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Zombie Investor

A new kind of dieases in Property Industry. It’s called the “Zombie Investors” diease, found largely in bulk purchases organised by a group or a property investment club (“PIC”).

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Menara Wawasan – Menara KL118

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Permodalan Nasional Bhd (PNB) has awarded the contract to build Menara Wawasan or also known as Menara KL118 here to the joint venture of South Korea’s Samsung C&T and UEM Group Bhd.

PNB president and group chief executive Tan Sri Hamad Kama Piah Che Othman said: “The contract is worth about RM3.4bil”.

He was speaking to reporters after announcing the income distribution of Amanah Saham Nasional 3 Imbang (ASN 3) for the financial year ending Nov 30.

The tower, located within the enclave of Merdeka Stadium and Stadium Negara, would be the tallest building in the country, which is targeted to complete in the next four years.

According to reports, there were initially six parties bidding for the construction portion of the skyscraper including Samsung-UEM. The others were IJM Corp-Norwest Holdings Sdn Bhd-Shimizu Corp, Malaysian Resources Corp Bhd-China State Construction Engineering Corp, WCT Bhd-Arabtec Construction LLC, TSR Capital Bhd-Daewoo Group and Seacera Group Bhd-Spaz Sdn Bhd-China’s Sinohydro Corp-Shanghai Construction Group.

Reports said the UEM-Samsung consortium was picked because of its good relationship with Turner Construction Co, which is the project manager of KL118 Tower.

The KL118 Tower is planned to be more than 500m tall and will surpass the 452m Petronas Twin Towers. Besides being a new landmark in Kuala Lumpur city centre, KL118 is expected to generate a gross development value of more than RM6bil over five years.

PNB, via its wholly owned subsidiary PNB Merdeka Ventures Sdn Bhd, is the owner of KL118. The net lettable area for office space alone, excluding the hotel portion, is about 150,000 sq m. The tower will also be connected to a mass rapid transit station.

It is said that 20 floors would be reserved for a 250-room hotel to be operated by an international luxury hotel group.

Samsung C&T had experience participating in the building of skyscrapers, which included the Petronas Twin Towers and the Burj Khalifa in Dubai, which is currently the tallest building in the world at 828m.

Meanwhile, Amanah Saham Nasional Bhd will distribute a dividend of 6.2 sen per share for ASN 3 for the financial year ending Nov 30.

PNB chairman Tun Ahmad Sarji Abdul Hamid said that the dividend distribution would be at the same rate as last year. – The Star, 24 Nov 2015

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Google Expands In Malaysia, New Office Will Be 5 Times Larger Than Current Office

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Despite an influx of office space in Kuala Lumpur over the next three years, several new and operating multinational companies in Malaysia have shown strong commitment to expand their offices across the city.

Tech giant Google Malaysia has signed up 54,000 sq ft in a new office tower called 1 Sentrum. The Google Inc.’s local subsidiary did not confirm whether the new office will be its new Malaysian headquarters.

Standing prominently on Jalan Tun Sambanthan, the 32-storey newly-completed office tower is most recognizable due to its external facade featuring chequered form similar to songket weaving. It is located annexed to the Nu Sentral shopping centre in KL Sentral.

1 Sentrum is a ‘Grade A’ office tower that is designed in accordance with US Green Building Council’s Leadership in Energy and Environmental Design (LEED) and the Malaysia Green Building Index (GBI) requirements.

1 Sentrum was jointly developed by Malaysian Resources Corporation Berhad (MRCB) and the building owner Pelaburan Hartanah Berhad (PHB), which is a wholly-owned subsidiary of Yayasan Amanah Hartanah Bumiputera. The building was completed in 2013.

Other multinational office tenants at 1 Sentrum are Jones Lang LaSalle, Agoda International and Novo Nordisk. Rental rates at 1 Sentrum is believed to be hovering around RM7.00 to RM8.00 per square feet.

It was not too long ago in August 2013 that Google Malaysia relocated from Menara Citibank to KL Sentral. The company had occupied 10,000 square feet of office space on Level 20 of the Quill 7 building in KL Sentral.

At Quill 7, Google Malaysia’s office was often called “cool”. It was one of the coolest office in town with a unique themed playground, cafeteria and amphitheatre concept.

Like Google’s other global offices, the entire space is open and connected, meant to foster collaboration among employees.

As quirky as one would imagine. The Kuala Lumpur office has plants sprout from the walls and ceiling, while bright decor made the office like a technicolor jungle. There is a boardroom that looks like a cave, complete with stalactites.

