Ensuring fair practice in real estate valuation, appraisal, and property management.
The Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEA) or better known as LPPEH (Lembaga Penilai, Pentaksir, Ejen Hartanah & Pengurus) is the regulating body for Valuers, Appraisers, Estate Agents and Property Managers in Malaysia. Quite a mouthful isn’t it?
Let’s explore LPPEH for a better understanding of its roles and functions. This blog aims to help those interested in purchasing or renting properties in Malaysia, as well as those who are interested in real estate as a career.
A little history & getting to know the terms
LPPEH was set-up in 1981 and falls under the jurisdiction of Malaysia’s Ministry of Finance. Registered valuers and appraisers in Malaysia are regulated under the Valuers, Appraisers and Estate Agents Act 1981.
To get started, let’s get acquainted with some of the terms:
Valuers and appraisers – expert surveyors who consult clients on valuation of properties including houses, factories and shops.
Estate agent – a go-between (ie, an agent) for the owner and the buyer, assisting with their negotiations in the sale or rental of property or land till the completion of the deal.
Property manager – a person, firm or company who manages or maintains or controls a land or building on behalf of the owner. The property manager must be a registered valuer with LPPEH.
Property management – the management and control of any land, building and any interest in the land or building on behalf of the owner for a fee. This excludes the management of property-based businesses.
Property-based business – examples include hotel, motel, hostel, plantation, quarry, marina, port, golf course, cinema, stadium, sports complex and hospital.
As of 13 January 2021, the number of registered members with LPPEH stands as follows:
Type of Licence
LPPEH’s (Lembaga Penilai, Pentaksir, Ejen Hartanah & Pengurus) role
The primary function of LPPEH is to ensure that registered valuers, appraisers and estate agents in its care comply with prescribed standards of ethics when carrying out their responsibilities. Ethical practices include professionalism, integrity, spirit of fairness in competition, avoiding double standards and client protection against fraud.
LPPEH’s role breakdown:
To keep and maintain the Register of Valuers, Appraisers, Estate Agents and Property Managers, Probationary Valuers and Probationary Estate Agents and firms of Valuers, Appraisers and Estate Agents.
To approve and reject applications for registration.
To hold disciplinary proceedings.
To conduct examinations.
To prescribe Scale of Fees.
To regulate the professional Conduct/Ethics of Valuers, Appraisers, Estate Agents and Property Managers.
To award scholarships.
A look at the jobs of Property Valuers, Real Estate Agents (REA) and Property Managers
If you are thinking of selling your house or an office lot, you would be interested to know how much the current market price is before you set a price, right? Having a good idea of the price of the property you have for sale is the first step to attracting prospective home buyers to take an interest in what you have to offer. This is where valuation comes into play.
Property valuers will conduct an evaluation of how much your property is worth if it were to be put on the market. This is based on the current market value, i.e. an estimation of how much your house or shop is likely to be worth at that particular point in time. During the movement control order (MCO) due to COVID19 in 2020 and 2021, property prices were soft (i.e. there are more sellers than buyers). As a result, the value of the property will be lower compared to thriving economic times when demand for property is high.
Valuation is carried out by registered and authorized companies like banks and valuation specialists. The worth of a piece of property is calculated based on recent property transaction prices, as well as other market factors such as location, the type of property, demand and supply, general economic trends and area demography.
Real estate agents (REA)
In Malaysia, not anyone can simply claim to be a real estate or property agent. They have to be accredited with LPPEH, the big brother who keeps a strict and watchful eye on the estate agency profession as a whole. Property agencies can operate individually as a sole-proprietorship, a partnership or as a corporate (a Sdn Bhd). Only those registered with LPPEH can set-up the practice. In the case of sole proprietorships and partnerships, the owner and/or partners must be fully authorized. For corporations, the majority of the directors must be registered. So, what is it that real estate agents do?
Real estate agents provide services of selling, leasing or searching and purchasing property for clients. They are your advisor, the salesman and the creative marketeer in one package. Experienced agents can help market your property efficiently as they have sound knowledge in the field. In fact, most of them possess good sales craft in property marketing and can make your listing shine out from the hundreds of ads out there.
Known to have an established database of contacts, these agents will be able to send out your listing to the right target audience, e.g. those living around the vicinity or district. It would save you precious time and headache by hiring a real estate agent to act as the intermediary to bring prospects for viewing, help with shortlisting and to use their persuasiveness to help close the deal for you.
How to differentiate a bona fide property agent from a potential scammer? Go tohttp://search.lppeh.gov.my/ to conduct a quick search on your agent with their registration number, or scan the QR code on their ID tag. If nothing comes up in the database, seek clarification right away from the property agency they supposedly represent!
