Q.
What do you say about the profession after 100 days as PEA?
A.
30th Jan, 2018 I got serious about doing the training in Estate Agency. At that moment of time, it was an urgency that I have been sitting around jobless for a month!
I started on the 16 Feb, 2018. Now, it has passed 3 months and more than 100 days so I am writing up this article as a report card. May be it would be useful for those who choose to pursue this career and join me in this industry!
In the first month of the job, I took it very easy as I did not have any leads. Truly, I was not desperate for listings. In my mind, I just wanted to learn slowly, learning the rope to be a better 'landlord'. I am used to the usual posting in Mudah.my. For years we have organised letting of our properties all by ourselves. If there is phone call, I would attend to it. Some stories I heard was to call up those telephone numbers in the banners when you bump into them in housing estates. Try to persuade them to give you listing... Or, even do co-broking (co-agency).
I told myself: if I were to do what others (years of experience) are doing, I will not do better than them! Why rush into it? I need to craft out my niche. So, I started to do short postings in FB. Now, I am still doing it - http://facebook.com/thomassimys/.
Quite luckily, I got some Doctor friends who wanted to rent out their apartments/condos. In this, I learned a lot about the process of letting and how payment are collected into client's account of firm. Thanks to my Doctor friends! Hence, I learned the professional process of engaging a tenant and maintaining professionalism in the screening process.
Towards middle of Feb, we got an appointment with Ibraco Berhad - a renowned developer in Kuching - to act as their agent in all their sales. So, I was lucky to get start with project marketing which is part of the requirement for my Test of Professional Competence (TPC) 2 years down the line. We started the agency work in End March, with the launching of NOVA72 @ NORTHBANK on the 31st Mar - 1st Apr, 2018.
Some weeks later, the developer took up sales gallery at the newly opened shopping complex - Aeon Mall. We rotate with another agency to stand duty at this venue and attended to public to promote the projects.
As of today, I have managed to sell 3 units of properties by this developer. Meantime, I rented out 4 units of properties. Below are summaries of what I learned.
1. Sequence of events in engaging a prospective tenant is important. This is contract law.
2. Using client's account as a service of estate agency.
3. Do and Don't in tenancy. Stamping and taking meter readings, handling over of vacant possession.
4. Engaging with bank officers for prompt communication between all stakeholders.
5. Open house and launches as crowd handling is crucial, invitation and advertisement.
As a conclusion, estate agency business is somewhat challenged by the below conditions:
1. Cost - most people cannot afford premium properties. Hence, successful closing is hard.
2. Ultra short interaction between agent and prospects. Prospect only buy one property in a lifetime. This means an old agent/negotiator or newbie doesn't differ much unless specific knowledge is asked by the prospect*.
3. Confidentiality as prospects would not review income level to strangers. Thus, trust is scarce.
4. Urgency is rare. Most people are not in urgent need of investing or owning a property.
5. Technical data - most people do not know about interpreting data/past trends or future trends.
6. Differentiation is rare. One agent does NOT differ from another. So, all the same la!
In the 3 months I have been in the field, I see the good demand for property in Kuching and that is a piece of good news at least. Young population is really taking the housing supply to the next level. The cost of property is also alarmingly high. Most local salaried man in Kuching cannot afford a house more than RM400,000. Average income per household is RM5k, so annual income of RM60k. This times 3 is RM180k - affordable home by Bank Negara Malaysia standard.
On the other hand, there are some very well to do people in Kuching who could buy property beyond millions. Despite being rare, this segment of the market is served by senior RENs and agency bosses, including the developer themselves.
As a whole, this industry is a growing industry and it is now more professionally run than years before. People do appreciate the knowledge and significance of property investment thus, a career in estate agency practice has a bright future in Kuching.
*This ultra short interaction posts another topic of discussion which I will write later.
Monday, May 28, 2018
Wednesday, March 21, 2018
New VAEP Act for Property Managers
Q. (Also posted in EstateAgentExam.com)
What is new about the VAEP Act 1981 on Property Management?
A.
Some areas of changes have been made to estate agency practice. Please see my earlier post here for VAEP Act amended 2017.
There is a totally new part called Part VB for Property Managers.
Actually, the original law had only Part V for Valuers and Appraisers. Then, as the estate agents were incorporated, it was inserted Part VA. Now, Property Managers is inserted as Part VB.
On a whole Part VB spells out the definition of Property Manager, registration of property managers under the Act, the qualification and registration of the probationers and practice by firm, etc pretty much similar in standard of requirement like that of Valuers and Estate Agents.
As there is critical needs of the profession* hence, the Board is introducing the liberalization exercise so that more property managers can be registered and regulated under the Act. There is a 12 month period where any practicing PM can get themselves registered without having to sit for examinations. Details of the conditions please refer to the Amended VAEP 1981 or LPPEH website.
Here, what is important is the scope of Property Management.
In the new Part VB, there is a S.22I which has this spelled out:
S.22I (2) The property management practice referred to in subsection (1) includes the following:
(a) enforcing the terms of leases and other agreements pertaining to the property;
(b) preparing budgets and maintaining the financial records for the property;
(c) monitoring outgoings for the property and making payments out of the income from the property;
(d) advising on sale, purchase and letting decisions;
(e) advising on insurance matters;
(f) advising on the opportunities for the realization of development or investment potentials of the property;
(g) advising on the necessity for upgrading the property or for the merging of interests;
(h) managing and maintaining the building and facilities attached to the building; and
(i) making or checking of inventories of furniture, fixtures, trade stocks, plant or machinery, or other effects.
Similar to S.22C on Restriction on Estate Agency Practice, S.22J is specific on Restriction on Property Mangement Practice.
S.22J (2) Paragraph (1)(b)# shall not apply to owner of any land, building and any interest therein who manages such land, building and interest.
#(1)(b) act as property manager;
Which means the profession of property manager is regulated to the below conditions:
Unless registered as a Property Manager,
(a) one cannot call himself a "Property Manager", "Managing Agent" or the equivalent thereto...
(b) act as a property manager
(c) carry on business or take up appointment or engagement as a property manager
(d) display any signboard or poster, or use, distribute or circulate any card, letter, pamphlet, leaflet, notice or any form of advertisement, implying...
(e) undertake for a fee or other consideration any of the work enumerated in S.22I (2) above,
(f) be entitled to recover in any court any fee, ...
The Register for Property Manager is created to be Part IV whereby Part I (Valuers), Part II (Appraisers), Part III (Estate Agents) and Part IV (Property Managers).
