Lecture 1 & 2 estate agency

10/07/11
EMT612 - The Practice of Estate
Agency
1
MOHAMAD ISA ABDULLAH,MOHAMAD ISA ABDULLAH,
Department of Estate Management,Department of Estate Management,
Faculty of Architecture, Planning and Surveying,Faculty of Architecture, Planning and Surveying,
MARA University of Technology,MARA University of Technology,
40450 Shah Alam, Selangor Darul Ehsan, Malaysia.40450 Shah Alam, Selangor Darul Ehsan, Malaysia.
Email: isa006@salam.uitm.edu.myEmail: isa006@salam.uitm.edu.my
ESTATE AGENCYESTATE AGENCY
(EMT 612)(EMT 612)

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Estate Agency
PROFESSIONAL
PROPERTY
CONSULTANCY
SERVICES
PROFESSIONAL
PROPERTY
CONSULTANCY
SERVICES
Property
Valuation
Property
Management
Market Research/
Feasibility Studies
Project
Management

The property market operates within the inherent
imperfect condition. There are :
No centralised property market.
Provides form of formal market
Changing roles within the dynamic nature of property
market
Previously was referred to property brokers, fly by night,
bogus etc.
Current need is imminent.
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1.0 Introduction1.0 Introduction

Nigel Stephen :
“Estate agency practice, if not in itself a purely professional occupation, is
one that should be conducted by men and women with a background of
professional knowledge and follow ethical standards prescribed by the
leading professional bodies of the land.”
Prof John Greeve:
“Estate agency is not simply b commercial activity, as one side claims, neither
is it a non-commercial profession. It is a combination of the two and the
elements of both the salesmanship and professionalism should be
combined systematically to the greater advantage of the consumer.”
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2.0 Definitions2.0 Definitions

• Estate Agent is a European English term for a person or
business that arranges the selling, renting or management of
homes, land and other buildings, although an agent that
specialises in renting is often called a Letting Agent.
• Estate agents are mainly engaged in the marketing of
property available for sale and a Solicitor or Licensed
Conveyancer is used to prepare the legal documents.
• In Scotland, however, many solicitors also act as estate
agents, a practice that is rare in England and Wales.
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Estate Agents (Cont’d)Estate Agents (Cont’d)

• The term originally referred to a person responsible for managing a
landed estate, while those engaged in the buying and selling of homes
were "house agents", and those selling land were "land agents".
• However, during the 20th century "estate agent" started to be used as a
generic term, perhaps because it was thought to sound more impressive.
• Estate agent is roughly synonymous in the United States with the term
real estate broker.
• Estate agent is the term used in the United Kingdom to describe a person
or organization whose business is to market real estate on behalf of
clients, but there are significant differences between the actions and
liabilities of brokers and estate agents in each country.
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Origin of Estate Agents (Cont’d)Origin of Estate Agents (Cont’d)

Real Estate Agent – A person who obtained a
professional Estate Agent registration with Board of
Valuers, Appraisers and Estate Agents Malaysia.
Real Estate Negotiator – A person who works under the
supervision of a registered Real Estate Agent/Firm
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3.0 Who is Real Estate Agents3.0 Who is Real Estate Agents

Part of the scope of work within the estate
management discipline.
Full recognised professional, can sue and be sued.
Challenging
Rewarding
Flexible time
Free entry, no limit of job opportunities
Ability to build own business
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Careers of Estate AgentsCareers of Estate Agents

In term of business, they operate within two categories
of firms:
• Valuation firms – denoted by VE
• Estate agent firms – E
• The person working under the estate agent is called
negotiators. Each agent is allowed to employed not
more than 20 negotiators.
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Careers of Estate AgentsCareers of Estate Agents

• The nature of work of estate agents in Malaysia as prescribed
under the Sc 2 of Valuers, Appraisers and Estate Agents Act
1981 (Act 242):
“actings or holding one self out to the public as ready to act, for a
commission, fee, reward or other consideration, as an agent
is respect of the sale or other disposal of lands and buildings
and any interest therein or the purchase or other acquisition
of lands and buildings and any interest therein or in respect
of the leasing or letting lands and buildings and any interest
therein.”
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3.1 Estate Agents in Malaysia3.1 Estate Agents in Malaysia

• As defined under Section 22C of the Valuers, Appraisers and
Estate Agents Act 1981, only registered estate agents can
practise, carry on business or take up employment as an
estate agent.
• They provide a service:
– buying,
– selling,
– leasing properties for clients so that, optimum returns can
be achieved.
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Estate Agents (Cont’d)Estate Agents (Cont’d)

