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Encounters with Bad Apples
 
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Encounters with Bad Apples
Chan Ai Cheng discusses common complaints against real estate agents and gives tips on how to avoid them
Posted Date: May 12, 2011
By: Chan Ai Cheng

As in every industry, there are shining examples, the ‘unsure’ ones and the downright bad apples.  We just have to know which they are when we come across them in our quest for the right property.

Where the term ‘Agent’ is used in the article below, the term will be broadly used to cover Estate Agents and Negotiators.

Misrepresentation

“Agents” must refrain from misrepresenting material facts - either affirmatively or by willful or negligent omission.

What is a material fact? It is any information that might affect the parties’ decision whether to buy or sell. This would include information that could put the interests of the parties at risk.

Such information include facts about the property (leaky roof, presence of asbestos, etc.); facts relating to the property, including zoning changes and plans for a major highway nearby; and facts which relate to the seller’s ability to complete the transaction, such as a bank foreclosure.

Typical complaints of misrepresentation involve failure to disclose hidden defects, changes in land use, and lot-size errors.

I have come across a situation where a buyer purchased a 22 x 75 house thinking it was 22 x 80 as represented by the ‘agent’ only to discover the actual measurements when the copy of the title was presented to the Buyer’s solicitors.  That’s 110 sq ft smaller than it actually was! 

I understand that in this case the ‘agent’ was given the wrong information from the seller of the property. To avoid this sort of situations, it is best to insist for a copy of the Title to the property to confirm the lot dimensions and the floor layout plans, where available and it pays to measure the property yourself before you make an offer to purchase.  Simple measurements can be made based on the size of the tiles or width of the door for rough estimates.  [Ed’s Note: If the seller has previously taken a loan, a valuation report would have been done and the dimensions would be reflected in the previous Sale & Purchase Agreement, unless it was bought directly from the developer].
 
On facts about the property itself, for example, leakages, termites etc., you should insist that the ‘agent’ disclose to you these matters as to the best of his or her knowledge.  At times it is also a challenge to the ‘agent’ as he or she is really no expert in house construction and wear and tear.  It is still best to engage the services of a house inspector for a complete report on the condition of the property to avoid any nasty surprises when you move in.

As for facts relating to the property, where it concerns the neighbourhood, it may not always be the case that the ‘agent’ is setting him or herself out to deceive but merely out of ignorance and lacking the practice of due diligence.  For instance, new zoning, road expansions etc., the ‘agent’ may genuinely be unaware of the changes to the locality. 

This is where locating an ‘agent’ who focuses on the area you plan to buy comes in very useful.  Having been in the market, that ‘agent’ should be more conversant of the going-ons there. And with the advent of the internet, we really should conduct our own independent assessment as well.

I would say that the more severe of these misrepresentations is claiming to be the appointed ‘agent’ for the sale of the property when in reality the owner has not given any such instructions.  Due to overzealousness, some ‘agents’ would advertise for sale properties that they have not listed or secured authorization to act on behalf of the owners. 

Mishandling Monies

It is always a matter of concern when it comes to money.  I have also come across situations where clients are in great despair after their earnest deposit paid to an ‘agent’ went missing.  At times I wonder how this can happen when the cheque is payable to the company and not the individual.  This is when I realize that some clients pay their earnest deposit in cash to the ‘agent’. 

In order to avoid such situations from arising, check up on the ‘agent’ and the ‘agency’ he or she is representing.  Then, always make the earnest deposit payments in the name of the estate agency firm and not any individual names including that of the owners.  All estate agency firms have a clients’ account where monies are kept there as stakeholders till the completion of the sale process.  Insist for a copy of the documentation and necessary receipts and store them in safekeeping should a need arises.

Drafting Agreements

It is going beyond the scope of works of the ‘agent’ when they offer to prepare Agreements.  This is often the case when it comes to Tenancy Agreements.  It is important that you refer to a solicitor on matters pertaining to agreements as this falls within the expertise of the solicitors and not the ‘agent’.  In a matter of dispute on the agreement, your solicitor would be the best person to represent you.  It pays to engage a good solicitor for your real estate transactions.

[Ed’s Note: In tenancies involving rentals of less than RM1,500 per month, it sometimes suffices to use a standard tenancy agreement which is later stamped. Many agents charge a fixed fee of between RM100 – RM300 to “prepare” the Standard Agreement. You have the right not to accept it and to arrange for your own Tenancy Agreement to be prepared. After all, you are footing the bill for the agreement and thus should be able to decide who you prefer to prepare the agreement.]

Lack of Communication

Many complaints come from disgruntled clients that their ‘agents’ do not return their phone calls or keep them updated on their transactions. To avoid this situation, be proactive and call or sms the ‘agent’ to remind him or her of your property requirement and to keep you on the alert of properties that are suitable for you.  The ‘agent’ could have misplaced your contact unintentionally.

In summary, I would like to re-emphasize that as in every industry there are shining examples, the ‘unsure’ ones and the downright bad apples.  I hope you come across the ‘shinning examples’ ‘agent’ and find your quest for the right property a pleasant and enjoyable experience.


Chan Ai Cheng is the General Manager of S. K. Brothers Realty (M) Sdn Bhd, a firm established since 1979 in the practice of Real Estate in Malaysia.  She is a Registered Estate Agent with the Board of Valuers, Appraisers and Estate Agents Malaysia (LPPEH) and a Member of ISM and MIEA.  She was recently conferred the prestigious title of Certified Residential Specialist by NAR, USA and also recognized for her contributions by the Malaysian Women’s Weekly 2007 being the Winner of the Great Women of Our Time Award in the Finance & Commerce Category.   She is a regular feature in the press on property matters.

 


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