Co-broking or Co-agency in Malaysian Real Estate Agency Practice

Dear Readers,

(KL: 19.5.2010): You must have heard of these terms -- co-broking or co-agency in Malaysian real estate agency practice often enough to want to know: What is it? And, what does it entail? So, let me blog on it in this post


What is co-broking or co-agency?
Co-broking or co-agency is a fee-sharing arrangement involving at least 2 real estate agencies: whereby the the "Listing Agent" agrees to share with the "Introducing Agent" the professional estate agency fee received by it in the event that the party introduced by the "Introducing Agent" to the "Listing Agent" submits an "Offer to Purchase or to Rent" - the property/properties shown by the Listing Agent to the Introducing Agent and the interested prospect - via/through the Introducing Agent to the Listing Agent for its client's acceptance.

Does it involve the property owner?
The Malaysian Estate Agency Standards ("MEAS 1999") aptly recognises that co-agency or co-broking (unlike sub-listing under the Contracts Act) does not normally involve the Client of the "Listing Agent" (usually the property Owner) - This is stated in the "Definitions Chapter" of the MEAS1999.

Does co-broking or co-agency involve an agreement?
Yes, co-broking and co-agency in practice involves an agreement known as the co-broking or co-agency agreement which must be reached before the Introducing Agent proceeds to introduce its interested prospect(s) to the Listing Agent. A co-agency agreement is a contract contingent upon:
* firstly, the Listing Agent showing its property/properties to the Introducing Agent and its interested party;
* secondly, the Introducing Agent introducing its interested party to the Listing Agent and its property/properties; and,
* most importantly, the Introducing Agent securing an "Offer to Buy or to Rent" from its interested party for the property/properties shown by the Listing Agent for submission to the Listing Agent for the acceptance of latter's client.

Does it involve joint-inspection of the Listing Agent's property/properties?
Yes, in practice, it is through a joint inspection that the Listing Agent shows its property/properties to the Introducing Agency and its interested party and, conversely, the Introducing Agent introduces its interested party to the Listing Agent and its property/properties. This joint-inspection is governed by Standard 3.2.8 of the Malaysian Estate Agency Standard 1999 where it is stipulated the the inspection must be supervised by and with the consent of the Listing Agent. Standard 3.2.6 suggests that property inspection is best recorded and documented.

Does co-broking or co-agency necessarily involve the Introducing Agent introducing its interested party to the Listing Agent?
Yes, otherwise what was the basis or "quid pro quo" for the Listing Agent to agree to share its fee?

Does co-broking or co-agency necessarily involve the Introducing Agent securing an Offer from its interested party for submission to the Owner via the Listing Agent?
Yes, this is necessary because many a times the same interested party may view the same property/properties of the Listing Agent through another/other Introducing Agent(s) as well. Recognition and hence the payment of fee are only given to the Introducing Agent who successfully secures an Offer from the interested party for submission to the Owner via the Listing Agent.

Facts: Last year (2009), my estate agency (GT Realty) successfully carried-out co-broking or co-agency with 2 other estate agencies which acted as the Introducing Agents: Reapfield and JA Valley (Tropicana). Both agencies not only signed co-agency agreements with GT Realty but also proceed to actually:
1) introduce their prospective buyers to us via a joint-inspection of the properties;
2) submit to us their interested parties' Offers for our submission to our Clients (the property owners) for consideration/acceptance.

Hence, when the deals were closed and our fees paid, even before they invoiced us, their co-agency fees were already ready for their collection. This has been our long standing policy and practice. This can be verified with our other Introducing Co-agents: e.g. Mr. Kuek of Magmas where we co-broke on a Desa Sri Hartamas bungalow lot of considerable value and more (to be listed later), etc. To us, trustworthiness is very important in business as in any other areas in life.

However, please be forewarned that my agency will not entertain anyone (particularly the bogus agents, freelance agents or, agents and "sleeping principals" who sublet their "licences") who tries to claim co-agency fee from us purely on the basis of a co-agency agreement which has been signed, partially signed or which were merely a forwarded draft - but which was not subsequently followed up with:
1) any introduction of any interested party to us;
2) any joint-viewing of our property/properties; nor
3) any submission to us of their interested party's/parties' Offer for our submission to our Clients for consideration/acceptance.

To us, no one can claim on the basis of an unperformed contingent contract even if there was indeed such a contract - what more, if there wasn't! Disputes as to facts and law of co-agency are best settled in court as under the watchful eyes of the learned judge and the lawyers who are ever ready to pounce, lying won't be easy in court - more so when doing so is a very very serious offence!

Cheers.

All comments are welcome.