Its Gerai Gugel café is beautifully decorated like a tropical forest with playground swing chairs and colourfully upholstered kopitiam chairs. Next to the café is a mini amphitheatre with cushions for presentations, and a screen which shows what is trending real-time in terms of worldwide searches.

Staff members work from workstations whose 120-degree configuration ensures that each individual either faces or sits beside their fellow team members.

We convincingly bet that Google’s cool open office and work culture will continue with the upcoming, new office at 1 Sentrum.

Google first opened a sales and marketing office in Malaysia in January 2011, its second country in the region after opening in Singapore in 2007.

Opening in Malaysia was seen as a strategic step for Google to increase its ad sales and market share in Southeast Asia. Modestly, Google operated like a local technology startup at that time, operating from a one-room windowless office at KLCC.

Source : PTLM

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Buying HDA properties

In West Malaysia, most property developers practice the “sell then build” model, whereby the developers offer the property for sale to public before completion or during the construction of the property.

The sale and purchase of property under construction is regulated by the Housing Development (Control and Licensing) Act 1966 (“HDA”) if it is for housing accommodation or residential purpose. Apart from property solely for residential units, HDA also covers property with partly commercial features, e.g. shop-apartments and service apartments erected on lands prescribed for commercial use.

On the other hand, sale and purchase of commercial property under construction is not regulated by the HDA, and it shall be governed by the contractual documentations entered between the purchaser and the developer.

Many people are unaware of the existing legislation regarding housing developments and therefore their rights as a home buyer. In fact, the HDA offers several layers of protection to home buyers:

Developer License and Advertising and Sales Permit

All the housing developers are required to obtain their developer licence and advertising and sales permit before they can proceed to offer and sell properties. Furthermore, all advertisements posted are required to state the stipulated key particulars of the housing development project as below:

housing developer’s licence number and validity date;

the advertisement and sale permit number and validity date;

the name and address of the licensed housing developer;

the tenure of the land if the land is leasehold, its expiry date, restriction in interest and encumbrances, if any, to which the land is subject;

the description of the housing development;

any parking lot which is an accessory parcel to the housing accommodation in a parcel;

the name of the housing development;

the expected date of completion;

the selling price of each type of housing accommodation;

where applicable, the minimum and maximum selling price of each type of housing accommodation;

the number of units of each type available; and the name of the appropriate authority.

With the above, a potential buyer will have a clearer picture and better information in relation to the development project.

“Sell then Build” Model – Prescribed Sale and Purchase Agreement

Furthermore, in order to ensure that the terms of the sale and purchase agreement are not unfairly favouring the developer, all the housing developers are required to adopt the form of sale and purchase agreement as prescribed under the HDA.

The forms of sale and purchase agreement are prescribed under the schedules of the Housing Development (Control and Licensing) Regulations 1989.

Both schedule G and schedule H are prescribed for sale and purchase agreement of sell-then-build property. The difference lies in the type of accommodation it is used for. Schedule G is prescribed for the sale and purchase of a housing accommodation together with the subdivisional portion of land, for example terrace houses, semi-detached houses, bungalow, etc.

Whereas, schedule H is prescribed for the sale and purchase of a housing accommodation in a subdivided building in the form of a parcel of a building or land intended for subdivision into parcels, for example condominium, apartment, townhouses and/or landed strata property.

In short, schedule G shall be adopted for property with separate individual title and schedule H shall be adopted for property with strata title.

The salient terms of the sale and purchase agreement include:

Developer shall not further encumber the project land to finance the construction.

Purchase price to be paid to the developer progressively based on status of construction and in accordance to the stipulated schedule of payment.

Property to be completed and delivered with certified completion and compliance (also known as certificate of fitness) within:

24 months from the date of sale and purchase agreement – Schedule G

36 months from the date of sale and purchase agreement – Schedule H

Failing which, the developer shall be liable to pay the purchaser a late delivery interest calculated from day to day at the rate of 10% per annum of the purchase price.

Developer shall be liable to make good any defect, shrinkage or other faults in the property which are due to defective workmanship or material, within 24 months after the purchaser takes vacant possession of the property. To ensure there is fund available for defects rectification during the defect liability period, the final 2.5% of the purchase price shall be held by the solicitors as stakeholder.

The relevant approved plans of the property, e.g. floor plan, layout floor, site plan, etc., shall be attached to the sale and purchase agreement

The building specifications and materials used for construction of the property will also be set out in the sale and purchase agreement.