As it is to preserve the influence and positions of the Valuers and Appraiser, the new amended VAEP allows Valuers and Appraisers who were already in the Part I and II of the register be entered into Part IV. This simply means Valuers and Appraiser who are existing as of the new amendment are automatically property managers as well.
This is covered in S.22F of the VAEP Act 1981.
S.22F Registration of property managers
(3) Any registered valuer or registered appraiser who, immediately before the coming into force of this Part, had his name entered under Part I or II of the Register shall, upon the coming into force of this Part, be entitled to have his name entered under Part IV of the Register without payment of any fee.
However, it is not so easy for Estate Agents. In Subsection (1A) of Section 22B, no registered estate agent shall carry on property management. Nevertheless, subsection (2) has some allowance that a registered estate agent, if approved by the Board, can practice property management under certain conditions.
Now, in the amended Act 2017, the subsection (6) under S.22F (Registration of PM) is included as below:
(6) Any registered estate agent shall be entitled to have his name entered under Part IV of the Register if before the date of the coming into force of this Part he was permitted to undertake property management as specified in S.22B (2).
Which means, if a registered estate agent was previously allowed to practice Property Management by certain condition, he is now allowed to be a fully Registered Property Manager in Part IV.
As for the liberalization exercise, anyone who has been practising prior 12 months from the date of the coming into force this Part for registration (S.22F), shall be entitled to have his name so registered if conditions are fulfilled.
How to qualify?
S.22H which is a mirror of S.22D (EA) and S.18 (V), spells out the qualification to be registered as PM. Similarly, there are two ways, one is by having a degree recognized and another by passing the board Property Manager Examination.
The Act mentions about the probationer called Probationary Property Manager, who is required to obtain the practical experience and to pass the Test of Professional Competence prescribed by the Board or any equivalent (RISM). There is however, no mention of the length of practical experience like the case of PV S.18 (3) and PEA (S.22D (3) as this is specified in the VAEA Rules, 1981.
At the time of writing, I have not read the new VAEP Rules, 1986 so I do not know how many years is the requirement of practical experience for PPM. I would assume it is 2 years like that of PEA.
*Critical need of property managers. Refer to the article "Property managers given a year to register with BOVAEP" published in Malaysian Reserve on 12 January, 2018, extracted below.
She (Deputy DG Dr Zailan Mohd Isa - Valuation and Service Department) said currently 5,000 professionals in the business are still not registered.
“We want to ensure that after the timeframe given, all of them would conform to the Act,” Zailan said, adding that only 1,200 practitioners are already registered.
BOVAEP board member Kamaruzaman Jamil said that unregistered practitioners who fail to comply within the stipulated timeframe can be fined up to RM25,000 and barred from practising within the industry.
“The process to be part of the Act over the 12-month period would also be significantly flexible compared to the normal procedures, which are more stringent.
“I’d like to urge practitioners to come forward and be part of the Act to avoid any unwanted circumstance,” he said.
Last year, only 10 claims on mismanagement and malpractice by registered property managers were directed to BOVAEP, while 116 cases involved illegal practitioners.
To date, at least 19,000 strata schemes are available throughout Malaysia, benefitting 7.5 million people, or 30% of the total urban population.
Ref:
Valuers, Appraisers, Estate Agents (Amendment) Act, 2017.
What is new about the VAEP Act 1981 on Property Management?
A.
Some areas of changes have been made to estate agency practice. Please see my earlier post here for VAEP Act amended 2017.
There is a totally new part called Part VB for Property Managers.
Actually, the original law had only Part V for Valuers and Appraisers. Then, as the estate agents were incorporated, it was inserted Part VA. Now, Property Managers is inserted as Part VB.
On a whole Part VB spells out the definition of Property Manager, registration of property managers under the Act, the qualification and registration of the probationers and practice by firm, etc pretty much similar in standard of requirement like that of Valuers and Estate Agents.
As there is critical needs of the profession* hence, the Board is introducing the liberalization exercise so that more property managers can be registered and regulated under the Act. There is a 12 month period where any practicing PM can get themselves registered without having to sit for examinations. Details of the conditions please refer to the Amended VAEP 1981 or LPPEH website.
Here, what is important is the scope of Property Management.
In the new Part VB, there is a S.22I which has this spelled out:
S.22I (2) The property management practice referred to in subsection (1) includes the following:
(a) enforcing the terms of leases and other agreements pertaining to the property;
(b) preparing budgets and maintaining the financial records for the property;
(c) monitoring outgoings for the property and making payments out of the income from the property;
(d) advising on sale, purchase and letting decisions;
(e) advising on insurance matters;
(f) advising on the opportunities for the realization of development or investment potentials of the property;
(g) advising on the necessity for upgrading the property or for the merging of interests;
(h) managing and maintaining the building and facilities attached to the building; and
(i) making or checking of inventories of furniture, fixtures, trade stocks, plant or machinery, or other effects.
Similar to S.22C on Restriction on Estate Agency Practice, S.22J is specific on Restriction on Property Mangement Practice.
S.22J (2) Paragraph (1)(b)# shall not apply to owner of any land, building and any interest therein who manages such land, building and interest.
#(1)(b) act as property manager;
Which means the profession of property manager is regulated to the below conditions:
Unless registered as a Property Manager,
(a) one cannot call himself a "Property Manager", "Managing Agent" or the equivalent thereto...
(b) act as a property manager
(c) carry on business or take up appointment or engagement as a property manager
(d) display any signboard or poster, or use, distribute or circulate any card, letter, pamphlet, leaflet, notice or any form of advertisement, implying...
(e) undertake for a fee or other consideration any of the work enumerated in S.22I (2) above,
(f) be entitled to recover in any court any fee, ...
The Register for Property Manager is created to be Part IV whereby Part I (Valuers), Part II (Appraisers), Part III (Estate Agents) and Part IV (Property Managers).
As it is to preserve the influence and positions of the Valuers and Appraiser, the new amended VAEP allows Valuers and Appraisers who were already in the Part I and II of the register be entered into Part IV. This simply means Valuers and Appraiser who are existing as of the new amendment are automatically property managers as well.
This is covered in S.22F of the VAEP Act 1981.
S.22F Registration of property managers
(3) Any registered valuer or registered appraiser who, immediately before the coming into force of this Part, had his name entered under Part I or II of the Register shall, upon the coming into force of this Part, be entitled to have his name entered under Part IV of the Register without payment of any fee.
However, it is not so easy for Estate Agents. In Subsection (1A) of Section 22B, no registered estate agent shall carry on property management. Nevertheless, subsection (2) has some allowance that a registered estate agent, if approved by the Board, can practice property management under certain conditions.