Another Community-Service Article by:
Douglas GT Tan
CEO/Proprietor
GT Realty

For Sale by Tender: 8.53-Acre Vacant Commercial Land at Sec 27 Shah Alam, Selangor

 



(Update, 29.6.2010: This property is now OFF the market. During the April/May Prokhas Property Tender Exercise 1/2010, Century Logistics' people bought a tender package through GT Realty. However, in my subsequent follow-up, I learnt that they would not be submitting any tender for this land. According to a subsequent press report, Century Logistics eventually bought a much bigger piece, if I recall the press report correctly, at about RM34 million at Bukit Raja. However, if you are looking to buy commercial land in the same locality, please be informed that in an upcoming July/August 2010 Prokhas Property Tender No. 2/2010, there are two pieces of 6.2-acre and 37,382 sf commercial land available for sale by tender at very attractive minimum tender prices. Click the hotlinks over the size of the land to know more. Regards, Douglas Tan.)
 
Dear Investors,

(30 March 2010). Are you currently looking for a piece of vacant commercial land of about 8.5 acres in Shah Alam, Selangor?

If so, then there is good news! Currently, a piece of vacant commercial land at Section 27 Shah Alam - along the western side of Persiaran Klang (within Taman Bunga Negara) - is available for sale by tender until 5pm, 4th May 2010: Its Photos, Location Plan & Layout Plan are as shown in this post.

You may also find its location or study its surrounding from "Google Map" by entering "persiaran klang, taman bunga negara".

Other details:

* Title No.: H.S.(D) 63624;

* Lot No.: P.T. 626;

* Mukim: Damansara;

* District: Petaling;

* State: Selangor Darul Ehsan;

* Tenure: Freehold

* Provisional Land Area: 34,514.208 square metres (371,520 square feet or 8.53 acres)

* Category of Land Use: "Bangunan";

* Express Condition: " Bangunan Perniagaan"

* Restriction in Interest: Nil

* Tender Closing Date: 5:00 p.m., 4th May 2010

* Indicative Price: RM24.15 million only (RM700 per sq. m or RM65 psf only) - Stamp Duty Waived!

For further details or to buy its tender package - containing original tender form, valuation report, terms and conditions of sale, sample Sale & Purchase Agreement, etc. - at only RM100 per pack, please contact me at 012-288 6993 / 03-7958 8821.

Hurry, opportunity waits no man.!

Best regards,
Douglas, Tan Gee Tick (E 1579)
Proprietor/CEO

GT REALTY [E (3) 0698]
22-B (2nd. Floor), Jalan 19/36,
46300 Petaling Jaya,
Selangor D.E.

Tel: 6-03-7958 8821 / 6-012-288 6993
Fax: 6-03-7958 7821
Email: tanhalim1@gmail.com

Documentary Proof of Legal Standing to Claim Estate Agency Fees in Court

Dear Readers,

Are you aware that: In year 2005, a well-known estate agency firm (with the acronym OR) failed to recover estate agency fee in the court because of failure to fully establish its legal standing to claim the fee. Apparently, it failed to meet the "locus standi" requirement under Sec 23(1) of the Valuers, Appraisers & Estate Agency Act 1981 (VAEA Act 1981): The Claimant adduced to the court a defective certificate of Authority to Practise (ATP) estate agency - his firm's ATP Cert. labelled as Form N when it should have been Form O under the law (Rule 25G of the VAEA Rules 1986)?

You see, since the enactment of the VAEA Act 1981  - and, all its subsidiary rules, etc. - real estate agency in Malaysia was no longer just a business - i.e. no longer a business regulated only by law of commerce/contract; It has since been a profession (pl. see also: statement by BOVAEA in Circular 11/96) - one that is regulated, over and above the normal law of commerce/contract, by specific estate agency law, rules, standards, practice notes and circulars of the Parliament-instituted statutory board - the BOVAEA.

Under the Malaysian estate agency law, anyone seeking to recover in any court any fees, charges or remuneration for any...services rendered as an estate agent - would not only have to prove that there was an enforceable agreement but also to show the court that he meets the two(2) "legal standing" requirements respectively stipulated in 1) Sec 22C(1)(d) & 2) Sec 23(1) of the Valuers Appraisers & Estate Agents Act 1981:

Under Sec 22C(1)(d): The claimant must establish that "...he is a registered estate agent and has been issued with an authority to practise under section 16".

Sec 22C(1)(d) reads :"No person shall - unless he is a registered estate agent and has been issued with an authority to practise under section 16 - be entitled to recover in any court any fees, charges or remuneration for any professional advice or services rendered as an estate agent."

A registered estate agent with the "locus standi" under Sec 22C(1)(d) would be able to produce to the court his certificate(s) of Authority to Practise (ATP) estate agency under Sec 16 as issued by the BOVAEA, namely: 1) his personal ATP Cert. in Form I (issued under Sec16(1) when he first registered as an estate agent), and; 2) his renewed personal ATP Cert. in Form K (issued under Sec 16 (2) when he renews his ATP annually).

