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Monday, October 8, 2018

Can Artificial Intelligence take over estate agency?

Q.
Do you think Estate Agents will be out of job in the AI (Artificial Intelligence) era in the future?

A.
Modern machine capabilities generally classified as AI include successfully understanding human speech, competing at the highest level in strategic game systems (such as chess), autonomously operating cars, and intelligent routing in content delivery networks and military simulations.- Wikipedia.

In this context, if AI can open and close door and negotiate prices (or there is fixed pricing) I think it can replace agents to a great extend. Can’t it?

Imagine you fix a programmable locking system to your main door which enables you to change passwords online. When a prospect wants to view your property, you just send him the password. You need not have to go there. Everything else can be negotiated via telephone. You do NOT need to go yourself to open and close the house. Quite realistically, this is no AI yet!

If you are worried about your valuables in the house, you would NOT simply give your password unless they pay a deposit. For stolen things (even you have CCTV), you can deduct from the deposit. Now, this becomes a problem. This is a problem of trust, not a problem of AI.

When it involves trust, estate agency practice comes in. As a prospect, you cannot trust the landlord/owner because he might not return you the deposits. He just hold your deposits although you saw the house in good faith but did NOT want to take it - reason is not important. This is the same as a tenant or purchaser putting booking fee, but eventually turn down the property with certain conditions not fulfilled. The booking fee should be returned immediately.

In the relationship of an agent to the principal in dealing with the third party, there is a certain amount of protection of rights of the third party which makes this relationship necessary. It is not really about the physical means to achieve a contract. It is about the duty and independence of the three people in an agency contract.

Indeed, it is not about technology or AI taking over the physical job, the core reason of estate agency is trust. Can AI take over this trust? Cannot. However, AI can be used by estate agent to better perform the tasks. No matter what, landlord/owner and estate agent canNOT be the same person. Or else, there is no protection to the rights of the tenant/purchaser.

Furthermore, there are issues about undisclosed principal - a buyer or seller who does NOT want to be contacted. In such scenario, there have to be a person entrusted with the job - an agent. This cannot be solved with AI because even when an undisclosed buyer can trust an AI to come into contract with the seller, the seller might not be confident to contract with an AI which might not represent the buyer.

For example, you are a billionaire and you need to buy a plot of land. However, you would prefer your identity to be kept a secret. So, you set up an AI. And, AI for that purpose is like an anonymous phone call, it does NOT represent anyone to come into contract.

When this AI contact the seller, they seller wants to know who this AI is. Then, you say I am a Secret. How would the seller trust a Secret Person? Therefore, it has to be an AI controlled by an estate agent which can take this contract legal because the third party can come to contract with this estate agent which is binding to the principal - buyer.

Sunday, October 7, 2018

Joining a MLM Agency Firm

Q.
New to the business? We are inviting young and energetic business partners to join our agency! Together we forge for a real estate empire!

I was thinking, is it that easy to make money from real estate?

Come to think of it, the real estate agency practice had been tarnished by many who are "hit and run" operators. What it means is you sell only once in a long time for this client, so you do NOT really matter whether he is screwed or not.

In selling or letting a property, you take great care of the owner/landlord. You really do NOT care much about your buyer or tenant. They will have to submit to your whim and fancy or that of your principal. They can offer whatever amount but it is still your right to take that offer to your principal and be accepted. If you never take that offer to your principal, he won't probably know as well.

Therefore, as a tradition, all agency firms work on the seller/landlord end and neglected the purchaser/tenant side.

Over the years, it had been good times as property is a scarce commodity. You can have a proud landlord who says I will rent to the best tenant I can select. I will discriminate so and so types of tenants. It is my right as owner, I decide.

Well, over time the property supply overwhelmed the demand. Or put it in another perspective, as people have choices to buy or rent, the table is turned to the other side.

Therefore, agency firms can be listing tens and hundreds of property for sale and let, but nobody is taking them.

This has become the disconnect between the agency firm and the public. Why? Because public do not trust the agent (broker especially) and when you ask about how many potential buyer or tenant a firm has? No firm can give you any figure. They can give you figure of how many listing of landlords and sellers, but they cannot give you who are the buyers or tenants.

This is intrinsic of the estate agency practice as buyers and tenants do NOT pay fees. At least, not in the local setting in Malaysia.

