Q.
Imagine that the number of PEA in your area increase 2 folds! What would you think will happen?
A.
The Board won't simply pass you out as a REA! This is a fact, as the yearly passing of REA in Malaysia over the last few years had been around 50-70 per year.
Every year there will be many PEA passing out from the examinations. Firstly, there are internal route from UCSI, INSPEN, IMPERIAL, TAR COLLEGE, etc. Next, there are those from UiTM, UTM, UM and UTHM not mentioning those from Overseas. Other than the formal classroom style studies, there are also many who qualify through the tough Board Examination - like you and me.
Base on the number of today (08 Mar, 2018) and that of 06 Mar, 2015 from LPPEP Website:
--------Today 2018----------2015
PEA ------ 984---------------505
REA ----- 2074--------------1862
Let us look back at earlier readings (06 Mar 2015 - exactly three years ago).
PEA - increase of 984-505 = 479
REA - increase of 2074-1862 = 212
Increase of PEA per year is 479/3 = 159 (round up 160)
Increase of REA per year is 212/3 = 70
If such trend were to continue, every year there will be 160 coming out as PEA, despite only 70 made to become REA. The net growth per year of PEA is 160-70 = 90!
Every year 70 new REA, in ten years 700, which is added to the current 2074 = 2774.
* In fact, if you use 70 new REA per year, you will arrive at around this number of REA from 1985.
2018 - 1985 = 33 years.
70 REA per year x 33 years = 2,310. Minus some who has passed away or ceased business, the number is quite near.
Below is a table showing the likelihood of the scenario in 2028.
--------Today 2018----------2028
PEA -----984----------------1884 (up 90%)
REA ----2074----------------2774 (up 34%)
What would happen in 10 year's time? Would it be the same as today?
IN SUMMARY:
PEA will double to around 2,000 from the 1,000 now.
REA will probably stay quite the same taking into consideration that most senior REA will be retired by then.
This is because 1980's REA by then will be 60 plus years old and most of them will no more be actively around. This will easily take away some 50% of the numbers in the earlier years. Let us assume in the 1985 - 1995, there were around 700 REAs, that means half (350) will no more be around by year 2028.
2,774 less 350 = 2,424.
One agency average has 10 active RENs. That would see that market having 24,240 RENs at any time.
Currently 27,017 is the Registered REN No on 09 Mar, 2018. We know that many RENs are just temporary and their continual presence in the industry is very sensitive to market ups and downs. Taking out 10% who are inactive RENs (27,000 less 10% - 2,700 = 24,300), our estimated number of 24,240 is quite near to the number now.
Which means the future landscape of estate agency practice in Malaysia would most likely be similar as like today. The number of active RENs will probably stay around 25,000. However, the PEA will take higher number at 2,000. As there is no huge increase in REA, the number of approved REN per firm would be kept around there. Hence, there will be continual demand for license and the trade will still sustain the profession. However, the playing field might be different by then!
The increase of PEAs will mean most RENs will be replaced. Like comparing REN to illegal brokers, the illegal brokers are not concerned about knowledge as compared to RENs. Similarly, comparing REN to PEA, the gap is about knowledge as well. Despite good and knowledgeable REN around, they are not so keen in higher standard of passing examination.
Although knowledge may not be the essential item in daily transaction, a specialist in any field should have the competence more than required in its daily job. Take for example, a doctor should have the competent knowledge of delivering a baby despite the fact that he does not operate a labour practice in his clinic. A doctor in General Practice (GP) might have not been delivering baby for 20 years, but he MUST be competent when it is required of him!
Thus, the higher number of PEA means most won't survive in the future if the profession is just about competing for listing. Future is cutting out the unnecessary fees. So, practitioners not adding value will have no place in this profession. But value of property won't come down. So, the future agent will earn good money by transforming property value into real profit for clients.
Taking a step backward. The profession of Estate Agency is matching the principal to the client. In today's technology, the agent is the internet. Hence, buyers and sellers can interact directly without going through an agent. This is for sure and will be here to stay! Thus, if listing is the rice bowl, then fighting for listing will be the make or break decision for the agency. Do you want to be an agent cannibalizing on other's listing?
The answer is YES and NO! Although there is regulation that forbids agents undercutting each other, and such bad faith may be lodged with the Board, in reality, enforcement is difficult. On the other hand, unless it is exclusive appointment, there is no regulation that another estate agent cannot represent the same principal.
Rule 96 of the VAEP Rules, 1986 extracted below:
Seeking unfair advantage over other registered estate agents.
(1) A registered estate agent shall not seek unfair advantage over other registered estate agents and shall conduct his business so as to avoid controversies with other registered estate agents.
(2) A registered estate agent shall not make or participate in any promotional offers or give or participate in the giving of any incentives to secure business.
(3) No registered estate agent shall claim that his services are better than that of other registered estate agents, whether in those words or in words of like effect, through any form of advertisement.
(4) A registered estate agent shall not erect any signboard or other form of advertisement on the client's property if there is already such a signboard or advertisement on the property unless he has written authorisation from the client to do so.
(No. 4 illustrates that principal can always appoint agents in ad hoc basis, and thus competing for listing is a natural process of business)
Therefore, when a listing is being covered by more than one estate agent (ad hoc appointment), it is just natural market forces that would render who is a better agent. Or else, the working condition could very much be exclusive and other agents would work with listing agent in a co-agency. However, the trend is towards ad hoc agency appointment as nobody is confident enough to secure a buyer or tenant! Inevitably, the owner or landlord would want his property leased out or sold for a better price and quicker by more people promoting it (demand is higher when more people get interested in the property).
So, the key word here is "DEMAND".
Hence, the future agency would have to work on the Demand Side of the equation.
How to determine where is demand, and how to create demand will be the make or break decision in the future!
Ref:
VAEP Rules, 1986.
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