Can A Malaysian Real Estate Agent Act for a Buyer or a Tenant?

Dear Readers,

Have you ever wondered whether in law and in practice: A Malaysian Real Estate Agent can act for a buyer or a tenant of a property?

In my nearly 20 years of experience in the real estate agency trade, the agency firm which I worked for previously as well as my own agency firm had on some occasions acted for the buyers (instead of the Vendors) who were therefore the firm's clients responsible for the payment of the firm's estate agency fees upon successful purchase of their wanted properties. One such case was recorded in my "Record of Experience" submitted, among others, to the Board of Valuers, Appraisers & Estate Agents of Malaysia (the "Lembaga") in my Test of Professional Competence before qualifying for registration as a Malaysian Real Estate Agent by the Lembaga.

And, in August/Sept this year (2010) too, I have also successfully acted for a Tenant who wanted me to find a replacement tenant to take over the remainder term of his tenancy. This Tenant (not the Landlady) became my client and paid me my fee when the replacement tenancy was approved and accepted by the Landlady.

So, while it is the common practice in Malaysia for the REA to act for the Vendor (or the Landlord, as the case may be) as the REA's client, under our Malaysian estate agency law, a Malaysian REA may act for the Buyer (or the Tenant/Lessee) of a property instead of the Vendor (or the Landlord/Lessor). Under our estate agency law, "Estate Agency Practice" (vide: Definitions Chapter of the MEAS) means:
"acting or holding oneself out to the public or to private individuals or firms as ready to act in whatever manner (including the act of referring or introducing the availability of land (as defined in the National Land Code) for sale or rental discreetly or otherwise), for a commission, fee, reward or any other consideration in respect of the sale or other disposal of land and buildings and of any interest therein or the purchase or other acquisition of land and buildings and of any interest therein or in respect of the letting or renting of land and buildings and of any interest therein"

In the preceding paragraph, I used the words "instead of the Vendor (or the Landlord/Lessor)" because a Malaysian real estate agent cannot act for more than 1 party to the same estate agency transaction as stipulated in Rule 89(2) of the "Valuers, Appraisers & Estate Agents" Rules 1986 (the "VAEA" Rules) which reads:
"A registered estate agent shall not charge or attempt to charge fees on more than one party in any one transaction...".

The party that the REA can charge fee is the REA's "client" or "principal" under our estate agency law and professional practice.

Rule 89(2) means that if the Buyer (or the Tenant) is already the client or principal of the REA (who is therefore responsible for the payment of the REA's fees), the REA CANNOT also collect or attempt to collect fees from any other parties to the same transaction including the Vendor (the Landlord or the agent acting for them, whichever is relevant).

Collecting or attempting to collect fees from more than 1 party to a real estate agency transaction is illegal under our Malaysian estate agency law (i.e. contrary to Rule 89(2) of VAEA Rules) and, I believe, against the Malaysian "agency law" in general as well.

So, to the question "Can Malaysian Real Estate Agent act for a Buyer or a Tenant?", I would say: "Yes, both in practice and in law, a Malaysian Real Estate Agent can act for a buyer or a tenant".

Some expat customers of mine in fact told me that back in their countries, the normal practice is for the Buyer or the Tenant to pay agency fees to the agents. So, they were pleasantly surprised when in Malaysia, they didn't have to pay agents' fees and yet could hitch multiple free rides to view properties until their wanted ones were found!

I have therefore urged in my "Record of Experience" that more Malaysian REAs should act for their expat Buyers or Tenants/Lessee (who in their home countries commonly pay fees to agents as the agents' clients) while other REAs act for the Vendors or the Landlords/Lessors so as to generate more incomes and tax revenue all round for the Malaysian REAs and our country.

All views and comments are welcome.

Cheers,
Douglas GT Tan
Publisher of
http://PropertyMarketingMsia.blogspot.com