I wrote so much about this before I answer the issue of MLM (multi-level marketing) agency structure above in real estate practice. There is a few reasons. Firstly, to let you understand the defective strategy of agency work in our local setting all this while. Secondly, to let you appreciate what I am going to point out below about MLM agency structure and its flaws.

Traditional RENs and Agents are not tuned to MLM system, so they hope that MLM system as in Cosway etc will bring more clients to the agency for its products. Theoretically, by garnering more network of field force, you will have better reach to the public. Furthermore, the most significant different from conventional selling is MLM scheme sells to its members, as well as pays them for successful referrals. It might be more convincing  doing the mouth to mouth selling than selling in Mudah.my, for example.

Hence, MLM scheme recruit members as users and sales force.

On the surface, this might be so and is a successful factor in MLM for smaller townships. Why? Because auntie and uncles believe more in coffee table gossips than going to the bank and find out from the bank officer what is today's exchange rate.

Property in bigger cities (where agency firms are present) is not a toothpaste that can be sold just over a coffee table. So, this strategy won't work in Real Estate Business. And, MLM works on products which are easily replaceable or substituted. Like instead of toothpaste A, now use toothpaste B.

Due to its complexity, property market would not grow like a fast moving consumable good (FMCG), therefore the various level of MLM pay out will not be achievable in a short term. Owing to this inherent nature of the business, and worsened by the recent slow down of the entire industry, MLM scheme will not work on property.

You will see people being recruited and paying membership joining fee in significant sum, yet the business will just stagnate and eventually increase to a temporary hype, thereafter plateau and might plummet to another new low.

This is because initially when the recruitment drive is on, people are in high spirit. As more crowd join in the sales force, some newbies might eventually buy some properties themselves - as users. Thereafter, those who cannot afford to buy might close some sales. In general, there cannot be any repeat sales among members! Next, they will suffer a period of anticipation of downline making them rich... which never really happened. Finally, when no more new sales are made, they will eventually leave the firm.

Imagine, have you ever think that such MLM scheme be used for insurance scheme? It is of course, prohibited as well by Bank Negara Malaysia ruling in the first place. But, if ever MLM is used for insurance scheme, it would not be possible as over time, many will abundant their insurance and join a new insurance scheme like buying toothpaste B replacing toothpaste A. Would that be able to sustain? The whole financial system will not be able to sustain it.

When is MLM best used? When there is element of speculation, or in its root word - greed. Notwithstanding, only when a commodity is without price - like propagating a gospel for religious purpose - valueless/no value, then MLM is without flaw. By word of mouth religion has been the most successful MLM scheme of all times.

So, property is something with value. Thus, MLM system for property will only work when there is no referral fee and everyone is doing it for the good of education. But, would you teach someone when he benefits from you and you do NOT make anything out of it?

Well, it is very rare that this could happen. Nonetheless, I can do it for close to free.

"All that glitters is not gold"

Q.
All that glitters is not gold. Small or big firm, which is better for Estate Agency Practice?

A.
This is a famous proverb in English, meaning - the attractive external appearance of something is not a reliable indication of its true nature

This is the same question when one is asked to join a big corporation or a small firm, which is better? A big firm glitters? A small firm looks weak and vulnerable.

Being an employee, you would think that Small Firm would not pay the money. Big firm have advantages like better salary, annual leave, room to grow (can be disputable) and hierarchy for promotion.

However, let us put those elements aside. We just concentrate on the business operation itself, not about employment issues.

Big firm of estate agency practice like Knight Frank, Rahim & Co and Henry Butcher have a good spectrum of specializations. They are like supermarket of real estate including Valuation, Estate Agency, Property Management, Consultancy and Tender or Auction. They are like Medical Specialist Center, with various disciplines of sub-specialties. They are high volume and high cost of operation. In certain aspects, they pay good salary for high positions, and they will not pay a single sen less on your taxes or EPF.

So, you can see that their structure is hierarchical and volume of business is also enormous. On the other hand, smaller practitioners of Estate Agencies are mainly like GPs, or even like pharmacies. They mobilize their activities in local geographical area and work with cost saving and in small scale. They might have very unstructured hierarchy, everyone operates on his own, be responsible for his own cost and expenses. The salary is non-existent as most Negotiators are engaged on a "Contract for Service", where each one is a "contractor" of his firm.

On the business front, which will garner more customer? The question is about what bottom line you are looking at.

