Why you should consider employing a real estate agent at all? What can he do for you that you may not be able to do yourself? First of all, if you select the right agent, he will be able to guide you from your initial goal setting phase through the selection, acquisition and management of your investment. His services may help make your venture an outstanding real estate investment, especially for the first time investor.
A knowledgeable property agent not only understands and practices the many different facets of real estate investing, but he also knows the market. When it comes to negotiating the purchase, he is a middleman, able to get a contract agreement more easily than when a buyer and seller meet face to face. When it comes to selling or renting a property, he is a salesperson, able to locate the right buyer/tenant for you.
However, there are many full-time real estate salespeople who have never been active or have never become knowledgeable in the filed of investment real estate. Since you are about to invest the largest sum of money or cash advance you have ever spent, you deserve the best.
The property agent you want should have the basic knowledge in real estate investing, taxation, depreciation, management and financing. He is experienced in the field because it is his only business.
How do you find this agent? Contact them through property listings/advertisements on local papers, Internet or referrers like your relatives and friends. Give them a call and ask them some questions about property investment to start the evaluation process.
When you are evaluating a property agent, watch out for agent with the following characteristics:
1. Cannot answer most of the questions you ask about a property and its prospect of investing, such as the age of the property, expected rents, rental demand, maintenance cost, etc – he may not be knowledgeable enough to assist you.
2. No reply at all after you have called them – he may be picky about his clients.
3. Respond to your enquiry slowly until you have to remind him – he may not be interested to serve you.
4. Prefer to SMS you instead of calling you, unless the SMS delivers details like numbers and addresses – he may be stingy and calculative (he may not even want to fork out money to advertise for clients).
Two simple rules of thumb of a good property agent:
1. Care to go for extra miles – able to provide more information and services than you wanted.
2. Fast response – time is the money.
Although normal custom seems to dictate that a property agent is employed by the seller of a property, there is nothing wrong with you, as a buyer, employing him to find you investment and you paying him professional fee. He should then represents you and is obligated to purchase the property you want at the lowest price and best terms.
In Johor Bahru, the market rate of agent’s professional fee or commission is seller pays 2% of the purchase price while buyer pays 1%. It seems to be a norm also in Johor Bahru that in most transactions there is only one property agent – a salespeople appointed by the seller.
It is always not advisable to just rely on seller’s agent in your purchase – there is conflict of interest because the agent tends to side the seller since their pay is proportional to the purchase price. In fact, according to the Board of Valuers, Appraisers and Estate Agents Malaysia, a property/estate agent shall not accept fees from more than one client in any one transaction.
For example, if you are buying an auction property from a bank through a property agent assigned by the bank, the agent should only receive commission from the bank and you don’t need to pay the agent.
However, the services and investment guidance you can receive from a good property agent is well worth what you pay him. If you like his services, do pay him well and pay in time.
(If you’re not already a subscriber to Real Estate Investment in Johor Bahru, subscribe here to receive our FREE latest update and articles via email.)
We write regularly useful information about real estate investment. Some of our featured articles include:
“How to know if a property investment is worth investing?”
“How to finance your real estate investment for maximum return?”
“How to estimate the value of a property?”
(Also, don’t forget to subscribe to our newsletter to receive a property investment evaluation tool. You can use this tool to estimate monthly cash flow, monthly installment and return on investment for your property. This tool will also show you if a property investment is worth borrowing/leveraging.)
Your comment and feedback on our posts are very much welcome. Please visit our blog posts to view other readers’ comments and write your feedback.
Related posts:
{ 19 trackbacks }
{ 19 comments… read them below or add one }
Hi KL,
Thanks for the sharing. Maybe you can come out with a set of questions we should ask our prospective real estate agents, before engaging any.
In Penang, I’ve met many agents who don’t really know about the market. Only a handful of them are professional and knowledgeable.
Thanks for the suggestion, KC.
Some questions that we normally ask our real estate agents:
How old is the property? Fully-furnished or unfurnished? Lease hold or free hold? How big is the built-up area? How much is the monthly maintenance cost, if any?
Any other expenses for the property? Has the individual title issued? Why does the owner want to sell?
What is the lowest offering price? Is the price reasonable in the market? Any room for negotiation?
How much is the highest and lowest rent I can get from the property? How long will you need to find a tenant for the property?
Once you have asked the same questions to several agents, you will be able to identify who can serve you better.