In executing day to day work of an estate agent, there are
some of the roles of estate agent.
1. taking instructions
2. Record keeping
3. Conduct marketing/promotion
4. Providing information
5. Property inspection and viewing
6. Making the sale/purchasing then conclude
7. Confirming the details, contract
8. Handling the deposit
9. Completion
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Basic Roles of Estate Agent

1. Inspecting the property.
2. Providing a market assessment.
3. Researching comparative evidence.
4. Research the Certificate of Title and any documents relating to
encumbrances.
5. Provision of a marketing plan that would consider the price, the most -
suitable type of promotion, the attributes of the property.
6. Recommend ways to optimize the appeal of the property.
7. Recommend the most appropriate types of advertising.
8. Determine and research any existing tenancy arrangements.
9. Liaise with the occupiers to co-ordinate inspections.
10. Arrange suitable signage.
11. Arrange photography.
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Service of Estate AgentsService of Estate Agents

12. Design, produce, and lodge advertising and promotional material.
13. Promote the property to prospective purchasers.
14. Promote the property to other Real Estate Agents.
15. Conduct Open House programmes.
16. Maintain a register of inspections.
17. Provide reports on the level of buyer interest and market feedback.
18. Quality prospective purchasers.
19. Recommend suitable level of deposit.
20. Prepare the Offer and Acceptance documents and to include special
conditions.
21. To present any written offers to the seller.
22. Receipt deposit to be held in the Real Estate Agent Clients' account.
23. Explain the effect of any variations to the Contact that may be requested
by the seller.
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Service of Estate AgentsService of Estate Agents

Those that work in the lettings area of estate
agency also:
– vet prospective tenants by collecting references and
credit checks;
– ensure properties meet legal and health and safety
requirements, i.e. gas safety certificates;
– draw up tenancy agreement contracts;
– collect or organise rent payments;
– act as a property manager and resolve any issues that
arise with properties.
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Basic Roles of Estate Agent (Cont’d)

• Practice of estate agency in M’sia is governed by Valuers,
Appraisers and Estate Agents Act 1981 (the Act 242).
• There are about 1900 registered estate agents in the country
– public and private practitioners.
• Condition to qualify as required under the Act Sc 22A
– Minimum age at 21 yrs old.
– Malaysian citizen.
– Registered as probationary estate agent (2 yrs)
– Not and undischarged bankrupt.
– Passes the Board’s examination or posses recognised qualification.
(Section 22D)
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4.0 Practice of Estate Agents4.0 Practice of Estate Agents

• FOR REGISTRATION AS AN ESTATE AGENTS
• ACADEMIC QUALIFICATIONS
1. All the academic qualifications recognised by the Board for registration as valuers.
2. Other academic qualifications:
MALAYSIA
a)) University Technology Mara (UiTM)
– Diploma in Estate Management (1995 onwards)
b) University Technology Malaysia (UTM)
– Diploma in Valuation (2000 onwards)
– Bachelor of Science (Land Administration and Development)
• AUSTRALIA
a) Moorabin College of Technical and Further Education, Victoria
– Advance Certificate Course in Estate Agency
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TEST OF PROFESSIONAL COMPETENCE RECOGNISED BY THE BOARD
FOR REGISTRATION AS AN ESTATE AGENTS
• MALAYSIA
a) Institution of Surveyors Malaysia
– Passed Test of Professional Competence for General Practice
Surveying
– Passed Test of Professional Competence for Property
Consultancy and Valuation Surveying
– Passed Test of Professional Competence conducted by the
Board of Valuers, Appraisers & Estate Agents.
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• PROFESSIONAL QUALIFICATIONS
1. All the professional qualifications recognised by the
Board for registration as valuers.
2. Board of Valuers, Appraisers and Estate Agents
(a) Certificate in Estate Agency
(b) Diploma in Estate Agency
3. Institution of Surveyors (Malaysia)
a) General Practice Intermediate Examination
b) Property Consultancy and Valuation Surveying Intermediate Examination
4. INSPENS (Institute Penilaian Negara)
a) Certificate of Estate Agency
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• Professional knowledge
– proficient in the matters regarding to properly and the industry. E.g land
laws, building construction, town planning, economics etc. Acquired
through formal education.
• Ethical knowledge
– Have high ethical standards, integrity, good personality etc.
Prescribed by the law, standards etc.
• Skills
– Skills required in execute the business such as marketing skills,
negotiation skills, interpersonal skills etc.
– Acquired through rigorous training and experience.
•
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The knowledge required can be divided into :