Now, in the amended Act 2017, the subsection (6) under S.22F (Registration of PM) is included as below:
(6) Any registered estate agent shall be entitled to have his name entered under Part IV of the Register if before the date of the coming into force of this Part he was permitted to undertake property management as specified in S.22B (2).
Which means, if a registered estate agent was previously allowed to practice Property Management by certain condition, he is now allowed to be a fully Registered Property Manager in Part IV.
As for the liberalization exercise, anyone who has been practising prior 12 months from the date of the coming into force this Part for registration (S.22F), shall be entitled to have his name so registered if conditions are fulfilled.
How to qualify?
S.22H which is a mirror of S.22D (EA) and S.18 (V), spells out the qualification to be registered as PM. Similarly, there are two ways, one is by having a degree recognized and another by passing the board Property Manager Examination.
The Act mentions about the probationer called Probationary Property Manager, who is required to obtain the practical experience and to pass the Test of Professional Competence prescribed by the Board or any equivalent (RISM). There is however, no mention of the length of practical experience like the case of PV S.18 (3) and PEA (S.22D (3) as this is specified in the VAEA Rules, 1981.
At the time of writing, I have not read the new VAEP Rules, 1986 so I do not know how many years is the requirement of practical experience for PPM. I would assume it is 2 years like that of PEA.
***********************************************************************
*Critical need of property managers. Refer to the article "Property managers given a year to register with BOVAEP" published in Malaysian Reserve on 12 January, 2018, extracted below.
She (Deputy DG Dr Zailan Mohd Isa - Valuation and Service Department) said currently 5,000 professionals in the business are still not registered.
“We want to ensure that after the timeframe given, all of them would conform to the Act,” Zailan said, adding that only 1,200 practitioners are already registered.
BOVAEP board member Kamaruzaman Jamil said that unregistered practitioners who fail to comply within the stipulated timeframe can be fined up to RM25,000 and barred from practising within the industry.
“The process to be part of the Act over the 12-month period would also be significantly flexible compared to the normal procedures, which are more stringent.
“I’d like to urge practitioners to come forward and be part of the Act to avoid any unwanted circumstance,” he said.
Last year, only 10 claims on mismanagement and malpractice by registered property managers were directed to BOVAEP, while 116 cases involved illegal practitioners.
To date, at least 19,000 strata schemes are available throughout Malaysia, benefitting 7.5 million people, or 30% of the total urban population.
Ref:
Valuers, Appraisers, Estate Agents (Amendment) Act, 2017.
https://themalaysianreserve.com/2018/01/12/property-managers-given-year-register-bovaep/
Monday, March 19, 2018
Real Estate Agency Service and GST
Q. (Also posted in EstateAgentExam.com)
Why do I have to pay for GST to the Agency which I appointed to sell/rent my house?
A.
Little known fact about GST in Estate Agency Practice.
That is most of the time the owner. And, the fact that the representative who does not collect GST is nothing to do with its legality in its profession. Simply, it means the collection of GST has nothing to do with whether he is illegal or a legal agent. This is little known.
Why do I have to pay for GST to the Agency which I appointed to sell/rent my house?
A.
Little known fact about GST in Estate Agency Practice.
Some people try to save on commission when dealing with agents and brokers. Apparently, some discounts are given being “illegal”.
The fact that if he is illegal, there is no GST. You save the 6% GST.
How I wish this could be true in real life!
Who pays for GST?
He who appoints the representative, because he receives the service of estate agency.
That is most of the time the owner. And, the fact that the representative who does not collect GST is nothing to do with its legality in its profession. Simply, it means the collection of GST has nothing to do with whether he is illegal or a legal agent. This is little known.
Let me give the example of “prostitution” as a service. It is illegal. However, a “prostitute” still need to pay tax! So, irrespective of who this representative is (being a illegal broker or registered agent), the duty to pay GST is not about his legality, but that a service had been rendered.
Indeed, if you are an owner, and you don’t pay GST to an agent, the agent has to pay it out from his commission received. That is “GST inclusive”. So, engaging an illegal broker, it is “GST inclusive”, that is all. If he ever be caught, he is himself in deep trouble. And, if that is the choice, you can mention it to the registered agent, he might just waive it for you as well!
Ref:
Own account.
Real Estate and GST
Q. (Also posted in EstateAgentExam.com)
How is GST imposed on properties, especially Commercial Property in Malaysia?
A.
There are two parts to this.
One is service and the other is the goods - the property. They are two separate things.
First, GST on services rendered. It has been discussed in a separate post here.
Today is about GST on the Real Estate as "Goods", not "Services".
There are two categories, one is residential and another is commercial/land. Residential property sale and lease is exempted. Commercial/land above RM2 mio would require the payment of GST.
The other criteria are:
Based on the previous DG’s Decision, any individual person is considered as carrying out business if make a supply of more than two commercial properties or commercial land exceeding 1 acre and is liable to register with GST if his total annual taxable supply exceeds RM500,000.
So long as you supply less than three commercial properties or commercial land not exceeding 1 acre, it would be treated as not carrying out business even if the sale is more than RM500,000 in a 12 months period.
However, the above mentioned amendments added one more criteria (i.e.commercial property or commercial land worth more than RM 2 million ringgit at market price) to determine when a person is considered as carrying out business of supply of commercial property.
Any individual that supplies commercial property or commercial land worth more than 2 million ringgit at market price after 28 October 2015 shall liable to register for GST. Any late registration will be subject to penalty based on number of days late which capped at RM20,000.
However, the seller has to collect, not the agent or the lawyer or the purchaser. Next is the issue of input and output GST. Output tax is the RM6 of RM100 paid by purchaser. Input tax is the part you can claim back from Director General if you have paid for GST when acquiring the goods earlier on. If you had paid RM4 as GST for this property, you just need to pay the remaining RM2 for GST on this sale.
The threshold is RM500,000.
Ref:
How is GST imposed on properties, especially Commercial Property in Malaysia?
A.
There are two parts to this.
- One is the GST on the service.
- Another is the GST on the Goods Sold.
One is service and the other is the goods - the property. They are two separate things.
First, GST on services rendered. It has been discussed in a separate post here.
Today is about GST on the Real Estate as "Goods", not "Services".
There are two categories, one is residential and another is commercial/land. Residential property sale and lease is exempted. Commercial/land above RM2 mio would require the payment of GST.
The other criteria are:
Based on the previous DG’s Decision, any individual person is considered as carrying out business if make a supply of more than two commercial properties or commercial land exceeding 1 acre and is liable to register with GST if his total annual taxable supply exceeds RM500,000.