For retail business, most big firms are not so involved. They are more into Corporate Sales - building which are in hundreds of millions. Small apartment of 800 sqf  they are not so interested. Let us put corporate sales aside, among the agencies which do retail sales - subsale and developer sale, does size matter?

Size does matter when it involves developer sales. It does not matter when it is subsale. Hence, when it is about image and professionalism, it will not depend on size that much. It depends on quality of service. On the contrary, buyer or seller would be worried if the cost (commission) will be exorbitant to sell their small property. So, big firm usually would not undercut small firm in the retail subsale market. It is too small for them.

Among the competition in the subsale market, agency firms try to outdo each other by claiming that their team is bigger. It appears that bigger team means better performance. However, I beg to differ.

The listings are concentrated among a few internet sites - Mudah.my, iProperty.com, Propertyguru, etc. So, general public will not go to firm website to see the listings. So, big or small firm listing does not matter much. Indeed, a REN with 10 listings or a REN with 100 listings, to a person who sells or buys property once in a lifetime, it really does not make significant impact.

Probably, his choice would be a firm with 10 RENs rather than a firm that has 100 RENs. We do not know. It is individual choice. However, when his property is difficult to sell, then he would look for concentrated attention. He will not look for a big firm. Unless, the big firm have lots of buyers. Is that true of the big firm?

When I come to this industry, I thought that big firms will have investors who follow them over time. They are the land bankers. They are the big bosses of developer firms. So, they will buy from you anything with no question asked. They are so rich!

On the contrary, big firms who have all these investors will only buy from you if you are desperate. They are not stupid. They are smart investors, or "sharks". Therefore, when you want to sell your property, it might be good to list them with medium or smaller firm. They will likely give you more attention and find you a genuine buyer who buy your property to stay rather than to speculate.

Truly, at this time of downturn, who on earth - investor or not, will buy to speculate? There is nobody to speculate with! So, small firm will survive better during this slow time as they rely on genuine buyer and tenants. Big firms would not be interested in small tenancy. They only target expatriates or corporate clients. Thus, during the low period, there will be no business as big corporate appointments are put on hold!

The next article is about joining a big "MLM" real estate firm. It will be interesting to see...

Friday, July 13, 2018

REA license is no more "VALUABLE"

Q.
People say “Negotiator” same la with “Agent”. There is no financial differences with both making good money! Why study so hard to pass the Estate Agent Examination?

A friend asked me:

“I heard from one of my negotiator friend.. he said the rea license not as "valuable" as we think.. how true is it actually?”

This question is very hard to answer. It is individual expectation of what is becoming a real estate person.

It is like “There are plentiful doctors, there is no more money making to become a doctor?”

Two parts of this question I must emphasize:
  1. The profession of Estate Agency Practice. 
  2. The viability of the trade/profession. 

Although, they do NOT really mean one thing, they are linked. The balancing act is the part we need to discuss.

A Negotiator can actually practise both parts. YOU DO NOT NEED TO BE A REA! Why?

Because “Negotiators” are employed (or engaged) to assist the REA in estate agency practice - S.22C (2A) of VAEP Act, 1981.

That means if you imagine that the REA is invisible, the Negotiator basically runs the whole business. In many agencies, the Senior Negotiators are given their own sales team to run the business. You can have a Negotiator led Sales Team bringing business more than an entire agency in some successful modals. In fact, in today’s social media, their Senior Negotiators are not even running the show - it is the celebrity “Consultants” who are running the business. These people are not even Negotiators! Why? Because selling without boundaries is the way to bring business. And, being a REA or Negotiator, you cannot simply say anything you want! The Board has a set of ethics and conduct to follow.

So, the profession of estate agency practice is tainted with many “consultants”, and yet nobody really can do anything about it. And, why is this so? It is because the real estate industry is layered with a cream of greed! People are motivated by wealth and prestige. People swamp around celebrity “consultants” mimicking their so called “successes” in the quest for wealth. “Dato’ so and so, the Guru of Property Investing”.

The reason why some of these “XYZ Consultancy” company or “Guru” are tagged with Negotiator or REA is because they are more wealth waiting for them! If a client wants formal dealings, they will satisfy them to go to an agency firm. If the client does NOT need this formal dealings, they just sort out the deals direct with vendor or developer. Developer or vendor do NOT mind going through them because they sell at good price and fast! Selling with “this cannot say, that cannot say” will have difficulty in getting a buyer, right???

