Real estate agents lose 40% sales every year to fraudsters

KUALA LUMPUR (July 14): The Malaysian Institute of Estate Agents (MIEA) estimates that bogus agents have caused registered real estate agents to lose as much as 40% in sales last year, or about RM40 billion of the RM100 billion worth of property transactions that were carried out by “real estate agents” that year.

MIEA immediate past president Siva Shankar (pictured) told reporters yesterday that the total value of property transactions done in 2014 was RM162.97 billion — for both the primary and secondary markets — and 60% of that or RM100 billion was carried out by real estate agents, of which about 30% to 40% are estimated to be deals sealed by bogus agents.

Siva — also a member of the Board of Valuers, Appraisers and Estate Agents Malaysia’s (BOVAEA) Estate Agency Practice Committee (EAPC) — together with chairman Eric Lim Chin Heng, is waging a war against bogus agents. Lim said BOVAEA gets 30 to 40 complaints a month about illegal agents, which he believes is just the tip of the iceberg.

Lim said the practice of real estate agents and negotiators is regulated by the Valuers, Appraisers and Estate Agents Act 1981, and anyone who is not a registered agent but poses as one and engages in the selling or leasing of property on behalf of property owners for a fee or commission, is breaking the law and can be fined RM300,000, jailed for three years, or both. However, after 34 years of enforcement, not a single illegal agent has been charged under the act, claimed Siva.

Lim said the EAPC is currently working with the police’s commercial crime division to take action against illegal agents. He  urged the public to engage registered real estate agents to avoid being cheated or getting stuck in a legal entanglement if a deal goes wrong. He highlighted four areas of illegal practices, including cheating, absconding with deposits, profiteering and misrepresentation. These will also be the focus of EAPC’s latest campaign, scheduled for the end of this month, to raise public awareness.

Last year, BOVAEA launched its Real Estate Negotiator (REN) tag with identification numbers for its members as proof of their identity. There is a quick response code on each tag, so customers can scan the code with their smartphones to check the agent’s background. Customers can also verify the agent’s REN number on BOVAEA’s website or call up the board, Lim said, adding that BOVAEA had certified 16,000 real estate negotiators in the last two years.

“When an earnest deposit is paid ... we are bound by law to hold the money in trust ... you can’t touch the money. If the deal does not go through, we are obliged to return the money. If we don’t, we can lose our licence,” said Siva.

This article first appeared in The Edge Financial Daily, on July 14, 2015.