So long as you supply less than three commercial properties or commercial land not exceeding 1 acre, it would be treated as not carrying out business even if the sale is more than RM500,000 in a 12 months period.
However, the above mentioned amendments added one more criteria (i.e.commercial property or commercial land worth more than RM 2 million ringgit at market price) to determine when a person is considered as carrying out business of supply of commercial property.
Any individual that supplies commercial property or commercial land worth more than 2 million ringgit at market price after 28 October 2015 shall liable to register for GST. Any late registration will be subject to penalty based on number of days late which capped at RM20,000.
However, the seller has to collect, not the agent or the lawyer or the purchaser. Next is the issue of input and output GST. Output tax is the RM6 of RM100 paid by purchaser. Input tax is the part you can claim back from Director General if you have paid for GST when acquiring the goods earlier on. If you had paid RM4 as GST for this property, you just need to pay the remaining RM2 for GST on this sale.
According to the latest “GST General Guide” (amended on 25 January 2017), the registered person may be allowed to claim input tax on the goods he holds at the time of registration based on the approved amount by the Director General.
NEXT is about Commercial RENTAL.
Yes, GST is imposed on rental collection for commercial properties. GST is charged if
NEXT is about Commercial RENTAL.
Yes, GST is imposed on rental collection for commercial properties. GST is charged if
- he is supplying any lease, tenancy, easement, licence to occupy or rent ; AND
- his annual turnover for such supply has exceeded the prescribed threshold in the period of 12 months.
The threshold is RM500,000.
Ref:
https://www.3ecpa.com.my/taxation-and-gst/gst-and-commercial-property-in-malaysia/
Saturday, March 17, 2018
Amendment to VAEA Act 1981 that affected EAP
Q. (Also posted in EstateAgentExam.com)
What are the main CHANGES in Valuers, Appraisers, Estate Agents and Property Managers Act 1981 (amended 2017) that affect Estate Agency Practice?
A.
The piece of legislature VAEA Act 1981 was amended and passed in Dewan Negara on 21 August, 2017 to be called VAEP 1981. The Bill that enabled it was VAEA (Amendment) Act 2017, and come to force on 2nd Jan, 2018.
*The Act — now known as the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 — was passed last October and gazetted on Jan 2, 2018. It was previously known as the Valuers, Appraisers and Estate Agents Act 1981. The main change is the inclusion of Property Managers as a NEW REGULATED PROFESSION under this ACT. Read more on Property Manager here.
According to the report, there are currently 5,000 professionals in the business are still not registered.
“We want to ensure that after the timeframe given, all of them would conform to the Act,” Zailan said, adding that only 1,200 practitioners are already registered.
BOVAEP board member Kamaruzaman Jamil said that unregistered practitioners who fail to comply within the stipulated timeframe can be fined up to RM25,000 and barred from practising within the industry."
However, this article is about the changes that affects the Estate Agency Practice. The key points in the amendment which affects the Estate Agents are below:
1. Better Definition
S.2 Interpretation
"Estate agency practice" has been deleted and inserted this definition in the key Section 22B Estate agency practice.
S.22B Estate agency practice
(1) ... no change
(1A) A person undertakes estate agency practice if he acts as an agent, or holds himself out to the public or to any individual or firm as ready to act as an agent, for a commission, fee, reward or other consideration -
(a) in respect of any sale or other disposal of land and buildings and of any interest therein;
(b) in respect of any purchase or other acquisition of land and buildings and of any interest therein;
(c) in respect of any leasing or letting of land and buildings and of any interest therein;
(d) in making know of the availability of land, building, or any interest therein for such sale or disposal, purchase or acquisition, or leasing or letting referred to in paragraph (a), (b) or (c), as the case may be; and
2. Included tenancy administration as NEW area
[NEW TO THE ACT]
(e) in respect of any tenancy administration including rental collection, payment of outgoings, arrangement for minor repairs and handing over and taking over the possession of a property of any land and buildings and of any interest therein.
3. The word "Consultant" is now included
In S.22C - Restrictions on estate agency practice, a new term is added to the restricted list of terms used to the profession.
This is particularly crucial as in the industry, many unlicensed brokers or sales personnel disguise themselves under various investor groups who call themselves "Real Estate Consultants" or "Real Estate Agency Consultants".
(1) No person shall unless he is a registered estate agent and has been issued with an authority to practise under section 16 -
(a) practise or carry on business or take up employment under any name, style or title containing the words "Estate Agent", "House Agent", "Property Agent", "Land Agent", "House Broker"...
"Real Estate Agency Consultant"
or the equivalent thereto, in any language or bearing any ...
4. Position of NEGOTIATOR
This has been much delay. The role of REN has never mentioned in the Legislation before and I have written article on this issue - see Agent's agent here. So, this new inclusion has put the foothold of NEGOTIATOR as a part of the LAW! Therefore, it would be something permanent in the future!
**My earlier prediction that the role of NEGOTIATOR will be replaced with increased PEAs - is now debunked.
Now, let us see how it is added to the ACT.
S.22C Restrictions on estate agency practice
(2) Notwithstanding subsection (1) -
[NEW SUBSECTION]
(2) (d) a negotiator may assist the registered estate agent in the estate agency practice.
Which means, despite saying that Section 22C (1) the restrictions, there are some exceptions to this estate agency practice, see Exceptions to Estate Agency Practice here.
This includes:
(2)(a) Owner himself
(b) licensed auctioneer,
(c) holder of Power of Attorney, and
now (d) Negotiators (newly added).
However, the wording used exactly is:
"assist the REA in Estate Agency Practice" which means it is NOT that a Negotiator can practice on his own.
This subsection (2)(d) is further given definition of "Negotiator" as in a new subsection of (2A) below.
(2A) For the purpose of paragraph (2)(d), "negotiator" means a person who is employed by a registered estate agent to assist him in the estate agency practice.
Lastly,
5. FOREIGNER can practice if qualified
S.22D Qualifications for registration of estate agents and probationary estate agents.
(1) to (5) defined what are qualification for registration, and (5) has been removed.
(5) A person who is not a citizen or permanent resident of Malaysia shall not qualify for registration as an estate agent or as a probationary estate agent ...
Other less important amendments are:
The use of "Registered Probationers" to include "Registered PV, PEA and PPM".
Ref:
Valuers, Appraisers, Estate Agents (Amendment) Act 2017
What are the main CHANGES in Valuers, Appraisers, Estate Agents and Property Managers Act 1981 (amended 2017) that affect Estate Agency Practice?
A.