After all, the client wants good product and they have convinced them of the goodness in them. As for getting the clients into complication, hello!? Didn’t I say it is “potential future return”? I DIDN’T promise “anything”!

If a client were to lodge a complaint, they will push the agency firm in front of them and say that the dealing was legitimate as it was handled by the Negotiator or REA. They push away their “Consultancy” works by saying “we just give advice” nothing else.

Therefore, whether a doctor is a good or bad doctor, taking a medical leave really does NOT matter who is a good or bad doctor. Estate Agency Practice is like that!

Your employer would not normally question the legitimacy of your medical leave as long as it is certified by a medical doctor registered with the Malaysian Medical Council. So, similarly your real estate client would normally not mind if it is a good or bad REA firm, as long as it is a good property or a good buy.

Only when he does NOT get a good deal, he will question this firm. BUT, it is usually too late by then. The consultant will say “Well, in any investment, there is risk! We are sorry that it happened. We did NOT want that to happen as much as you do!” and probably end with a “We are sorry, but do come back for a better deal!”

Ref:
S.22C (2A) Valuers, Appraisers and Estate Agents (Amendment) Act, 2017.

Sunday, July 1, 2018

Agency vs Employment vs Marriage Part 2 of 2

Q.
Should you decide what to say? Or your boss decides for you?

A.
Agency can be quite confusing when it is masked with employment or even marriage. The simplest thing to understand agency is two parties (can be individual or company) come to an agreement to do something with the authority of the principal entrusted to his agent in dealing with a third party. The third party is taken as directly contracted with the principal as he deals with this agent.

So, when a salesperson is promoting the product of his company, he is entrusted to sell this product as if the company sells directly to the customer. His delivery of the information is taken as if it is from the company. However, he cannot contract the company to buy stock or even a tin of milk for cafeteria as supply for all staff. Even when he is a financial controller of the company, he still cannot sign a contract of sale and purchase of a plot of land. That is the authority of the board or Chief Executive Director of the company.

Husband and wife, in the context agency really does not mean much. Husband who is the owner of the company, might not be the true principal. Rather, the wife who is running the business would have ostensible or apparent authority no matter what.

The question of who listen to who is rather subjective in such context. An employee cannot be acting without authority from the employer. A wife can act irrespective of whether her husband in fact, had authorized her. So, in the most strict sense, estate agency stays in between these two extremes. You have more authority to the employee but less than a wife.

Take for example, developer's staff will say things like this to customer:

During road show, company promoting Condo with special bonus! Below is a conversation:

Customer: Wow, so good la! Why give so much? Must be unable to sell la!

Employee: No la! We give special cash bonus in promoting our special launch, not because we have unsold units.

Customer: Must be cannot sell only give so much rebate and bonus la! I read in Star Newspaper so much condo unsold, 34,000 units completed cannot sell! MUST be too expensive la!

Employee: Where got expensive! We give rebate and bonus! Not expensive la!

The employee have to follow the instruction of the company to say the company's sales pitch. Whereas, as an agent, the agent can say what is best for his professional knowledge. For example:

Customer: Wow, so good la! Why give so much? Must be unable to sell la!

Agent: Sir, you are quite right. Actually, the whole property market is seeing a glut. So, developers are giving special prices to survive this difficult time! Our company do have unsold units and we are doing special promotion now, to echo your point, sir!

Customer: Must be cannot sell only give so much rebate and bonus la! I read in Star Newspaper so much condo unsold, 34,000 units completed cannot sell! MUST be too expensive la!

Agent: Sir, you do follow the market closely, so you really know the situation well! However, you should take this opportunity to enjoy all the rebate and cash bonus, right? After all, the market will recover soon, and you will make good investment!

The distinction between an employee and an agent in such circumstances is quite blur. The employee can be given the training to say what the agent said. However, it would have to be approved by the management. Whereas, the independent contractor - Agent is entrusted to sell the condo as in agency appointment. He being a professional, would have to deliver his value under the standard of code of conduct and ethics regulated by the profession itself.

If he thinks it is unacceptable to his profession, he can reject the sales pitch. He could modify to his expectation of the standard or refuse to abide by the request of the principal who appoints him. In case of necessity in emergency, he can even decide on his own what is best for the principal without having to get approval!

*However, such is the case, in today's situation of connectivity, one must call up the principal and get an instruction before deviating away from the original instruction. Or else, the principal might decide not to ratify the contract (s.149 Contracts Act, 1950).

