roystevenung

Yes that is correct.

Property agents norrnally earn 1% of the purchased price from the seller. The buyer OTOH has to come up with the lawyer fees.

It is sad that it is happening but my guess is that you wont be recommending your property CONsultant to anyone, eh?

pearlinpenang

CORRECT!

kebi

Sorry but I have to object. As you can see below these are the regulations for registered Real Estate Agents:

Agent fee
“A maximum of 3% of the sale price of the property.
The above scale applies to any sale or purchase by way of private treaty, tender or any other mode of disposal or acquisition.
For Sales and Marketing of projects by registered estate agents the fees is to be agreed between the estate agent and the client.”

Since we have a buyers’ market (more sellers than buyers) hardly any agent will charge the 3% he would be entitled to and for sure not from the buyer. But he can if his client agrees.

Davita

I would think that 1%of the sale price was a bargain.
In Canada it starts at around 6% of the first C$100,000 and 2.5% of the remainder...you cannot list on the real estate multi-listing without employing a realtor.
In the USA it is bargainable but still averages 5-6%.
Most buyers and sellers have their own realtors and the commission is shared between the realtors.
I believe the UK, when I bought/sold, was 3%.

pearlinpenang

My point is that an Agent CANNOT charge BOTH parties!! That is the MALAYSIAN LAW - you cannot dance around it.

Davita

I've always found in any debate, vocal or written, that raising one's voice or bolding the text, is not persuasive.
Adding verifiable references offers more clarity.

pearlinpenang

Sorry I thought raising the voice on cyber ONLY applies if you write an entire sentence in CAPS.

When a word or two is in CAPS - its merely stressing the word.

JC3

Hello Pearl in Penang,

I’m not sure that it is ‘the law’. Can you provide any evidence that this is the case? It would be very helpful to know for sure.

It's common here for agents to try to charge a fee from both landlord and tenant. But this is dodgy practice, and you don't have to accept it.

The Board of Valuers, Appraisers and Estate Agents Malaysia Code of Conduct and Ethics clearly states:

'A registered estate agent shall not accept fees from more than one client in any one transaction', but as far as I’m aware that doesn’t make it ‘the law’.

An agent at Henry Butcher in Penang explained commission charges to me like this:

In Malaysia, the maximum professional charges is 3% of the transacted purchase price. It is practiced in KL that realtors obtain 2% commission from solely seller.

In Penang, the agents would usually ask for 1% commission from each buyer and seller. Reason being is that sellers are unwilling to provide commission of 2%, even though it is practiced by a licensed realtor according to the law set by board of valuers, appraisers and estate agents.


My advice would be that if you are asked by the Owner’s agent to (also) pay a fee, you refer the agent to the Code of Conduct and tell them that as you did not engage them, no fee is payable. My view is that when you pay an agent a fee, he/she needs to be working exclusively for you to avoid a conflict of interests. If you are interested in a property it’s best to make it clear upfront who you will / won’t be paying a fee to.

JC3

kebi

Good points JC3 especially highlighting the code of conducts. The Board of Valuers, Appraisers and Real Estate Agent you quoted are the legal body according the “Valuers, Appraisers and Real Estate Agent Act 1981” and by this the code of conduct is “the law”.

The issue should be quite clear because it just depends who is the client. If someone is looking for a property and engages an agent to do the search she/he is the client and has to pay the fee. But usually it’s the other way round. The property owner engages the agent to market his property and he is the client. If one calls the agent regarding a property advertised she/he can’t be the client because an agent is only allowed to represent one party.

Now I would like to add another advice to the good ones of JC3. Search the relevant webpages for properties and then call the agent to inquire about certain properties. The agent most probably will offer you more properties than the those you asked for. Don’t ask him to look for a property with your specifications, because you might become the client.

kebi

Your first point was: "...they are not supposed to get ANY money (commissions from you) They can only getit from the OWNER of the Property."

But I admit I love to dance.

JC3

Thank you Kebi, but I'm still not convinced that it is 'the law'.

In the UK, codes of conduct have a different status to laws and regulations, breach of which are enforceable through the UK justice system. Codes of conduct are typically voluntary, with organisations electing to opt-in to the code, i.e. they are used as a method of self-regulation.

My understanding is that in the UK codes of conduct are not legally binding and enforceable through the courts.

As Malaysia Law is largely based on UK Law, I’m still left wondering whether or not it is actually illegal for Real Estate Agents in Malaysia to charge fees to both buyer and seller, or simply a breach of the code of conduct.

In Penang it seems to be common practice for agents to charge both buyer and seller. The point I suppose is that if the buyer doesn’t agree to pay 1%, then the agent will look to the seller to pay an additional 1%, total 2%. What probably happens then is that the seller builds the additional 1% cost into the price he/she is willing to accept for the property. Personally I would still prefer to have an agent working exclusively for me.

As I understand it, either the seller or the buyer can pay the seller's Real Estate Agent, but it should not be both, because of the conflict of interest, unless both buyer and seller are happy for that to be the case.

Whilst on the subject of fees, it is possible (perhaps even normal in the case of locals) to get a discount of around 20% on legal fees for conveyancing, with a little negotiation. However lawyers are bound by the Solicitors' Remuneration Order 1991 (SRO), there are scale fees for all conveyancing transactions, and lawyers are not allowed to give any discount. If a lawyer gives a discount on the scale fees, he could face disciplinary action. So if you do negotiate a discount, don’t expect to get anything in writing from your lawyer confirming this.

