Unless you’re a seasoned investor with an impressive portfolio, likely, the property industry isn’t something you’re 100% confident in.
You see, buying a property isn’t as easy as it may seem. There are loopholes that illegal brokers often use to their advantage – loopholes that you probably aren’t even aware of!
With that much money on the line, your property purchase isn’t the place to scrimp or be careless. For your own sake, make sure you’re dealing with a qualified professional.
Not sure how to verify if the REN (real estate negotiator) or REA (real estate agent) you’re dealing with is the real deal? Read below to find out how!
Are They A REN, Or A REA?
Did you know that your “property agent” may not be an agent, per se? In Malaysia, you’ve got Real Estate Negotiators (RENs), and you’ve got Real Estate Agents (REAs).
In simpler terms, RENs work for the REAs. RENs have to undertake a two-day programme, or the “Negotiator’s Certification Course”, upon which they’ll receive a certificate of attendance.
From there, they have to find a real estate firm to sponsor their application to become a REN. Only upon receiving their official tags are RENs allowed to operate in the industry under their firm.
REAs on the other hand, boast a whole lot MORE experience under their belt. And they’re mandated to do so too!
To receive their REA license, these professionals have to pursue a diploma, undertake two years of work experience, and submit their work log regularly to BOVAEAP for appraisal. Whew!
You can read more on how RENs differ from REAs here. It’s important you know how to differentiate the two, as there are certain limitations as to what RENs are allowed to do.
For example, RENs cannot open their own agency, and must at all times, be linked to a registered real estate firm to undertake work within the industry.
And for what it’s worth, not just anybody can open a real estate agency firm! Only those registered with BOVAEA are entitled to do so, and the firm can operate as either a sole proprietorship, partnership or corporate body (Sdn. Bhd.)
A sole proprietorship is the most common structure of the business, whereby it’s owned and managed by only one individual. Think of it as a one-man show where there’s only one boss to report to.
For sole-proprietorships, the proprietor must be registered with BOVAEA, and the same goes for partnerships — both partners must be registered too.
However, for corporate bodies, it only needs at least 2 of the directors to be registered. The majority of the directors must be registered, so if there are 5 directors, at least 3 must be registered.
Registered real estate firms are also NOT allowed to operate from shared business centres (like co-working spaces) or virtual offices. If your agent brings you to a co-working space and claims it’s their office/headquarters, that’s a red flag!
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How To Verify If Your REN Or REA Is Legitimate
1) ID tag: Red or blue?
Your agent should have his or her ID tag worn when dealing with you. Their BOVAEAP tag, not their firm’s company tag, mind you. These tags are issued by BOVAEAP only, once the bearer is qualified as a REN or REA.
The tags are easily identifiable too! A red tag signals that the bearer is a REN or probationary agent, while a blue tag signals that the bearer is a REA.
If the agent makes up some excuse for not having the tag on his/her person, such as the tag being processed or left in the office, you can simply ask for their ID number (read below).
Or simply stand your ground, and firmly refuse to deal with him/her any further until you receive proof of their ID.
2) BOVAEAP hologram: Is it present?
On official REN and REA tags, a holographic image of the BOVAEAP logo should be present.
Security holograms are often used since they’re difficult to replicate, so if your agent presents you with a red or blue tag with no holographic logo, run for the hills!
3) QR code: Scan to make sure
The best way to identify whether your agent or negotiator is who they claim to be, is to scan the QR code provided on their ID tag.
The QR code will open up a link to their REN/REA profile, with all the necessary information, plus their photograph too.
4) REN/REA registration number: No QR code? Search online!
Certified RENs will all be assigned a registration number of their own. You can ask the particular agent/negotiator for this number, and conduct a quick search at http://search.lppeh.gov.my/.
5) Company name: Search online to verify the firm
RENs must always be attached to a registered firm, and a single firm only. On top of searching for their REN number, you can also search for their firm’s name to verify that it’s a real, properly operating firm.