Refer to updated write up on major changes to VAEP Act, 1981 at the link below:
The piece of legislature VAEA Act 1981 was amended and passed in Dewan Negara on 21 August, 2017 to be called VAEP 1981. The Bill that enabled it was VAEA (Amendment) Act 2017, and come to force on 2nd Jan, 2018.
*The Act — now known as the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 — was passed last October and gazetted on Jan 2, 2018. It was previously known as the Valuers, Appraisers and Estate Agents Act 1981. The main change is the inclusion of Property Managers as a NEW REGULATED PROFESSION under this ACT. Read more on Property Manager here.
According to the report, there are currently 5,000 professionals in the business are still not registered.
“We want to ensure that after the timeframe given, all of them would conform to the Act,” Zailan said, adding that only 1,200 practitioners are already registered.
BOVAEP board member Kamaruzaman Jamil said that unregistered practitioners who fail to comply within the stipulated timeframe can be fined up to RM25,000 and barred from practising within the industry."
However, this article is about the changes that affects the Estate Agency Practice. The key points in the amendment which affects the Estate Agents are below:
1. Better Definition
S.2 Interpretation
"Estate agency practice" has been deleted and inserted this definition in the key Section 22B Estate agency practice.
S.22B Estate agency practice
(1) ... no change
(1A) A person undertakes estate agency practice if he acts as an agent, or holds himself out to the public or to any individual or firm as ready to act as an agent, for a commission, fee, reward or other consideration -
(a) in respect of any sale or other disposal of land and buildings and of any interest therein;
(b) in respect of any purchase or other acquisition of land and buildings and of any interest therein;
(c) in respect of any leasing or letting of land and buildings and of any interest therein;
(d) in making know of the availability of land, building, or any interest therein for such sale or disposal, purchase or acquisition, or leasing or letting referred to in paragraph (a), (b) or (c), as the case may be; and
2. Included tenancy administration as NEW area
[NEW TO THE ACT]
(e) in respect of any tenancy administration including rental collection, payment of outgoings, arrangement for minor repairs and handing over and taking over the possession of a property of any land and buildings and of any interest therein.
3. The word "Consultant" is now included
In S.22C - Restrictions on estate agency practice, a new term is added to the restricted list of terms used to the profession.
This is particularly crucial as in the industry, many unlicensed brokers or sales personnel disguise themselves under various investor groups who call themselves "Real Estate Consultants" or "Real Estate Agency Consultants".
(1) No person shall unless he is a registered estate agent and has been issued with an authority to practise under section 16 -
(a) practise or carry on business or take up employment under any name, style or title containing the words "Estate Agent", "House Agent", "Property Agent", "Land Agent", "House Broker"...
"Real Estate Agency Consultant"
or the equivalent thereto, in any language or bearing any ...
4. Position of NEGOTIATOR
This has been much delay. The role of REN has never mentioned in the Legislation before and I have written article on this issue - see Agent's agent here. So, this new inclusion has put the foothold of NEGOTIATOR as a part of the LAW! Therefore, it would be something permanent in the future!
**My earlier prediction that the role of NEGOTIATOR will be replaced with increased PEAs - is now debunked.
Now, let us see how it is added to the ACT.
S.22C Restrictions on estate agency practice
(2) Notwithstanding subsection (1) -
[NEW SUBSECTION]
(2) (d) a negotiator may assist the registered estate agent in the estate agency practice.
Which means, despite saying that Section 22C (1) the restrictions, there are some exceptions to this estate agency practice, see Exceptions to Estate Agency Practice here.
This includes:
(2)(a) Owner himself
(b) licensed auctioneer,
(c) holder of Power of Attorney, and
now (d) Negotiators (newly added).
However, the wording used exactly is:
"assist the REA in Estate Agency Practice" which means it is NOT that a Negotiator can practice on his own.
This subsection (2)(d) is further given definition of "Negotiator" as in a new subsection of (2A) below.
(2A) For the purpose of paragraph (2)(d), "negotiator" means a person who is employed by a registered estate agent to assist him in the estate agency practice.
Lastly,
5. FOREIGNER can practice if qualified
S.22D Qualifications for registration of estate agents and probationary estate agents.
(1) to (5) defined what are qualification for registration, and (5) has been removed.
Other less important amendments are:
The use of "Registered Probationers" to include "Registered PV, PEA and PPM".
Ref:
Valuers, Appraisers, Estate Agents (Amendment) Act 2017
https://themalaysianreserve.com/2018/01/12/property-managers-given-year-register-bovaep/
Saturday, March 10, 2018
What if everyone is fighting over listing?
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.
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.
Wednesday, February 28, 2018
DATA - GAP - VALUE INFORMATION
Q.
Jack Ma said the future money is DATA. What do you think?
A.
Read further on:
Agent Positioning
Agent Positioning 2
GAP - Barrier or Opportunity?
In property business of estate agency, agent positioning is very important.
Currently, almost all agents position themselves as "AGENT of SELLER". Simple, they want to be paid. No buyer is paying commission for a service.
It is just like you buy a hand phone from a Brand Manufacturer, say Samsung, you pay a profit to the hand phone store.
The hand phone storekeeper (agent) takes money from Samsung for a NEW GALAXY phone sold!
Imagine you are a buyer of hand phone. Would you pay for a fee, asking a storekeeper to recommend you a phone? Then, you pay him a commission, and he sells you the phone at no mark up?
No, right?
Let us say a very ridiculous situation - you don't know a thing about hand phone. Yet, you need to buy one. So you appoint him to source for a phone within a budget. In this case, how much would it take for him to show you so that it is worth your fee?
Hard to define right?
That is about DATA.
The big talk about DATA is that it can be used to sell things to the right audience, spot on and reduce error and quicken time channeling big revenue in sales. That is exactly what is described above. You pay him a fee for showing you the best phone for your fit. And, you buy that phone and don't waste your time anymore. The phone manufacturer will manufacture the very type of phone and don't waste the resources on other phones.
In Real Estate, this is not so simple.
Property DATA is hard to collect. The variables are many. If you include FengShui, it is even more daunting to imagine.
However, with this DATA, a buyer will be attracted to select the right fit for his property. That is all that is needed, right?
Then, it takes two hands to clap! You have the DATA, but what type of audience needs DATA?
Simply put, not everyone reads the tech-magazine to buy a hand phone right?
Therefore, you need to study your market segment. The more sophisticated investors, the business people who use property to make profit, operator of businesses, offices, plantation land, etc.
It is less of the First Time Home Buyer group. So, know your segment!