Saturday, June 30, 2018

Agency vs employment vs marriage Part 1 of 2

Q.
What is agency relationship? Is agency relationship like a marriage? Or is it like employee and employer relationship? What is the difference?

A.
For reading into agency please go here for a good summary.

This is a tough question to answer. For, there are a few issues listed below:

1. no perfect condition for drawing a margin of who's who in the relationship.
2. a wide range of what is authorized or allowed to do, and what is not.
3. situations when circumstances may seem special.

In a bigger picture, agency relationship happens between employee and employer. In the circumstances when an employee is stationed far away from the center of command, he can even be an independent contractor! So, agency relationship in bigger scale can range from employee of a sundry shop to a contractor who is stationed in remote place of the earth. It can also be a wife who works in a sundry shop where her husband in name is the owner, but she calls all the decisions as if she is the real employer!
  1. Employer–employee relationship: An employer hires an employee to perform some form of physical service. An employee is not an agent unless the principal authorizes him or her to enter into contracts on the principal’s behalf.
  2. Principal–agent relationship: An employer hires an employee and authorizes the employee to enter into contracts on the employer’s behalf.
  3. Principal–independent contractor relationship: A principal employs a person who is not an employee of the principal. The independent contractor has authority to enter into only those contracts authorized by the principal.

All definitions suffer from inadequacies but essentially agency is defined as the relationship which arises where one person known as the agent acts for another known as the principal.

Through the acts of the agent, the principal and a third party may be brought into a contractual relationship. The agent may also have the power to dispose of property of the principal to a third party. 

Generally the agent´s acts have such effect because the principal has authorized the agent to do the acts in question and the agent has agreed. The agent in a sense becomes an extension of the principal and is therefore capable of altering the principal´s legal position either by binding him to a contract or effecting a binding disposal of the principal´s property.

How agency relationship can contrast other types of relationship, for example like employment.

At common law, there are a number of relationships that resemble agency but may not have the distinguishing feature of being able to affect the legal position of another as in agency, e.g. servants/employees, bailees, trustees, etc. 

For example, a servant or employee may be given specific tasks to perform which, though important, do not confer on the servant or employee any authority or power to bind the master vis-à-vis a third party. 

A finance manager of a company may not be authorized to enter into transactions on behalf of the company that he or she works for. The finance manager´s role may simply be to ensure that the accounts of the company are kept up to date. 

On the other hand, there are many employees who would have authority to bind their principals. A good example is the managing director of a company. As the officer of the company charged with the day to day running of the company, managing directors frequently have wide powers to enter into transactions on behalf of their companies.

Hence, it comes to a scenario what I want to discuss. A company fired all their sales staff and appointed outside agency firms to manage their sales. This means the employer-employee relationship between the previous old sales team has changed to a different arrangement of agency appointments.

The new agents under the agency firms are not paid a salary like the old employees. There was also no other sales identifications like company printed name cards, uniform or access name tag. The agents are stand-alone Negotiators or Probationary or Registered Estate Agents.

They work on an appointment basis, for a duration of months, not years. Future appointments are dependent on further negotiation and terms. There is also no PERKESO (SOCSO) or KWSP (EPF) benefits with this arrangement.

These agents get paid with a commission negotiated with the agency appointment. Only when a sale is made that a commission is paid. At times, it is paid by stages of the completion of sale. For example, upon signing of SPA, and followed by first draw down from the bank. The developer would not make commission payment until and unless it gets paid from the purchaser. That simple. If the terms are not attractive to the agency firm, it is okie, the developer will look for the next agency who will come to their terms.

On the part of agency appointment, the agency firm stands as an agent, not an employee. There are advantages of such appointment:

1. Agency firm can enter into a binding sales with customers even at its official address, and sales gallery with agency. Money can be collected and deposited into the Client's Account in the normal agency practice.
2. At the premise of the company, customer can straight away enter into sale with the company without going through the agency. Money can be collected and deposited into the Company's Account in the normal manner.
3. More agencies can indeed increase exposure and sales for the company as "sales centers" can be organized to promote the product of this company, not limiting to the office of this company alone.
4. There is cost advantage as no salary commitment can mean significant saving.

