Jackson movie but in real life, it is not that dramatic for a real estate agent.

The truth is, not everyone can become a registered real estate agent. In the past, due to the lucrative nature of the business, many people got involved in real estate transactions to make quick monetary gains. This rampant and unregulated practice led to many problems of fraud, which led to its regulation.

There are approximately 1,900 agents registered with the Board of Valuers, Appraisers and Estate Agents. The Board is a regulatory body of the Estate Agency Profession. It comes under the purview of the Ministry of Finance and is governed by the Valuers, Appraisers and Estate Agents Act 1981. Its primary function is to regulate the Valuers, Appraisers and Estate Agents practising in Malaysia. Presently, all practicing estate agents must be approved and registered with the Board and their yearly renewal of authority to practise is subject to a minimum of 10 Continuous Professional Development Hours (CPD).  This is mandatory to ensure that Registered Estate Agents are current in their practises.

MALAYSIAN INSTITUTE OF ESTATE AGENTS

The Malaysian Institute of Estate Agents (MIEA) is the recognised body representing all registered estate agents in the country.

MIEA’s vision is to unite all registered estate agents in Malaysia as an independent body to promote greater excellence and professionalism in the real estate industry, so that it achieves higher ideals and creates more profitability.

TITLES

Estate Agents are simply registered agents with the Board. They provide a service in buying, selling and leasing properties for clients so that optimum returns can be achieved.

A Negotiator is a salesperson employed by real estate firms. The real estate agent is responsible and accountable for all the actions of the negotiator. A negotiator is trained, managed and supervised at all times by the real estate agent.

As defined under Section 22C of the Valuers, Appraisers and Estate Agents Act 1981, only a registered estate agent can practice, carry on business or take up employment as an estate agent. No one else can operate under any name, style or title that uses the words “estate agent”, “house agent”, “property agent”, “land agent” or the equivalent that would imply that he is a registered agent.

Non-registered agents cannot display any signboards or circulate any cards, letters, pamphlets, notices or advertisements that imply they are registered estate agents, nor can they undertake any work that involves real estate transactions. Only registered estate agents can prevail on the court to recover any fees, charges or remuneration for their professional advice or services rendered as an estate agent.

An illegal estate agent can be punished by law, under Section 30 of the Act. On conviction of an offence under the Act, they are liable to a fine not exceeding RM25,000 or imprisonment for a term not exceeding three years, or both. He shall also be liable to a further penalty of RM500 for each day during the continuance of such an offence.

To avoid getting scammed by pretenders, the general public can verify the authenticity of the agent by their registration number. Each registered agent is given a number with the prefix “E”, e.g. E 1712. A real estate firm also has an E number, e.g. E (1) 1081, which is the registration number of the firm with the Board. This number must be displayed in all communications from the firm. 

SCALE OF PROFESSIONAL FEES

The Valuers, Appraisers and Estate Agents Board has a scale of fees that registered agents can charge for their professional services.

For sales and purchases of land and buildings, they are entitled to charge 2.75% on the first RM500,000 and 2% on the remainder.  With chattels (including plants and machineries), it is 10% of the proceeds. This applies to any sale or purchase by way of private treaty, tender or any other mode of disposal or acquisition.  The scale does not apply for the sale of foreign properties transacted in Malaysia or for the sale of Malaysian properties in foreign countries.

Real Estate Agents can earn a fee for lettings of properties. For tenancies up to three years, the fee is equivalent to 1.25 months gross rental; three to four years, 1.5 months; four to five years or longer without the option for renewal, 1.75 months; over five years with renewal options, 1.75 months plus 0.25 months rental for every additional year.   For tenancies of less than a year, the fee may be calculated on a pro rata basis. This scale does not apply to services offices and apartments or other premises of a similar nature.

If rental rates are reviewed, estate agents are entitled to 50% of the fees chargeable under the lettings.

Agents may also make claims for the cost of printing, plans, copies of documents, lithography, travel (if the distance from the agent’s office to the property exceeds 40km) and other expenses. They can also claim for media advertisements, signboards, brochures and other promotional material. However, they must first obtain their client’s approval for these additional expenses.

SERVICES TAX

Any real estate firm is subjected by law to collect a 5% service tax on the Professional Fees from its clients. The estate agent is required to collect this on behalf of the Customs and Excise Department.

CLIENTS’ ACCOUNT

Many estate agents, by the nature of their practice, hold money belonging to other people as stakeholders.  Estate agents are to maintain separate client accounts so that the monies entrusted to registered persons are paid into it. The transactions are to be properly recorded in the accounts maintained by the registered estate agent and properly monitored and audited.

The Board views the fiduciary duties of the estate agent very seriously. Breaches are dealt with severely. There are strict rules on how a client’s account is to be operated. As estate agency firm is also required by law to have professional indemnity insurance.

PROFESSIONAL INDEMNITY INSURANCE

Professional indemnity insurance protects professionals (estate agents, accountants, solicitors, architects, doctors and so forth) against the legal liability to compensate third parties who sustain injury, loss or damage due to their professional negligence. The insured is defined as the firm, practice or company made up of its partners and qualified professional staff, including clerical and secretarial staff.

The policy protects the insured against any claims for damages that may be made against him for breach of professional duty, by reasons of negligent act, error or omission in his professional capacity. In short, the insurance company covers the payment up to the sum insured.

Useful Contact

The Malaysian Institute of Estate Agents (MIEA)
Unit C-27-05 Dataran 3 Two
No. 2 Jalan 19/1
46300 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Tel: 03-7960 2577
Fax: 03-7960 3757
Email : secretariat@miea.com.my
Website : http://www.miea.com.my