Simply click “Search for Firm” at http://search.lppeh.gov.my/. If in doubt, you can even call up the firm to verify that the alleged REN you’re dealing with is indeed operating under them.
Firms can only engage or hire a maximum of 20 RENs! Once that quota has been reached, they will need to apply with BOVAEA to increase it to 30. However, if there’s more than 1 REA in the firm, the numbers can be multiplied consequently.
6) Agent commission: Maximum of 3%.
According to the Malaysian Institute of Estate Agents (MIEA), the maximum commission that you can be charged for the sale and/or purchase of land/buildings within Malaysia is set at a maximum of 3% of the property’s sale price.
So, make sure that an unscrupulous individual pretending to be REN/REA isn’t trying to trick you into paying more than that!
7) Advertisement details: Check for these 4 things
With illegal brokers, come fake advertisements. According to MIEA, property advertisements in newspapers, property portals, and signboards must display the following:
- Property firm’s e-registration number with BOVAEAP
- Relevant REA/REN’s name
- Relevant REA/REN registration number
- Contact details
If you see something fishy, you can report it too! Snap a photo and send it to BOVAEA along with the street name, date and time, as well as your name and contact number.
It will be verified first before being passed to the Malaysian Communication and Multimedia Commission (MCMC), following which they will suspend and bar the contact number on the advertisement.
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What Are Some Rules And Regulations That Protect Me From Illegal Brokers?
Despite all the bad rep the real estate industry usually gets, the industry is still regulated by rules and regulations that serve to protect you, as a buyer.
Overseeing the industry is once again BOVAEAP, which serves to regulate the professional conduct of those registered under them. Below are a few of the basic ones:
1) Illegal brokers
Any person who acts in contravention of Section 22(c) commits an offence under Section 30(i) of the Act and is liable upon conviction to a fine not exceeding RM300,000 or imprisonment for a term not exceeding 3 years, or both.
2) Aiding and abetting an illegal broker
Any person who aids and abets in the commission of an offence under Section 30(j) of the Act, is committing a crime and is liable upon conviction to a fine not exceeding RM300,000 or imprisonment for a term not exceeding 3 years, or both.
3) Foreign property marketed in Malaysia
Any foreign property being approved to be marketed in Malaysia is required to display the BOVAEAP approval number, for example, LPPEH/88/8888/KL.
A separate application is required for different venues, which is only valid for one month from the date of approval.
4) Requirements for property leaflets
Flyers or leaflets distributed by negotiators shall contain the company name, the firm’s e-registration number, and the REN number. Flyers are only permitted if:
- The contents in the flyer shall specify the types of property for sale/rental/lease or wanted.
- The flyer shall be produced on a firm’s letterhead which bears the name, registration number, telephone number, and address of the firm. It shall carry the signature of the REA. It shall include the negotiator’s name with the REN Number.
- The flyer must also carry the following statement: “Persons responding to this flyer are not required to pay any estate agency fee whatsoever for properties referred to this flyer as this firm is already retained by a particular principal”.The font size for this statement shall be similar to the general contents of the flyer.
Engaging An Illegal Broker: Is It Worth The Risk?
You may wonder: “What’s the point of going through all the trouble to verify my agent’s credibility?” As long as you get a good deal, and you know you’re not being cheated – that’s good enough, right?
If you decide to continue dealing with an agent, despite having identified that he or she is not registered with BOVAEAP, stop for a moment to think about why you’ve come to that decision.
Is the deal simply too good to pass up? Often, deals that sound amazing are precisely that – too good to be true.
With registered agents, funds are deposited in a client’s account and protected by professional indemnity insurance. BOVAEAP can also easily suspend or fine agents if they’re found to commit any offences.
Illegal Brokers Run Rampant Out There, But You Can Outsmart Them!
With all the challenges and intricacies of property transactions, beginner buyers may feel pressured into disregarding their gut feeling. But hold it right there – don’t succumb to pressure or rushed decision-making!
Make every step (and every payment) cautiously, and always research intensively or ask a professional if you’re doubtful. Click here to explore even more tips and guides on working with property agents.