Property management is a third party service where a company specializing in this field is engaged to manage and maintain a building on behalf of the owner. Examples include condos, supermarkets, hotels, etc.
Property managers are hired by property management companies not only to see to the needs and concerns that tenants may have, but also to make sure that the property is safe, well maintained and habitable. Depending on the type of property managed, the responsibilities may vary.
Generally, the property manager works to ensure that the owner’s goals are met by managing rent, tenants, maintenance, budgets, and rental property records. To be effective, they must have in-depth knowledge regarding the legal methods to screen tenants, handle security deposits, terminate leases, conduct evictions, and comply with property safety standards.
In Malaysia, property managers are required to be accredited with LPPEH.
Did you know? Registered real estate companies are NOT allowed to operate from shared working spaces or virtual offices. If your agent quotes or brings you to a co-working space claiming that is their HQ, beware!
Real estate as a career (REN and REA)
You may have known of friends in the property industry or heard of agents who earn fantastic commissions until they can sport luxury brands, cars or embark on that enviable holiday! Does that encourage you to try for a career in real estate? Or, perhaps you have been considering a job as a real estate agent but are unsure of how to go about it.
Honestly, the real estate profession is one of the most promising careers to consider as it can potentially bring high earnings in a short time while allowing job flexibility. To give you an idea of how much one can earn in this industry (known as fees or commission), here is a summary of the commission structure for Real Estate Agents (REA) in Malaysia:
Up to a maximum of 3% for the sale or purchase of land and buildings (this is all inclusive of property swaps, joint ventures, etc).
10% for chattels (i.e. moveable property such as computers, paintings, antiques), plants and machinery.
Commission for rental may vary according to the length of tenancy. It is safe to say that 1 month’s rental is the basic minimum fee.
Info from the Malaysian Institute of Estate Agents
Starting as a Real Estate Negotiator (REN)
If you want to get acquainted with the world of real estate marketing, a good place to start is by becoming a Real Estate Negotiator (REN). To become a REN, you will need to attend and complete a Negotiator Certification Course (NCC). This is a 2-day course where the basics of estate agency as well as the related laws, Acts and standards pertaining to the industry are taught. A certificate of attendance is issued upon completion of the course.
Do note that RENs are not required to be certified with LPPEH. So, armed with the NCC certificate, look for employment with a registered property agency. Your new employer will then apply for a REN tag for you from LPPEH. Once you get the red REN tag, congratulations! You are well on the way to a promising future in real estate prospecting!
Becoming a Real Estate Agent (REA)
Ready for the challenging and rewarding (oklah… sometimes also glamorous) profession as a Real Estate Agent (REA)? As a qualified REA, you can run solo, or if you are ambitious enough, set-up your own agency and employ up to a max of 50 Real Estate Negotiators (REN). Yup, RENs work for REAs. And, nothing beats being your own boss!
First things first, to qualify as an REA, you will have to pass LPPEH’s Test of Professional Competence (TPC). This involves registering as a Probationary Estate Agent (PEA) and undergoing practical training for 1 or 2 years with a real estate agency.
Registration as a PEA will depend on your level of education. SPM/STPM level equivalent will have to sit for and pass LPPEH’sEstate Agent’s Written Examination (held yearly in June or July) before applying for registration. Degree holders in a property related course are exempted from this written exam and can apply directly to be a PEA.
Once LPPEH is satisfied that all application requirements are met, they will then register you as a PEA, give you a red tag (similar to the REN’s) and advise you on the commencement date of practical training.
The waiting period between registering to be a Probationary Estate Agent (PEA) and confirmation is not fixed and may take longer than expected. The faster alternative is to apply to be a REN and begin working at an agency while you await your PEA registration. This way, you can kill two birds with one stone – i.e. practice and make money at the same time!
The length of practical training is also dependent on your level of education -i.e. 2 years’ training for those with SPM or STPM level and 1 year for degree holders.
During your stint in practical training, it pays to keep an updated and detailed ‘work diary’ of your daily tasks at the real estate agency. It is imperative to keep a full account of all the work that you do, especially in areas required for the TPC exams. The diary is part of the requirements for your TPC examinations as well as being an invaluable portfolio for future use.
The TPC is a combination of written work (that includes your work diary) and an oral “Professional Interview”. On successfully passing the TPC, you will be eligible to register as an REA, given a blue tag with an E number (E xxxx) which will allow you to practice. Give yourself a well deserved pat on the back and GO FOR IT!
There is color differentiation between the REA and REN name tags. These tags are given out by LPPEH to represent the qualification of the agent. The REA’s tag is BLUE whilst the REN’s or PEA’s one is RED.