Ten Point Commitment to Professionalism
1. Commited to Professionalism
2. Uphold Integrity & maintain ethic standards
3. Clients come first - be proactive with value and add services
4. Expose illegal's & those leasing authority to practice
5. Honour Co Agency agreements
6. Get Written and Exclusive listings
7. Register & Certify all Negotiators
8. No poster war
9. Office & E numbers, MIEA logo on all point of sale
communicatioins
10. Be united, releavant & progressive in all our actions
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The knowledge required can be divided into :

There are also differences in the types of work carried
out, depending on the specialism of the agency.
There are common tasks involved and typical work
activities tend to include:
– looking at and collecting information about a property,
and arranging for photographs to be taken;
– visiting and talking to the sellers about their property and
its special features;
– estimating the value of the property;
– marketing and promoting properties for sale;
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Basic Roles of Estate Agent (cont'd)

– representing the sellers in negotiation with prospective
buyers;
– monitoring sales as they proceed and liaising with all
interested parties including mortgage brokers, solicitors,
surveyors and other estate agents;
– advising clients and helping buyers to decide what they
want to buy;
– making sure that a price is agreed that is acceptable to
both buyer and seller;
– keeping up to date with trends in the local residential
property market, as well as the commercial market.
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Basic Roles of Estate Agent (Cont’d)

 They are registered with the Board of Valuers., Appraisers & Estate
Agents.
 They are governed by an Act of Parliament.
 Estate Agents are recognized by the Government.
 They are qualified, knowledgeable & experienced.
 They are accountable to the clients for their actions.
 They more understand about the respective laws relating to
property deals.
 They are well informed about currents events of property market.
 They are accountable for monies collected - clients account.
 Real Estate Agents save time & money - do it right the first time
around.
 Real Estate Agents advise on property values and negotiate prices.
 The vendors life is made easier as the Agents take care of all details.
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THE ADVANTAGES OF ENGAGING A CERIFIED AGENT IN
A SALE AND PURCHASE OF A PROPERTY

• The services provided involves the acting as agent for sale,
purchase and letting of all types of real estate ranging from
property interests in simple residential properties to property
interests in commercial complexes, industrial and agricultural
properties as well as specialised properties such as timber
concessions, quarries, plant and machinery, vacant lands and
individual houses to high-rise building.
It also covers advice on an implementation of marketing
strategies for commercial, retail, industrial, office space and
new development.
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Type of Estate Agency

i. Exclusive Agency
 Exclusive agency refers to the instruction from a principal
to a single estate agent to act on his behalf.
 The principal may make introductions but will leave the
closing of the transaction to the 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 deal.
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Type of Estate Agency (Cont’d)

ii.Sole Agency
Just as an exclusive agency, a single estate agent is
engaged.
The principal may, however, wish to reserve the right
to close deals himself and is not obligated to pay the
agent his fee in addition to making introductions or
an arrangement may be made for a discount in fees
where the principal plays an active role.
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iii. Sole Joint Agency
This is a variation of the Sole Agency.
The estate agent works together with the principal as a
team and the fee is divided on a pre-agreed formula.
The principal has the flexibility to compensate additional
estate agents and at the same time maintain the
advantage of having one estate agent in control.
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iv. Joint Agency
This is where more than one estate agent is
appointed and only the estate agent who secured
the deals gets paid.
The number of agents appointed is limited and each
is aware of the appointment of the others.
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v. Ad Hoc Basis or commonly referred to as “Open Listing”
 The principal can engage an unlimited number of estate
agents on an adhoc basis and fees are paid only on successful
conclusion of the estate agency transaction.
 Apart from the types of agencies listed there is also the
practice of co-agency or co-broking between estate agents.
 The appointed estate agent enlists the services of another
estate agent(s) and shares the agency fees accordingly.
 In such an instance the principal is usually not a party to the
arrangement.
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1) Services
2) Conduct of registered estate agent
3) Level of competence
4) Need to keep informed
5) Protection of public interest
6) Disclosed personal interest related on the
transaction
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Code of Conduct and EthicsCode of Conduct and Ethics