In principle, no housing developer is allowed to vary the terms and conditions in the prescribed sale and purchase agreement unless such variance is pre-approved by the Controller of Housing.

“Built Then Sell” Model – Prescribed Sale and Purchase Agreement

As discussed above, most of the property developers practice the sell-then-build model. Nonetheless there are also several projects adopting the model of “built then sell”.

This system can be used to better protect home buyers as it minimises the risk of being left with an unfinished house that is already paid for.

In general there are two types of “built then sell” models, namely:

Where the developer builds and completes the property with certificate of completion and compliance before it is offered for sale. In this model, the purchaser is not required to make any payment before the property is completed; hence, this does not fall within the ambit of HDA. The terms of sale and purchase shall be governed by the contractual documentations entered between the purchaser and the developer.

The second model requires the buyers to pay a 10% deposit upon signing of the sale and purchase agreement and the balance 90% after the property is completed. This model involves a prepayment of 10% before completion of the property, and therefore is governed under HDA.

The forms of sale and purchase agreement for the second built-then-sell model above are prescribed under schedule I and schedule J of the Housing Development (Control and Licensing) Regulations 1989. Save for the payment mode, all terms and conditions in schedule I are similar to schedule G, and schedule J are similar to schedule H.

Housing Development Account

Furthermore to the above, one of the most important features of HDA in protecting home buyers’ interest shall be implementation of housing development account (“HDA Account”), where every housing developer shall open and maintain a HDA Account for each housing development and all payment received by the developer from the sale in the housing development must be paid into the HDA Account.

The developer shall not withdraw any money from the HDA Account except for the purpose of the housing development as authorised under the Housing Development (Housing Development Account) Regulations 1991. For example:

Payment of all outgoings including quit rent, rates, taxes, assessments and other charges levied in respect of the land on which the housing development is carried out;

Payment of stamp duty payable on a charge, caveat, debenture, guarantee or memorandum of deposit of title to secure any loan for the construction of housing accommodation in the housing development;

Payment of: (i) insurance premiums, and (ii) architect’s fees, engineer’s fees, quantity surveyor’s fees and consultant’s fees for the housing development; and

The cost of carrying out construction works, works related to infrastructure preparation as instructed by the appropriate authorities and other works relating to the housing development in proportion to the housing accommodations that have been approved under the licensed housing developer’s licence.

With all the above mechanisms in place, home buyers’ interests are better assured and the possibilities of abandonment of housing development projects are significantly eliminated.

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Hammering On Auction Properties

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Homebuyers and investors who are seeking property purchases from both primary and secondary market may wish to look into properties made available via the property auction channel.

Despite the many myths and misconceptions, investing in auction properties presents several advantages that may put knowledgeable investors at the front edge.

Unlike sub-sale or buying from the primary market, investment in the property auction market requires due diligence to be done on the part of investors in a short duration of time.

These due diligences includes not just visiting the area where the identified property is located but also to investigate the surrounding areas, obtaining the services of lawyers and real estate agents in order to acquire documents from various sources pertaining to the property in order to fully understand the terms and conditions of both the property and the auction location as well as the auction time.

RISKS

Though auction may seem to be straight forward, it is in no way a simple process. The reason is that there are many risks which investors and homebuyers need to take into account before they bid to acquire their own properties from the auction market.

According to property investor Hazel Leong who specialises in auction properties, there are a number of things in which auctioned properties differ from sub-sale properties. With regards to the timeframe, for instance, the transfer of funds must be done within 90 to 120 days from the day of confirmed deal or else investors would risk losing all of their down payment made.

Furthermore, Leong said, “Auction unit comes as is. New owner will have to settle all outstanding debts of the property such as maintenance, assessment, utility bills, etc. These outstanding debts can often range from a few thousands to more than RM100,000. All these would have to be settled via cash and it is very important to check for any outstanding payments prior to the purchase.”

Bidding process may also attract syndicates who will demand to be paid off or else they will bid up the price, according to Leong. “Other bidders will influence the prices as well. There is no fixed pricing except on the day of the bidding itself for the winning bid,” cautioned Leong.

She also adds that it is the duty of the new owner to not only remove caveats placed by third party interest but also to evict the previous owners of the property. “There is the danger of the ex-owner refusing to move out or damaging the property severely prior to moving out. Sometimes threats and intimidation would be directed at the new buyers as well.”