Secondly, under Sec 23(1): He must also show the court that he is not a freelanced registered estate agent - operating from home, five-foot-way, etc. that is, practising without a duly registered estate agency firm - that is that he is a registered estate agent who "... practises as a sole proprietor..., a partner..., a shareholder or director...or as an employee of such sole proprietorship, partnership or body corporate".


Sec 23(1) reads: "No registered...estate agent shall...have the right to recover in any court any fee, charge or remuneration for any professional advice or services rendered by him pursuant to his practice unless he practises as a sole proprietor of a sole proprietorship, a partner of a partnership, a shareholder or director of a body corporate registered with the Board, or as an employee of such sole proprietorship, partnership or body corporate"

A registered estate agent who is not freelancing and who meets the locus standi requirement under Sec 23(1) would certainly be able to produce to the court 1) his Firm's ATP Cert. in Form O (issued by BOVAEA when his agency firm first registered with it); and 2) his Firm's renewed ATP Cert in Form Q (issued annually when his firm renews its ATP).


So, beware: For any claim of estate agency fee, related charges, etc. in any court, the Claimant must prove - apart from having to prove that there was an enforceable agency or co-agency agreement - that the 2 "locus standi" requirements as laid down by Sec 22C(1)(d) & Sec 23(1) of the Valuers Appraisers & Estate Agents Act 1981 are met as well.

All comments are welcome!

A Community-Service Article By,
Douglas GT Tan

Gong Xi Fa Cai!

Dear Chinese Readers,

Gong Xi Fa Cai!

Have A Happy & Prosperous Tiger Year !!
 
Usher in the Tiger year with this exciting acrobatic lion dance on poles captured on my camera - at Bandar Utama shopping complex, Selangor --. edited with a software with came with original SBE 2003:


Regards,
Douglas GT Tan

Govt teams up with eBay to aid SMEs, reported The Star.

Dear Readers,

The Star online reported today as follows:

KUALA LUMPUR (1 Feb 2010): Online auction site eBay and its payment provider PayPal have signed a deal with government-controlled SME Corp Malaysia that will benefit small- and medium-scale enterprises (SMEs) in the country...

This is something that real estate marketers must be aware of even if selling real estate online may not be the "in" thing at the moment. Will people go to eBay to look for real estate? Only time can tell.

Anyway, for the press report, read here.

Regards,
Douglas.

BOVAEA Moving On 18 Jan 2010

To:
Registered Estate Agents, Appraisers & Valuers;
Probationary Estate Agents, Appraisers & Valuers; and
Members of the Public,

Please be informed that with effect from 18 January 2010, the BOARD OF VALUERS, APPRAISERS & ESTATE AGENTS OF MALAYSIA (a.k.a Lembaga Penilai, Pentafsir dan Ejen Hartatanah Malaysia) shall be located at the following address:

A-27-15 Level 27
Menara UOA Bangsar
No. 5 Jalan Bangsar Utama 1
Bangsar
59000 Kuala Lumpur

Tel No: 03-2288 8815/2288 8816/2288 8817
Fax No: 03-2288 8819

Yours truly,
Douglas GT Tan (E 1579)

Footnote:
The above announcement is based on a Notice dated 5 January 2010 issued by the BOVAEA. The BOVAEA can be reached via email or its website as follows:
Email: lppeh@po.jaring.my
Homepage: http://www.lppeh.gov.my/

5% RPGT Only If Sold Within 5 Years

Dear Readers,

In a Bernama report dated 23 Dec 2009, Prime Minister Datuk Seri Najib (of Malaysia) was quoted as having announced that the 5% RPGT - real property gain tax introduced in the recent budget - would only be applicable to real estate properties sold within 5 years of their purchase.

Recently, in the budget announcement, the 5% RPGT - which was intended to take effect on 1 Jan 2010 - would be applicable regardless of years of holding of the properties by their vendor-owners. "...the decision was made following requests from the business sector and Federation of Chinese Associations of Malaysia or Hua Zong...", the Prime Minister was reported to have said.

With the change, the report further says: the Government will be foregoing about RM200 million in real property gain tax revenue - "We are willing to forego a substantial amount of revenue so that the sector can expand and grow", the Prime Minister was quoted as saying in a speech at the swearing-in of Hua Zong's office-bearers for the 2009-2011 term at Marriott Hotel, Putrajaya.

I am sure all real estate players in the country including the Malaysian property agents (of which I am one) welcome the announcement by the Prime Minister with thanks - it's Good News by the Prime Minister on the threshold of the incoming New Year 2010.

Merry Christmas & A Successful New Year to ALL!

Cheers,
Douglas GT Tan