Therefore, the three things a successful estate agent should master are:
1. Right mix of DATA.
2. Right fit for the GAP.
3. Right system (strategy) for long term sustainability.
These are never easy things to achieve. It ranges from networking to computer skill, inputting of raw data, analytical mind to research and presentation of the right DATA to the right audience resulting in a perceived VALUE INFORMATION.
Jack Ma said the future money is DATA. What do you think?
A.
Read further on:
Agent Positioning
Agent Positioning 2
GAP - Barrier or Opportunity?
In property business of estate agency, agent positioning is very important.
Currently, almost all agents position themselves as "AGENT of SELLER". Simple, they want to be paid. No buyer is paying commission for a service.
It is just like you buy a hand phone from a Brand Manufacturer, say Samsung, you pay a profit to the hand phone store.
The hand phone storekeeper (agent) takes money from Samsung for a NEW GALAXY phone sold!
Imagine you are a buyer of hand phone. Would you pay for a fee, asking a storekeeper to recommend you a phone? Then, you pay him a commission, and he sells you the phone at no mark up?
No, right?
Let us say a very ridiculous situation - you don't know a thing about hand phone. Yet, you need to buy one. So you appoint him to source for a phone within a budget. In this case, how much would it take for him to show you so that it is worth your fee?
Hard to define right?
That is about DATA.
The big talk about DATA is that it can be used to sell things to the right audience, spot on and reduce error and quicken time channeling big revenue in sales. That is exactly what is described above. You pay him a fee for showing you the best phone for your fit. And, you buy that phone and don't waste your time anymore. The phone manufacturer will manufacture the very type of phone and don't waste the resources on other phones.
In Real Estate, this is not so simple.
Property DATA is hard to collect. The variables are many. If you include FengShui, it is even more daunting to imagine.
However, with this DATA, a buyer will be attracted to select the right fit for his property. That is all that is needed, right?
Then, it takes two hands to clap! You have the DATA, but what type of audience needs DATA?
Simply put, not everyone reads the tech-magazine to buy a hand phone right?
Therefore, you need to study your market segment. The more sophisticated investors, the business people who use property to make profit, operator of businesses, offices, plantation land, etc.
It is less of the First Time Home Buyer group. So, know your segment!
Therefore, the three things a successful estate agent should master are:
1. Right mix of DATA.
2. Right fit for the GAP.
3. Right system (strategy) for long term sustainability.
These are never easy things to achieve. It ranges from networking to computer skill, inputting of raw data, analytical mind to research and presentation of the right DATA to the right audience resulting in a perceived VALUE INFORMATION.
GAP - Barrier or Opportunity?
Q.
GAP between a buyer and a seller remains as challenges in closing a deal. Is it a barrier or an opportunity?
A.
In a normal relationship, GAP is not something that we long for. Generation GAP for example, is an obstacle in a parent-children relationship.
Similarly, when GAP exists between two persons, business is hard to conclude and usually, it ends up as a fell out. Worse case scenario, they could become enemies.
So, in normal circumstances, GAP is a barrier. NOT an opportunity. When there is GAP, there is bad news.
In market place, when a GAP is apparent between a product and its market, it means the marketing unit has a lot more to do. BUT, isn't it the way we face everyday?
Of course, your boss wants to achieve a higher sales target this year. There is a big GAP of expectation! Yet, it is a job which employs you! Without this GAP, you got no job!
So, GAP exists everyday and everywhere, and it is because there is different level of expectations. Hence, there are big GAPs and small GAPs. This GAP exists, and therefore, effort in marketing and sales are to meet this expectations. It thus generates opportunity for employment.
Business Strategy
Business environment never stay still. There are always changes. For example, the dynamics of pricing, competitors and economic conditions. GAPs are everywhere. So, organizations rise and fall, and yet time and tide wait for no man! So, organizations with better tactics and implementation will thrive.
Strength and Weaknesses
Because of these GAPs and the limitation of one person to close all these GAPs, organization develop strategy to cater for the best fit as a TEAM. Therefore, organization studies its strengths and weaknesses They try to combat the GAP expectations by choosing a better battle to fight, saving resources and money. You just cannot win all!
Long term CORE COMPETENCE
In so doing, the organization looks into its core competence. This may be one or two areas where there is better chance to close the GAP. The ability to close the GAPs (into the future) makes the system of the organization successful. This system is in time becomes "Culture" of the organization. The culture can include "Innovation" or "Resilience to failures".
Develop the technique to narrow the GAP
Human cannot keep on battling the odds. That is why we develop machines. As GAPs keep on appearing, we develop computers. Hence, in the game of closing the GAP, better computerization should enhance the ability of human to sustain the winning strategy into the future.
This system, is what is called "strategy" in business or "applications" in information technology or "set of working rules" in the backyard factory. It could deliver the core competence of the organization and takes it into the future. So, that comes with the analysis of competitors and other reasons why the business is not sustainable.
Due to competitors, for example, VCD business.is replaced by internet. It has become a thing of the past as people move on to subscribing Internet TV through UNIFI.
So, in Estate Agency, agents survive because of the GAP. Agents sell expertise in bridging the GAP. Yet, to sustain this strategy of "middle man", you need to ensure you can offer the value over a longer period of time versus your competitors.
Scenario
Seller's agent - Increase value of seller's property. Buyers would be willing to part with their money to buy property of Seller because you show Value of the property to the Buyer. You closed the GAP.
Sustaining the Value Proposition
Estate agent delivers comparison of properties so that Buyer has knowledge of the benefit in acquiring the property. Estate Agent explains about capital gain and rental yield. This knowledge must be able to sustain into the future. Thus, the competitor will not match the knowledge (Value) perceived to benefit the Buyer. When another platform is able to offer that value to the buyer directly (e.g. Internet database like Brickz), then the GAP is narrowed. There is no point a Buyer were to look for an Estate Agent to meet up with the Seller. The buyer can narrow the GAP himself. In this case, by Googling in the Internet!
However, amidst all these, selling a property is much much better than say, selling a hand phone.
People could learn about almost anything and everything about a brand of hand phone by Google. The buyer can just go online to buy the cheapest hand phone of that particular brand and model. The information is not a barrier in this case. It is a perfect competition - you get information about hand phone to almost 100% accuracy by Googling. In fact, you would know more in learning via Google than speaking to the salesperson of the hand phone store!
However, real estate market is not in perfect competition. Nobody can be certain about value of a property and its potentials, or worse, its pitfalls. There is no two property exactly the same. So, there is always a GAP between a Seller and a Buyer. The Seller would want his property best you can think of. And, the Buyer would be worried that if it is over priced or worse, is it even a scam???
