Lecture 1 & 2 estate agency

10/07/11EMT612 - The Practice of Estate

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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: [email protected]: [email protected]

ESTATE AGENCYESTATE AGENCY(EMT 612)(EMT 612)


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Estate Agency

PROFESSIONAL PROPERTY

CONSULTANCY SERVICES

PROFESSIONAL PROPERTY

CONSULTANCY SERVICES

PropertyValuation

PropertyManagement

Market Research/Feasibility Studies

ProjectManagement

The property market operates within the inherent imperfect condition. There are :No centralised property market.Provides form of formal marketChanging roles within the dynamic nature of property

marketPreviously 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 Agents 3.0 Who is Real Estate Agents

Part of the scope of work within the estate management discipline.

Full recognised professional, can sue and be sued.ChallengingRewardingFlexible timeFree entry, no limit of job opportunitiesAbility 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.”10/07/11

EMT612 - The Practice of Estate Agency

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3.1 Estate Agents in 3.1 Estate Agents in Malaysia 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 instructions2. Record keeping3. Conduct marketing/promotion4. Providing information5. Property inspection and viewing6. Making the sale/purchasing then conclude7. Confirming the details, contract8. Handling the deposit9. 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.10/07/11


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Service of Estate Agents Service 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.10/07/11


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Service of Estate Service of Estate Agents 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:

MALAYSIAa)) 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)

• AUSTRALIAa) 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 Examinationb) 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 Professionalism1. Commited to Professionalism2. Uphold Integrity & maintain ethic standards3. Clients come first - be proactive with value and add services4. Expose illegal's & those leasing authority to practice5. Honour Co Agency agreements6. Get Written and Exclusive listings7. Register & Certify all Negotiators8. No poster war9. Office & E numbers, MIEA logo on all point of sale

communicatioins10. 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.10/07/11


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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 Code of Conduct and EthicsEthics

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 agents


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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

20)Use of registered estate agent’s name10/07/11EMT612 - The Practice of Estate

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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.

10/07/11 EMT654/686 - Professional Practice II 35

Cont’d2. 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) 288Valuers (V) 72Appraisers & Estate Agent (AE) 10Estate Agents (E) 885Estate Agent & Property Management (EPM) 8Property Management (PM) 39

Firms


are:


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Firms

Registered MembersLicence 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 MembersProbationary Valuers (PV) 572Probationary 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 MIEA1. 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

Business

Transcript of Lecture 1 & 2 estate agency