7) Rebate or profits
8) Participation of others in profits
9) Financial obligations
10) Acting for two parties
11) Professional work by registered estate agent in employment
12) Activities that constitute unauthorised practice of law
13) Seeking unfair advantage over other registered estate
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14) Engaging in practices inconsistence with agency of another
registered estate agent
15) Soliciting services of employee of another registered estate
agent
16) Criticisms on fellow registeres EA
17) Reference to the Board of erring registered EA
18) Accuracy of statements
19) Signature on report, etc
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21) Associateship and affiliation
22) Office and branch offices
23) Liability for offences by firm
24) Conduct in proceedings before Board
25)Conduct in proceedings before judicial bodies
26)Board to issue standards, directives, circulars and
guidelines on real estate agent practices
27) Performance of obligations under the Act and Rules.10/07/11
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Professional Fees: Real Estate Agency
1. Sale or Purchase
(a) Land and Buildings - 3%
(b) Chattels including Plant and Machinery
– 10% of the proceeds
Minimum Fee:
As above, but may be subject to a maximum discount of 30% and the minimum fee
shall be RM1,000 per case.
The above scale applies to any sale or purchase by way of private treaty, tender or
any other mode of disposal or acquisition.
For sale and marketing of projects by registered estate agents, the fees are to be
agreed between the estate agent and client.
The above scale of fees shall not apply to the sale of foreign properties in Malaysia
or sale of Malaysian properties in foreign countries.
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Cont’d
2. Lettings
Duration of Tenancy Maximum Fee (equivalent to)
Up to 3 years 1.25 months gross rental
Exceeding 3 years up to 4 years 1.50 months gross rental
Exceeding 4 years up to 5 years 1.75 months gross rental
Exceeding 5 years (with option for renewal) 1.75 months gross rental
Exceeding 5 years (without option for renewal) 1.75 months gross rental plus
0.25 months gross rental for
every additional year
Minimum Fee:
As above, but may be subject to a maximum discount of 30% or a
minimum fee of 1 month rental.
For tenancies less than one year, the fee may be calculated on pro
rata basis.
The above scale shall not apply to serviced offices or apartments or
any other premises of a similar nature.

Cont’d
3. Rent Reviews
50% of the fees chargeable under lettings
4. Additional Claims
In addition to the fees stated in items 1 to 3, claims may be made for -
– the cost of printing, plans, copies of documents, lithography, travelling (only where
the distance between the estate agent's office and the property is more than 40
km) and other expenses actually incurred;
– the cost of media advertisements, signboards, brochures and other promotional
material.
NOTE:
The above additional claims may not be incurred by the registered estate
agent without prior concurrence to the client.

BOVEA
Overview
• The Board of Valuers, Appraisers and Estate Agents
Malaysia was set up in 1981 under the purview of
the Ministry of Finance, Malaysia. The setup and
operation of this Board is governed by the provision
of Valuers, Appraisers and Estate Agents Act 1981. Its
primary function is to regulate the Valuers,
Appraisers and Estate Agents practising in Malaysia.
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Functions of BOVEA
To keep and maintain the Register of Valuers, Appraisers and
Estate Agents, Probationary Valuers and Probationary
Estate Agents and firms of Valuers, Appraisers and
Estate Agents.
• To approve and reject applications for registration.
• To hold disciplinary proceedings.
• To conduct examinations.
• To prescribe Scale of Fees.
• To regulate the professional Conduct/Ethics of Valuers,
Appraisers and Estate Agents.
• To award scholarships
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• Number of Valuers, Appraisers and Estate Agents
• Under the three registers maintained by the Board, there
are:
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Firms Numbers
Firm Type Firms
Valuer & Estate Agent (VE) 288
Valuers (V) 72
Appraisers & Estate Agent (AE) 10
Estate Agents (E) 885
Estate Agent & Property Management (EPM) 8
Property Management (PM) 39
Firms

are:
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Firms
Registered Members
Licence Type Members
Registered Valuers (V) 640
Registered Appraisers (A) 19
Registered Estate Agents (E) 1545

are:
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Firms
Probationary Members
Licence Type Members
Probationary Valuers (PV) 572
Probationary Estate Agents (PEA) 281
Probationary Members

MIEA
• The Malaysian Institute of Estate Agents (MIEA) is
the recognised body representing all registered
estate agents in the country.
• Formerly known as the Malaysian Association of
Real Estate Agents (MAREA), it was formed in 1974
but officially registered in April 1977 with the
Registrar of Societies.
• The name was changed on May 3, 1989 to reflect a
more professional image of the organisation.
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MALAYSIAN INSTITUTE OF ESTATE AGENTS (MIEA)

Objectives of MIEA
1. Address critical issues that affect the industry
2. Cultivate a positive public perception of the profession
3. Safeguard and protect the interests of its members and the
general public
4. Uphold high professional standards, ethics and integrity
among its members
5. Commit to continuous education to keep its members
progressive and up-to-date to remain competitive
6. Raise public awareness and encourage them to only use the
services of registered estate agents
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THE FUNCTION OF MIEA

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Prepared by: Mohamad Isa Abdullah
Department of Estate Management
Faculty of Architecture Planning & Surveying,
University Technology MARA, Shah Alam

Lecture 1 & 2 estate agency

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