To be able to offer VALUE INFORMATION, you will be better of than the another agent in the market. In this way, you will then be able to protect your business over a longer period of time.
It is indeed, the ART of showing off your VALUE INFORMATION.
Then, what is VALUE INFORMATION??? Read further here on Data - Gap - Value Information.
GAP between a buyer and a seller remains as challenges in closing a deal. Is it a barrier or an opportunity?
A.
In a normal relationship, GAP is not something that we long for. Generation GAP for example, is an obstacle in a parent-children relationship.
Similarly, when GAP exists between two persons, business is hard to conclude and usually, it ends up as a fell out. Worse case scenario, they could become enemies.
So, in normal circumstances, GAP is a barrier. NOT an opportunity. When there is GAP, there is bad news.
In market place, when a GAP is apparent between a product and its market, it means the marketing unit has a lot more to do. BUT, isn't it the way we face everyday?
Of course, your boss wants to achieve a higher sales target this year. There is a big GAP of expectation! Yet, it is a job which employs you! Without this GAP, you got no job!
So, GAP exists everyday and everywhere, and it is because there is different level of expectations. Hence, there are big GAPs and small GAPs. This GAP exists, and therefore, effort in marketing and sales are to meet this expectations. It thus generates opportunity for employment.
Business Strategy
Business environment never stay still. There are always changes. For example, the dynamics of pricing, competitors and economic conditions. GAPs are everywhere. So, organizations rise and fall, and yet time and tide wait for no man! So, organizations with better tactics and implementation will thrive.
Strength and Weaknesses
Because of these GAPs and the limitation of one person to close all these GAPs, organization develop strategy to cater for the best fit as a TEAM. Therefore, organization studies its strengths and weaknesses They try to combat the GAP expectations by choosing a better battle to fight, saving resources and money. You just cannot win all!
Long term CORE COMPETENCE
In so doing, the organization looks into its core competence. This may be one or two areas where there is better chance to close the GAP. The ability to close the GAPs (into the future) makes the system of the organization successful. This system is in time becomes "Culture" of the organization. The culture can include "Innovation" or "Resilience to failures".
Develop the technique to narrow the GAP
Human cannot keep on battling the odds. That is why we develop machines. As GAPs keep on appearing, we develop computers. Hence, in the game of closing the GAP, better computerization should enhance the ability of human to sustain the winning strategy into the future.
This system, is what is called "strategy" in business or "applications" in information technology or "set of working rules" in the backyard factory. It could deliver the core competence of the organization and takes it into the future. So, that comes with the analysis of competitors and other reasons why the business is not sustainable.
Due to competitors, for example, VCD business.is replaced by internet. It has become a thing of the past as people move on to subscribing Internet TV through UNIFI.
So, in Estate Agency, agents survive because of the GAP. Agents sell expertise in bridging the GAP. Yet, to sustain this strategy of "middle man", you need to ensure you can offer the value over a longer period of time versus your competitors.
Scenario
Seller's agent - Increase value of seller's property. Buyers would be willing to part with their money to buy property of Seller because you show Value of the property to the Buyer. You closed the GAP.
Sustaining the Value Proposition
Estate agent delivers comparison of properties so that Buyer has knowledge of the benefit in acquiring the property. Estate Agent explains about capital gain and rental yield. This knowledge must be able to sustain into the future. Thus, the competitor will not match the knowledge (Value) perceived to benefit the Buyer. When another platform is able to offer that value to the buyer directly (e.g. Internet database like Brickz), then the GAP is narrowed. There is no point a Buyer were to look for an Estate Agent to meet up with the Seller. The buyer can narrow the GAP himself. In this case, by Googling in the Internet!
However, amidst all these, selling a property is much much better than say, selling a hand phone.
People could learn about almost anything and everything about a brand of hand phone by Google. The buyer can just go online to buy the cheapest hand phone of that particular brand and model. The information is not a barrier in this case. It is a perfect competition - you get information about hand phone to almost 100% accuracy by Googling. In fact, you would know more in learning via Google than speaking to the salesperson of the hand phone store!
However, real estate market is not in perfect competition. Nobody can be certain about value of a property and its potentials, or worse, its pitfalls. There is no two property exactly the same. So, there is always a GAP between a Seller and a Buyer. The Seller would want his property best you can think of. And, the Buyer would be worried that if it is over priced or worse, is it even a scam???
To be able to offer VALUE INFORMATION, you will be better of than the another agent in the market. In this way, you will then be able to protect your business over a longer period of time.
It is indeed, the ART of showing off your VALUE INFORMATION.
Then, what is VALUE INFORMATION??? Read further here on Data - Gap - Value Information.
Monday, February 26, 2018
Agent Positioning 2
Q.
When everyone is doing the same, what can you do different from others?
A.
Read earlier post on Agent Positioning here.
In a nutshell, an estate agent can offer his service in three main fronts.
1. Represent the seller (that is what most agents would be and be paid);
2. Represent the buyers (that is what most agents won't do);
3. Academic and desk job in the research and publications.
It is like when you take the example of a hand phone business. You become the seller of hand phone. It is your job to do the promotion because it pays you the income.
You cannot (usually) charge the buyer a commission for recommending the brand of hand phone. You charge the supplier with the profit you earn in selling the brand. Of course, the profit is from the buyer who paid for the phone.
In between, there is the work of hand phone nerds who write review of hand phone in some tech-magazines. They are independent third party, who do not represent the buyer or seller. They are experts of their fields - however, due to their eagerness to be popular, they usually represent the voices of the readers (generally the buyers).
Now, seeing it clearer in the example of hand phone, what can a hand phone businessman do to be different from others?
There are generally three things he could do:
1. Different segment for the handphone (user);
2. Different intensity of the handphone (usage);
3. Different ways that handphone can be used (uses)
1. Example for different segment would be handphone for the senior citizens who require big wordings.
2. Example for different intensity of usage would be for purpose of gaming where usage will be very demanding for power and capacity.
3. Example for different uses would be biz use, social media, camera, music, movie and conversation.
Selling Hand Phone vs Estate Agency Practice
So, in the common front of estate agency, most agents go for the seller in conventional selling, renting and leasing. This means estate agents concentrate on securing listing from owners. The main purpose is to be paid for the uses "To Let" and "For Sale". Full definition of "Estate Agency Practice" you can refer to MEAS 2014 Definition.
From here, there spring out another three variables.
1. Agents who tag with Developer (Owner) for intensity of "To Let" for shoplots and shopping malls.
2. Agents who tag with Developer (Owner) for intensity of "For Sale" onto residential houses, strata livings - subsale and primary market.