Happy Lunar New Year
Cheers
Hi Ong,
Glad that you like my blog’s post on Malaysian National House Buyer Association.
You are really well versed in real estate. Your blog is really insightful.
I have put it in my blogroll. Thx.
Hi WY,
Thank you. Hope we can learn and hear more from you.
Happy Lunar New Year
Cheers
how would u know if the agent u’re hiring won’t be trying to sell for his clients? wouldn’t there still be conflict of interest as agents would likely already have a pool of clients they’re already serving and earning commission from?
Hi LYY,
In today’s market where sellers are more than buyers, agents start to know they have to serve buyers better in order to close any deal. However, we always encourage home buyers and investors to do their ground work like learning how to estimate the property value, how to identify a property worth investing and borrowing before negotiating any price with the seller through agent.
No doubt most of the agents today still tend to sell for their clients and the conflit of interest is there. It’s our own responsibility to protect our own interest. And the best way to do so is to equiped ourselves with the right investing and market knowledge.
Cheers
Hi OngKL,
Thanks for the reply. May I know what’s the standard fee like for hiring/paying an agent in KL or PJ area? Is it 1% of the property purchase price like in JB?
Yes, you are right, LYY. But for certain higher value transactions you may negotiate with the agent to have some discount on the commission. For example, for a RM500k transaction we normally expect to get 20%-30% discount from property agent, i.e. 0.7%-0.8% of the purchase price instead of 1% for agent’s commission.
Cheers
This is another great article… God job Ong..
Thanks, Fauzi.
Hi Ong,
I intend to buy a condo in jb. Is it the norm for buyers to pay 1% commission plus govt tax to the agent? according to my lawyer buyers dont pay any commission. Pls advise ASAP as i’m suppose to sign this friday. Tks.
Hi Syed Muhammad,
If the agent is engaged by you to look for a particular condo, yes, you have to pay the agent 1% commission for his/her service upon signing the sell and purchase agreement (SPA), but no government tax is required.
If the agent sells the condo on behalf of the owner, you can choose not to pay this commission because real estate agent can get commission from one party ONLY according to the code of conduct imposed by the Board of Valuer and Real Estate Agent Malaysia. However, if you like his/her service to locate certain condos that you have been looking for, paying the commission will save you a lot of time.
Cheers
With regards to property agents, I saw the unit on the internet, called him and he arranged for viewing. That was all. But he requested that i pay him the 1% commision. Is that the norm? Tks
Hi Syedmuhammad,
Have you viewed the property? If so, how many agents were there during the viewing? If there was only one agent, you can negotiate with him since he will get his commission from the seller. If he co-brokes with other agent, then you should pay him the 1% commission because he can’t get any commission from the seller.
Cheers
Hi… i would like to have several agents to email my boss for any good prospects of shop lots/condo or other property with good prospect rental and develop and also the initial price for that prospects… she also have other property to be sell/rent at cyberjaya. Therefore, whois interest kindly email me to know the details..
thanx..
I just had a bad experience with a property agent…
where do I check the property company that this agent is belongs to?
davis_damma@hotmail.com
as I was asking for more info about the property basic info, instead of giving me all the details at once I have to reply several emails to ask and some of the question were ignore.
I was expecting info like, tenure, maintenance fee, location, even apartment name! all these weren’t answered. instead below is what the response when i question about this professionalism.
#
#
i did given all d details. you shld point your self before telling others ok. for enquiry u shld call first and ask. whatever u ask i did reply then wat else. next time no money dont talk or mail…. wasting pple time. how dare ask me no qualified.. idiot… bloody moron…
#
i think m wasting my time with you. should call me for more details then kept mailing. think u dont have enuf top ur for ur prepaid.
bye………
#
Date: Tue, 25 Aug 2009 00:28:53 -0700
From: xxx_xx@yahoo.com
Subject: RE: Reply: Apartment in Tampoi
To: davis_damma@hotmail.com
are you a qualified agent? cos if you’re then you would have given me all the detail at once rather than having to have asked and not answered.
you should know wat’re the basic info to be given.
Although acquiring real estate agent has more benefit rather being single one , the most significance of keeping him with you is that he serves more effectively to get a contract agreement more easily than when a buyer and seller meet face to face as mentioned in the post, cuz there are many hide and seeks buyers or sellers may not know but these can cause problems afterwards.
Glad to see your website,which is real informative
hi Ong,
Do you have lawyer firm to recommend to deal with auction property? I need this urgently. Would you give me suggestion please?