Additionally, Leong shared, “A common mistake for most investors buying auction is the assumption that they can get it ‘cheap’. Generally we can only get the good ones at slightly below bank valuation rates.” She continued, “Another very common and fatal mistake is not allocating enough funds to see the process through. There are many factors that can delay the financing process and it’s always prudent to have the full sum of the property being bid on.”

In case of delays, buyers will have to pay the full sum first, and then solve the issues before getting the loans, according to Leong. “Most auction novices lose their entire deposit and all associated costs when they run into problems and cannot afford to meet the payment dateline,” she said. The reason that investors should always have the full sum, according to Leong, is that not all banks finances auction properties due to its strict timeline.

Leong also adds that investors should “have the full sum available. Nothing is more important and that cash reserve for emergencies.” These emergencies, as explain above by Leong, would serve as a cushion for investors should additional costs arise and were identified such as caveats placed or outstanding payments that are due.

Another disadvantage is that, unlike sub-sale properties where investors can take a look at both the exterior and interior of a property, buyers may not do the same with auctioned properties. This puts the investor at a risk of obtaining a property with its interior being in a very bad condition and the contract of purchasing the unit is non-negotiable.

In this regard, there are certain instances, albeit rare, that potential investors could get the chance to view the interior of an auctioned property.  Rizal Properties manager and senior real estate negotiator Evonne Lee, who deals mostly in auction properties, shared, “Only selected ones such as the most recent property being auctioned, Sunway Palazzio, that the banks have the keys. That’s why we can allow viewing.  But this is a very rare case, maybe 0.001% where you can get the keys.”

THE APPEAL OF AUCTION

The question that investors often ask by now would be: If there were so many drawbacks to investing in auctioned properties, why would we want to even start going into it?

Property investor cum real estate agent Joel Lee shares that the reason he went into auction is because the chances of getting better deals in auction is better. “Because the requirement for skill, knowledge and courage are higher, you need a higher level [of nerve]. So because of this, there’re not many people who have this kind of readiness, so the prices will be better,” he said.

Common people and new investors always shy away from auction property.  ‘Cannot see, don’t know how, will get cheated or not,’ are reasons Joel Lee often hear.  “All these concerns will come in; and because of that, the level of experience, the level of courage and the level of skill required are turning away a lot of people. That’s why we get a lot of chances of getting better in terms of price.”

Evonne Lee also shared that with different types of auctions being done, there are varying percentages of down payment required when investors win their bids. “For high court and land office, it is very normal, 10%. For LACA auction as in assignment auction, those conducted by banks in hotel ballroom or auctioneers’ office, you have to get their POS, it will indicate if it is 5% or 10%; but for CIMB, it’s a standard 5%.”

MYTHBUSTING

Having said that, investing in auction properties isn’t all doom and gloom. To start it off, investors need to realise that there are a number of myths when it comes to auctioned properties. Alan Poon, seasoned property investor and principal strategist of Superior Wealth Mastery, shares and debunks some myths of auction properties.

“A lot people do not want to go into auction property. ‘Difficult to get, not worth my time, all very run down, auction property very far, troublesome, don’t know how, not good buy’ but most important is that a lot of people out there have fear,” Poon said.

“There’re top three myths that people like to associate with auction property, reason number one   is ‘Looks cheap, sounds cheap but not cheap.’ By the time you keep bidding, the price is already very high when people are fighting for it,” Poon said.

“I’ve met many people during seminars who told me, ‘Alan, I know auction is good, but every time I go, I can’t win and feel very rejected and failed so many times already.’ But is this the truth? Sometime last year, there were a lot of properties with the price sold and the reserve price are the same. The reserve price is the price being offered as the starting bid, and if the price sold is the same, it means that no one bid for it and that you have won,” he explained.

“When I went for my first auction property, I went in there and waited but there was nobody,” Poon recalled. “My agent said to me, ‘Alan, why are you wasting time? I want to go already.”  I said, ‘But it hasn’t started yet.’ So my agent said, ‘Never mind that it hasn’t started yet, you go and hit the thing yourself.’ I won and that was how I got my first property. So it is not so true that auction properties are hard to get.”

The second myth, according to Poon, is that auction process is very tedious and hidden, i.e. you can’t see the interior, you can’t figure the cost or whether people have paid for it or if there are any debts. Poon clarified, “In auction properties, you can obtain the Proclamation of Sales (POS). This is like a copy of your S&P (Sales and Purchase), and is a document that tells you very clearly whether some of the payments that you need to pay and if you can claim back. So it is not so hidden after all.”