3. Agents who tag with BUYER (of LAND), and dig out the owners of land.
NOBODY IS INTERESTED IN THE BUYERS!!! ONLY THOSE DEALING WITH LAND!!!
Why?
IT IS LIKE WHEN YOU ARE WHOLESALER OF HAND PHONE!
When you are sourcing of which brand of hand phone to carry as a sole distributor, you look for the brand which buyers go for. You won't not want to represent a brand which nobody wants, right???
Hence, you study why buyers want this brand of hand phone. Is it trendy? Or its battery lasts longer? Or it is thinner? Etc.
Similarly, an agent of land would study the type of land the BUYER wants. In which case, is it a buyer or many buyers? Of course, many buyers! This means demand for the land is high, the price will be high too. As a result, the commission pay out will also be high.
Now, what stands in between the Land Owner and the Land Buyer? The gap of knowledge between the land owner and the ready buyer is miles apart!!!
Take for example, Land Owner who is a farmer, illiterate and never know of a land deal. The Land Buyer who is a shrewd businessman!
Only when there is this GAP, that the role of Estate Agent comes in! (Don't get me wrong, An Agent should NOT conspire with the Land Buyer to cheat the Land Owner). When any element of fraud, undue influence, misrepresentation and coercion is found in a contract, the contract is voidable.
Thus, to develop a position in the field, one must MASTER this knowledge of GAP! Target a segment of market where there is BIG GAP between Seller and Buyer. Try to bring this GAP closer and close the DEAL!
The argument of closing the GAP is further discussed here.
Usually, a ready buyer is just about price. However, a ready buyer might not have the energy and precision of a foresight to see the GAP being near to close. The ART of closing this GAP is indeed a psychological one!
The GAP can also manifest in the other two segments -
For a developer who has many shop houses "To Let", the Tenants do not see the benefit of renting the Shops. There exist a BIG GAP!
For a property owner who wants to sell his house, the Buyer do not see the benefit of buying that house. He might think that the house is too highly priced. This is also BIG GAP!
As an estate agent, one MUST learn how to close that GAP! The ART to CLOSE the GAP is key to success in this game.
YET, you don't want to use a method which everyone is using. That means you are no better than any others. You also won't want to always change your method, for you will one day run out of the idea. Hence, you need to work on a STRATEGY!!!
So, when everyone is doing the same, what can you do different from others?
When everyone is doing the same, what can you do different from others?
A.
Read earlier post on Agent Positioning here.
In a nutshell, an estate agent can offer his service in three main fronts.
1. Represent the seller (that is what most agents would be and be paid);
2. Represent the buyers (that is what most agents won't do);
3. Academic and desk job in the research and publications.
It is like when you take the example of a hand phone business. You become the seller of hand phone. It is your job to do the promotion because it pays you the income.
You cannot (usually) charge the buyer a commission for recommending the brand of hand phone. You charge the supplier with the profit you earn in selling the brand. Of course, the profit is from the buyer who paid for the phone.
In between, there is the work of hand phone nerds who write review of hand phone in some tech-magazines. They are independent third party, who do not represent the buyer or seller. They are experts of their fields - however, due to their eagerness to be popular, they usually represent the voices of the readers (generally the buyers).
Now, seeing it clearer in the example of hand phone, what can a hand phone businessman do to be different from others?
There are generally three things he could do:
1. Different segment for the handphone (user);
2. Different intensity of the handphone (usage);
3. Different ways that handphone can be used (uses)
1. Example for different segment would be handphone for the senior citizens who require big wordings.
2. Example for different intensity of usage would be for purpose of gaming where usage will be very demanding for power and capacity.
3. Example for different uses would be biz use, social media, camera, music, movie and conversation.
Selling Hand Phone vs Estate Agency Practice
So, in the common front of estate agency, most agents go for the seller in conventional selling, renting and leasing. This means estate agents concentrate on securing listing from owners. The main purpose is to be paid for the uses "To Let" and "For Sale". Full definition of "Estate Agency Practice" you can refer to MEAS 2014 Definition.
From here, there spring out another three variables.
1. Agents who tag with Developer (Owner) for intensity of "To Let" for shoplots and shopping malls.
2. Agents who tag with Developer (Owner) for intensity of "For Sale" onto residential houses, strata livings - subsale and primary market.
3. Agents who tag with BUYER (of LAND), and dig out the owners of land.
NOBODY IS INTERESTED IN THE BUYERS!!! ONLY THOSE DEALING WITH LAND!!!
Why?
IT IS LIKE WHEN YOU ARE WHOLESALER OF HAND PHONE!
When you are sourcing of which brand of hand phone to carry as a sole distributor, you look for the brand which buyers go for. You won't not want to represent a brand which nobody wants, right???
Hence, you study why buyers want this brand of hand phone. Is it trendy? Or its battery lasts longer? Or it is thinner? Etc.
Similarly, an agent of land would study the type of land the BUYER wants. In which case, is it a buyer or many buyers? Of course, many buyers! This means demand for the land is high, the price will be high too. As a result, the commission pay out will also be high.
Now, what stands in between the Land Owner and the Land Buyer? The gap of knowledge between the land owner and the ready buyer is miles apart!!!
Take for example, Land Owner who is a farmer, illiterate and never know of a land deal. The Land Buyer who is a shrewd businessman!
Only when there is this GAP, that the role of Estate Agent comes in! (Don't get me wrong, An Agent should NOT conspire with the Land Buyer to cheat the Land Owner). When any element of fraud, undue influence, misrepresentation and coercion is found in a contract, the contract is voidable.
Thus, to develop a position in the field, one must MASTER this knowledge of GAP! Target a segment of market where there is BIG GAP between Seller and Buyer. Try to bring this GAP closer and close the DEAL!
The argument of closing the GAP is further discussed here.
Usually, a ready buyer is just about price. However, a ready buyer might not have the energy and precision of a foresight to see the GAP being near to close. The ART of closing this GAP is indeed a psychological one!
The GAP can also manifest in the other two segments -
For a developer who has many shop houses "To Let", the Tenants do not see the benefit of renting the Shops. There exist a BIG GAP!
For a property owner who wants to sell his house, the Buyer do not see the benefit of buying that house. He might think that the house is too highly priced. This is also BIG GAP!
As an estate agent, one MUST learn how to close that GAP! The ART to CLOSE the GAP is key to success in this game.
YET, you don't want to use a method which everyone is using. That means you are no better than any others. You also won't want to always change your method, for you will one day run out of the idea. Hence, you need to work on a STRATEGY!!!
So, when everyone is doing the same, what can you do different from others?
Monday, February 5, 2018
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