JC3

Sue

No, any words in caps can be viewed as shouting in the internet world. Best thing is to just underline a word if you want to emphasis it.

pearlinpenang

Hi JC3,

Here is the Link you are looking for http://www.lppeh.gov.my/

We consulted with Presgrave & Matthew ( one of the oldest law firms in Penang ) and was told that indeed is the law and agents can be prosecuted for taking commissions from both parties in a transaction. I suggest you consult with them ( they will charge you a fee for consultation)

If you want legal advise, go to law firm, not to a Real Estate Brokerage house.

It was just too bad we discovered this information after the fact.

But of course, there are some people who don't mind getting conned by Real Estate agents and make up all kinds of excuses for them!!

No such thing as Agent working exclusively for you ( that is very rare ) Both agents ( in 2 different transactions - 2 separate properties ) immediately refunded the money they stole when notified of the facts.

RE agents are always supposed to act in clients best interest - but they rarely do. Realtors are only out there to get your money, not look after your best interest. That has been our experience in buying and selling property for many many years.

EstateAgents are legally obliged to put their client's interests above anyone else.

Many sellers and buyers have been burned by Agents and that is a fact as they are constantly pushing the boundaries of ethics and law. Real estate agents traditionally represent the seller, not the buyer.

That is why in the US now there is such a thing a "Buyers Agents" where the Agents pledge 100% allegiance to the buyer from the begining right to closing of the sale - as more and more people are getting fed up with Real Agents agents.

In Penang, we found that Real Estate agents representing both the buyer and seller - that to me is a conflict of interest - as legally they are obliged to put their client's interests above anyone else In UK there is a Office of Fair Trading set up to ensure that Agents meet their legal obligations. And if they don't comply with the law, they will be prosecuted. Same in US. And I am sure the same applies here. Apart from the regulatory body prosecuting them - the buyer/seller who got conned can also sue them for failing in their fiduciary duty. No such thing as a cooked Real Agent getting off scot free.

There are even some Agents here in Penang masquerading a Real Agents agents without a licence!

Sure there are some honest respectable agents, but it seems that only a handful and a good Agent is worth every dime they make. I guess every industry have its share of crooked practitioners.

But if anyone embarks on buying or selling a house with the delusion that that all agents are angels, then good luck to you.

JC3

Hi Pearl in Penang,

Unfortunately this is not the link I am looking for, it merely points to The Board of Valuers, Appraisers and Estate Agents Malaysia Code of Conduct and Ethics that I told you about in my original message (see #23, above)!

But let us assume Presgrave & Matthews are correct.

The issue then is that it is common practice in Penang for Estate Agents to charge 1% commission to both buyer and seller. The ‘going rate’ being a total of 2%.

From what I can see, if the buyer and the seller go into this split-fee arrangement willingly and with their consent, no one is being ripped off, nor are they being conned. That’s not to say I like it.

As I’ve said before, it makes little difference who pays the agent his 2% commission, buyer, seller, or 1% each. If the buyer refuses to pay his 1%, the agent will look to the seller to pay it, and the seller will increase the selling price of the property accordingly.

Your statement that there is ‘No such thing as Agent working exclusively for you’ is rather odd. When we were looking to rent a house for our first year (we subsequently bought) we engaged an agent to do exactly that. The agent set up appointments to view, drove us all over town, helped negotiate the rent, helped get the changes we required made to the Tenancy Agreement, and helped with the inventory check. She even bought us a microwave oven as a gift. I think it's fair to say the agent worked exclusively for us. Anyone can engage an agent here to work in a similar way to help them rent or buy a house, and many do so.

If you are buying a house in Malaysia and do consent to the split-fee arrangement, I think the thing to remember is that the agent will be looking to maximise his commission, so for the agent the higher the selling price the better. Ultimately the agent will typically be working in his/her own best interest. You can of course work around this simply by deciding what price you are willing to pay for the property including commission (say one million), and telling the agent if he gets you the property for one million including his commission you’ll buy it. And if he negotiates a lower price then he can keep the difference. What do you care? You get to buy the property for the price, including commission, that you want. That way the sellers’ agent is incentivised by you, the buyer, to reduce the price.

Frankly I think split-commission stinks. That’s why we looked around and asked around, and bought our property direct from the owner. With no agents fees paid by us or the seller, I believe we got a better price.

I cannot find any cases of Penang Real Estate Agents being prosecuted for charging 1% commission to both buyer and seller. Indeed it seems unlikely given that the split-fee arrangement is common practice in Penang. It appears most buyers and sellers here enter into this arrangement with their eyes wide open, and with their consent. Personally I would not agree to pay anyone a fee unless I had engaged their services in writing.

One of the things I have learnt in Penang, is that whilst there are plenty of rules, regulations and guidelines, many people don’t know what they are, and/or ignore them completely when it doesn’t suit them, or costs any money to adhere to them. This is especially so when it comes to property and building regulations.

Lastly, with respect, and without wishing to be rude, I think you are going a bit overboard with your underlining for emphasis. Many people, including me, find excessive underlining, and the use of bold and/or capital letters, annoying. I think that’s why few people on this forum do it.

JC3

rusty747

Good points JC3, - especially your last one.