Having listed those two, Poon goes on to share the most believed myth of auction, that which is associated with both the supernatural and Feng Shui. “The number one myth which a lot of people say is that it is ‘dirty’ and is filled with bad energy, and that few years down the road you would also be bankrupt if you stay there. But is it true? Last year, there was an auction for a high class property in the Swiss Garden Residence by a Chinese citizen. Auction property doesn’t mean it is not good, and you have to get rid of the mind-set.”

CATEGORIES OF AUCTIONS

Before diving into any fields of investment, investors ought to know the basics of the field so as to give them the advantage to tread cautiously and yet be able to gain the rewards they aimed for.  To begin, investors need to know the many types and categories of property auctions made available in the market.

Poon shared that there exists two main categories of property auction conducted here in Malaysia, “One is called strata title or with individual title that is auctioned by the high court or land office due to existing caveats or some restrictions. The other more commonly known type is the Lone Agreement Cum Assignment (LACA) type, which have not gotten the title and auctioned by auctioneers or banks.”

He added, “For these two categories, there are four types and the first is public auction whereby people default in payment and the property is assigned to the banks. The second type is the high court auction which is the same as public auction but with titles.”

The third type of auction here in Malaysia, Poon explained, are those being auctioned by the Land Offices, which happens very rarely and even so, most people would not opt for it. The reason for that is often the confusion in the location of where the property is situated at and the Land Office which is auctioning it off. “For example, property in Subang is not in Subang’s land office but in Shah Alam’s Land Office.” Therefore if investors know the way to find out about it, then they can actually get some properties from this type of auction.

“The last type is the open market auction or some call it the private auction,” Poon said. “A few years back, someone had invited me to a big bungalow house somewhere in Damansara Heights. The place was very big and can park more than 12 cars, with an Olympic size pool.  Food was served, and after the meal, everyone were invited into a very nice and big living room. The host said, ‘Do you like this house and feel that it is nice? Good, this house will be auctioned off tonight.’ I didn’t even know that I was invited to a private auction.”

Poon hastened to add, however, that this type of auction “is more for non-distressed owners, people who want to know the fair value of the market so they invite many individuals who are related as stakeholders to come in.”

FATAL FLAWS

Being a seasoned auctioned property investor himself, Poon explained that there are mainly five fatal flaws when investing in auctioned properties that would cause investors to fail in their bidding, even after all the efforts placed in to researching the property.

  • “You don’t do due diligence and all  the things I mentioned just now.  That is the biggest mistake,” Poon  said.
  • Being late for the auction. “Like I  said, 10.30am, you think you are  early for being there at 9.30am?  Sorry.”
  • Talk too much, ask too much. “When you go to auction, people will ask which property you’re buying,  and suddenly you will see that they  are your competitors.”
  • All the technicalities were not verified and double checked such as the spelling.
  • Over bidding.

Leong meanwhile concurred that being late for the auction is among the most common of mistakes made and she advised that investors should read the POS and check the location in order to get there on time. She also added that another mistake made by investors when they are unable to secure a loan after successfully bidding and buying the property, resulting in them losing their deposits and she advises that investors should check their loans with banks beforehand if they are unsure.

In view of Poon’s point that talking too much is a fatal flaw, Evonne Lee on the other hand also shared that there are cases when syndicates present at the auction location goes around to ask and trap new investors. “New buyers may be afraid of them, but since I’ve done auction for a very long time, I know them and they know who I am. As long as you don’t tell them which property you’re buying, they won’t come.  But some buyers like first timer who go on their own and didn’t go through an agent, those syndicates can actually recognise who’s the first timer, the fresh face, and they will start to pressure and pester you and then they will say, ‘I’ll buy the same property as well. Pay me some money and I will let you buy reserve price.’”

All in all, the auction property market, even with its drawbacks and debunked myths, provides an opportunity for investors new and veteran alike, to invest and gain profit from it so long as they are willing to brave the market. Should investors ever wonder when is the best time for them to start their journey into the auctioned property market, Poon placed his advice to them as such: “You don’t go into auction when everyone is talking about auction. Be fearful when everyone is greedy; be greedy when everyone is fearful.”

THE DO’S AND THE DON’TS

Just like any other investments, there are certain things which investors who would like to go into the auction market should be aware of and these guidelines would eventually become the lifeline to raising the chances in winning a bid in auction.

Poon put it as such: “Auction property is the fastest, cost effective and time effective way to acquire property. You don’t have to wait two or three years to complete a new project if you’re buying from a developer and sub-sale you don’t have to waste time for negotiation. You go there, either you win or you lose; the question is can you increase your chances of winning?”