However, the disadvantages are:

1. due to its arrangement as agents who are not employees, they have other commitments to other jobs. This can be conflict of interest.
2. no culture or employee loyalty to the company.
3. no consistent income (as depending of commission), there is insecurity and hence may not be committed.
4. inconsistent in message delivery. The agents are diversified people, each with their own idiosyncrasies.

AND,

Legally they are not paid employee, so the where-about of their agents are hard to predict. What they say to the customer is also their own interpretation of the product. Unless a throughout training is being provided, these agents are guerrilla fighters. They fire bullets as and when they think is necessary, not really follow your set of rules.

As they are not paid staff, they can detach from the company anytime they want. Their agency firm may be committed, but not the independent agents/negotiators. They do not hold any position or salary from the agency firm as well. In such case, they are like "Independent Contractors".

It is not in the control of the company on what the agents are supposed to say. They can say things in their own interpretation, by their eagerness to sell the products. As long as there are sales, they claim their commission. No sale, no commission, they are not paid a single sen. Therefore, in their desperation for sale, they can promise anything to the customer. After all, after sales service is not their responsibility. In fact, they are not sure whether they can last that long!

If the company finds it an over promise, the company has to turn down the sale. However, sometimes damages have already been done! In this respect, there are companies who will never outsource their sales team.

In short, agency relationship is very wide in its effect and interpretation. There are a lots of inadequacies to this. Being an independent contractor, the company cannot dictate the method of how the agent carry out their daily activities. There are risks the company may end up with by over promising the clients using their independent contractors.

Ref:
http://estateagentexam.com/2015/04/compare-agent-and-principal-to-husband-and-wife.html/
http://wps.prenhall.com/chet_cheeseman_paralegal_2/61/15831/4052842.cw/-/4052848/index.html

Monday, June 18, 2018

Doctors versus Agents - What differences are there in the profession?

Q.
Wow, why so expensive you commission! You think you are a doctor?

A.
This idea was moulded when I sold the first property in a Road Show. Apparently, the perception of the public does not matter much with how young, old, experienced or newbie you are in the property industry. This is rather amazing to see as in most other profession, experience is the credential for winning a sale/bid.

Take for example, a doctor in practice. He who is experienced and had been there for consistent practice would likely win patient load. Those who are new to practice or looks very young and inexperience will not likely to get crowd.

Why it is not so for property sales?

The major reason are:
  1. Buying property is not an everyday job, so you would not likely see an agent in a long time.
  2. The profession does not have a distinction between who's who in the field. There is no difference between a senior negotiator compared to a junior negotiator.
  3. The rules and regulation of practice do not differentiate a field agent from a sitting in the office agent. It also does not differentiate an agent with 1000 listing from an agent with 10 listing.

Now, let me illustrate a scenario with a doctor versus an agent. REN - Real Estate Negotiator. PEA - Probationary Estate Agent. REA - Registered Estate Agent.

DOCTOR XYZ is a consultant paediatrician. This says a lot about a doctor, his specialty, training and years of experience.

First - He is a paediatrician, which means he has to be a medical trained doctor first before he can specialize in paediatrics. That is at least 5 years of medical school, 2 years of housemanship, and 4 years of work as medical officer in Government Hospital/Klinik Kesihatan.

Second - He is a paediatrician, which is a post graduate certification programme which likely took him 4 years of specialised training in a paediatrics setting (Master Programme in Malaysia - if MRCP around 3 years depending on how fast the exam was taken). At this stage, he would have at least 10 years of medical learning and 4 years of training in the field of paediatrics.

Third - He is a consultant, which means after he has attained paediatrics specialty, he had 10 years of experience working as a paediatrician. This period of specialized work would enable him to see enough cases to be called a consultant. All in all, a 24 years of medical learning and experience. Minus the 5 years medical school, he has worked 19 years!

AGENT ABC is a REN/PEA/REA. This says very little about an agent.

First - Is he a broker? Yes. He is a Licensed Broker. Before he was accepted by his current firm to be a Negotiator (REN), he should have attended a 2 day Negotiator Certification Course. Probably he has no formal education about estate agency practice and picked up the job while on the job. He might have learned from others, or learned all by himself.

Second - He is a PEA, which means he is a formally educated estate agent. Yet this formal education can be from various paths. He could be from a University/College (UM, UTM, UiTM, UTHM, TAR College or overseas Universities recognised by the Board). Or, from a part-time study from taking the Board Exam (LPPEP Estate Agent Exam). Lastly, he could be those who took the INSPEN Certificate Programme on Estate Agency which is a weekend class for those REN who aspire to become formally qualified.