To help investors regardless as to whether they are seasoned investors or new bloods going into the field of property investment, Poon stated a list of guidelines to help give them a fighting chance to achieve and win the bid for a property.

“If you want to know more about auction, these are the seven things you need to know and if you can’t remember then just remember the word AUCTION,” he explained.

  1. A stand for Area Analysis. Poon explained, “You look at the bigger picture, the location relative to a place. Most importantly, do you know where it is or not? If you do not know where it is then forget about it. Then you look at the micro view and if it is easy to access or not.”
  2. Understand the property. “You need to know how the property is like. Though a lot of people would say that you can’t go in and the door is lock, you can still check with the neighbours,” he said.
  3. Curate the information. There’s so many information out there such as the listings, the POS and COS (Condition of Sale). “Basically when you go for auction property, it is as-is when-is basis, which means that what you see is what you get, and it is without vacant possession, which means that the property is still tenanted. You also need to do legality checking before going for bidding not forgetting assessment and quit rent, which is the tax that must be paid by the Land owner to the State Authority through the Land Office. If you don’t pay all the outstanding payment, you cannot own the property depending on the terms and conditions of the POS.”
  4. Timeliness. It is very important and one of the most crucial part of auction, according to Poon. “In auction, you only have 90 days and some 120 days. If you do your transaction beyond this, you will either get penalty or you would lose your deposit.”
  5. Initiate bidding. “Know what to do when you start bidding, and that it is ok to stop bidding. When it is the day of bidding, make sure that you arrive early at the location. For example, if the bidding is at 10:30 a.m., submission will be closed at 9.30 a.m. So you will have to be there at 8.30 a.m. and have submitted all your documents by 9 a.m. You also need to check that all of your documents and spellings are accurate.”
  6. Never lose focus on your goal. “This is easier said than done and most people would lose focus. After two, three times, they would give up. One rejection or bidding that you lose doesn’t mean it is the end of the world. Know why you go into auction in the first place and that is the most important thing to succeed in the auction property.”
Digital Image by Sean LockeDigital Planet Designwww.digitalplanetdesign.com

HOW TO DEAL WITH UNSCRUPULOUS AGENTS

How do you deal with unscrupulous agents ?  

In Malaysia, one has to be registered with the Board of Valuers, Appraisals and Estate Agents (BOVEA) in order to legally carry out estate agency practice. Once registered and given an authority to practice by way of an official Certificate, a registered estate agent is regulated by the Board of Valuers, Appraisals & Estate Agents

Act 1981, the Rules 1986 and The Standards. The objectives of The Act, the Rules and The Standards are to ensure that all registered estate agents to conduct their estate agency practice in an ethical and professional manner whereby the image of the profession will be upheld at the highest level and the interests of the general public will be protected.

But, there are certain cases where the agents are so-called ‘unscrupulous’, in which these kind of agents are those who “pretend” to be an agent, when they are not. Property Insight talks to a few real estate principals to find out more about unscrupulous agents.

WHO ARE UNSCRUPULOUS AGENTS?

Unscrupulous agents are those who conduct their estate agency practice in breach of the provisions of the Board of Valuers, Appraisals & Estate Agents Act 1981, the Board of Valuers, Appraisals & Estate Agents Rules 1986 and the standard of practice set out in The Malaysian Estate Agency Standards, with total disregard to the interests of their client for their own selfish gains.

“In my opinion, the bulk of these unscrupulous agents are made up of persons who are practicing estate agency business without the authority from the BOVAEA,” Property Hub resident manager Wan Choy Heng explains. “These people are commonly referred to as “illegal brokers”. Unsuspecting public engaging the services of these illegal brokers run the risk of being left high and dry in the event of a dispute in the middle of a transaction,” he says.

These illegal brokers very often will disappear without a trace in the event of a dispute, sometimes together with earnest deposit, leaving behind both the vendor and the purchaser helpless with no recourse because the business operations of these illegal brokers are not authorised by the BOVAEA, according to Wan.

 

Because of their illegal status of business operation, unscrupulous agents are being irresponsible putting their client’s interest at risk in the event of a legal dispute during the process of a property transaction. In pursue of their selfish gains in the expense of their client’s interest is a gross breach of ethic in any business sense, Wan says. Fong Wai Choon, director of Reapfield Properties (Hartamas), agrees. “With effective from 1 June 2014, all negotiators will also need to register with the Board via their companies they work with and they will be issued an Authority to Practise Tag after undergoing the necessary training.