Third - He is a REA, which means he has been doing the job for a few years - REA would have completed PEA training of more than 2 years upon which they took and passed the Test of Professional Competence (TPC). This whole process would have taken at least 3 years. So, a REA can claim to have at least 3 years of field experience. Many a time, he could have more than 10 years of field experience.

In real life, while a senior REN can be of 10 years of experience without actually completing any structured training. In delivering value, this 10 years REN is similar to a 10 years REA. Because there are lots of things you gain from the experience. This is like a senior GP can be as good as a Paediatrician engaging in child care. However, a GP cannot charge the fee of a Paediatrician.

Thus, you can see there is no difference between a REN or REA in their job specialization. A REN or REA/PEA basically does the same thing. To a client, they are all the same. You cannot say a REA is more specialized than a REN or PEA. Similarly, you can go see a GP and get your pack of medicine similar to the medication from a paediatrician. No difference. The only thing different is the consultation charges. And, in fact many consultant paediatricians are charging similar fee to a GP!

When a paediatrician markets his expertise, he claims his specialization. On the contrary, a GP (as experience as a paediatrician) cannot claim his expertise in child care. This is his professional liability, and while the outcome of treatment might be the same, the charges aren't.

For estate agency practice, the charges are the same. Seeing a REN or PEA or REA has no difference. The maximum fee for a sales transaction is 3%, be it a REN, PEA or REA. Hence, a client would not see value in a REN, PEA or REA in terms of Fee payment. Only thing is REA is the highest recognition in the profession, and usually a REA would be an Sitting in Office Agent as he leads a whole team of REN/PEA and focus on big and mega deals. Or, he might just be claiming a profit sharing with the team, and enjoy his quality of life in air-conditioned room!

To the general public, seeing a REN in the field only mean seeing someone who can answer his inquiries. There is no "problem" which requires "solution" in the like of illness when a child is seeing a paediatrician. Hence, there is no distinction of who is a good REN/PEA/REA.

Unless you have a real "problem" in real estate, you would prefer to see an expert - REA. Other than that, anyone who could talk to you and make you delighted is a good Real Estate Sales Person.

There is no distinction on who can deliver that "entertainment" be it a broker, an agent or just an entertainer.

Ref:
Own account.

Monday, June 11, 2018

Buying Property is like looking for book in library

Q.
Similarity of buying property to looking for a book in a library. Discuss and illustrate.

A.
Many of us remember going to the school library. For most, you probably had some experience with even bigger libraries like University Library. UKM has one of the best libraries in the region, and mind you, I never really go there to look for (Red Spot) books.

This article is about who is who in real estate as compared to library. This will make you understand what is real estate industry, in particular the estate agency practice.

The four parties in library are:

1. Book seeker (potential reader or student)
2. Librarian
3. Library software system (library system)
4. Books

These are quite similar to estate agency:

1. Purchasers/Tenants (similar to book reader/student)
2. Estate Agents (similar to librarian)
3. Software or Listing (similar to library system)
4. Properties (similar to books)

When you go to the library to look for material, you can do a few things:

1. Randomly search the shelves.
2. Use the catalogues or library system.
3. Ask the librarian.
4. Check the Book Return Bin (for those books just returned)

There are a few things that will determine your selection of which library and what system to use for your best selection of books.

What type of book/material that you are interested. (Type of property)
How specific is the information that you are looking for. (Specificity)
How extensive is the search which you require. (Time urgency)

Therefore, imagine you need to look for a very specific book by a title or author, you would not go to every bookshelf and try and search for it, right?

This is the same as when you have a budget and specific type of property in your mind, you can go to the listing, type in the selection and let the system search for your best fit.

However, in most cases, your dream book by that particular author might not be available in the catalogue! So, what do you do?

You turn to the librarian, who will suggest a similar but not the exact book which you are looking for. Let us use an example, a book on "Parenting your child", you cannot find the exact book, but there are many 'Parenting' books around. There may be some popular topics on parenting which suit you! Hence, the librarian might be able to assist you to arrive at a good title.

Similarly, in estate agency, many are looking for properties, but unable to arrive at the exact fit. Hence, the listing might be able to shortlist some, and the estate agent can help you arrive at the correct (but not exactly similar) property of your needs.

Ref:
Own account.


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