“Much ado about nothing” :what to do about illegal brokers using PropTech ?
Picture credit: Priscilla du Preez, Unsplash
KUALA LUMPUR (Sept 8): Real estate associations are urging the public to beware of illegal brokers under the guise of technology and innovation.
The associations consisted of The Royal Institute of Surveyors Malaysia (RISM), The Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS), Malaysian Muslim Real Estate Consultants Association (PEHAM), Malaysian Institute of Property and Facility Managers (MIPFM) and Malaysian Institute of Estate Agents (MIEA).
In a joint statement today, the associations are calling for members of the public to deal only with real estate agents and firms registered with the Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEP) when engaging any person or persons to carry out real estate services which include selling, buying, renting, leasing, tenancy administration and advisory services.
The associations said the statement served as a reminder that there are people who are not estate agents but are operating estate agency businesses illegally and using many forms of creative ideas to do so.
They said real estate service is gazetted as a professional service under the Valuers, Appraisers, Estate Agents and Property Managers Act 242, 1981 to protect the public.
“It is also to ensure that if anyone other than those registered carries out the work as an agent in any form or shape or manner, they will be committing an offence and can be charged in court with a fine of not more than RM300,000 and imprisonment for not more than three years or both,” the associations said.
“It is important to state that we are not against innovations and technology but we want to reinforce our stand that we cannot condone anyone, either individuals or companies in any form or shape, who do not comply to existing laws of the land where it fits as far as real estate agency practice is concerned,” they added.
Source EdgeProp
RC's take on the EdgeProp article above:
It's interesting to see so many bodies representing the real estate broking industry band together to issue a statement against illegal brokers using Proptech that has…….. virtually no teeth. The fact is none of the above bodies, including BOVEA- are vested with enforcement powers. In simple terms, they can complain as loudly as they like about illegal brokers using PropTech. But all their complaints won't amount to a hill of beans unless they can get PDRM (Royal Malaysian Police) to take action.
Why hasn’t any body representing the industry taken a more proactive role if they really believe these unlicensed PropTech interlopers are stealing and eating their lunch? They have no money? Easy enough to fix…. Why not levy a charge on every property transaction by their members to finance a fund to track down alleged unlicensed real estate brokers and bring them to book? But I doubt this logical step is not going to happen anytime soon.
I think but cannot be 100% certain the real reason for much ado about nothing is much more mundane. Its easy to beat your drum, aka make allegations about alleged illegal agents stealing your lunch. But quite another thing to prove in court “beyond a reasonable doubt” any Malaysian laws were transgressed. I assume that if the police have to be involved, these are criminal charges that have to brought and not civil.
I asked F, a PropTech strategist, what he thought about the line of reasoning employed by the bodies above : only agents registered with BOVEA should be allowed to rent and sell properties on behalf of clients. Given PropTech now is a jargon umbrella for all kinds of people who want a slice of a fast growing business from legitimate businesses with a registered brand and product line of services that are accepted by the market to businesses and companies pushing the envelope, aka grey areas where I do not know if they are breaking any local laws.
F noted that worldwide, legislation always seems to lag behind in fast growing markets. Lawmakers are extremely slow to adapt, and even when new laws are put in place, the fast moving industries are always five steps ahead. This was especially true for the industries which have not yet reached maturity….But innovation, he added, requires trailblazers. Knowingly or unknowingly they might be on or over the edge of local laws.
Regarding the so-called grey areas I mentioned, F said, “Many jump on the bandwagon and try their luck, often not knowing what they get themselves into, as dinosaurs protect their market / territory, which they often accumulated over many years. Trailblazing companies, read start-ups, are a very interesting and innovative part of our new economy. In the end, the market matures, rotten applies get shaken out, local laws adapt and business is stable. Until the next wave of trailblazers arrives to shake up the market a bit”.
F also made the point that any property owner can rent or sell his or her property without the aid of a licensed agent. Some platforms, he noted, offer individual house owners an opportunity to list their properties. In his opinion, F said as long as the listing platforms are not legally involved in the transaction and local laws are adhered to, they should be allowed to operate.
When Grab first arrived on the scene and disrupted the taxi cartels, a lot of people also complained. Taxi drivers said Grab was not regulated by the Ministry of Transport. “What would happen if Grab car passengers got involved in an accident?”. Well, we now know how that ended. F agreed that Grab might have operated over the line at first. But the company then put in efforts to comply with local laws and have now become a powerhouse for the ride sharing industry. F said obtaining the correct legal licenses for any type of business is essential for survival. New PropTech companies entering the market do need a long term vision, sufficient funding, and adhere to possible legal requirements.
My PropTech Journey, circa 2007-2008
Back in the internet dark ages before iProperty.com and PropertyGuru strode on the scene- I mean back in 2007 -any enterprising real estate agent or for that matter, any landlord could have signed up with Yahoo Small Business Services’ website platform for just US$11.95 a month. The bargain basement price included a free global domain name registration and customized email account. Yahoo Small Businesses Services even included several real estate templates for free. Wowza!
So in 2007 before the advent of the property listings portals, yours truly had registered TWO property listings websites, RentKLCC.com to rent or sell KLCC condominiums and a condo specific website, MenaraPromenade.com to list my 3 studios at Menara Avenue (formerly Menara Promenade) for rent. Of course, there were other people who spotted the same opportunity. I had some competition from KLCCcondominiums.com and several others.
In 2007, internet speeds in Malaysia were not exactly broadband standard. So I could not embed property videos in the RentKLCC.com website. You could however upload your property videos to YouTube - which was what yours truly did ten years ago. And insert a URL link to your Youtube video. And of course, there were serious bandwidth limitations on the Yahoo website platform in 2007. Your website in 2007 could support a maximum traffic of 200G of data per month, and your whole website had to be under 5G of disk space.
Fast forward to 2021, most people now search for property listings using their touchscreen mobiles. But Apple’s iPhone - the first smartphone equipped with a touch screen was only launched in June 2007. The first version of the iPhone was expensive, it had a tiny screen and didn’t have enough power to scroll quickly and display property listings with lots of photos.
So in 2007, most people who had the internet encountered RentKLCC.com on their desktops. To overcome slow downloads of pictures of the properties for rent or sale, my solution was to stick downloadable PDF files with each property listing on the website. See below;.
What happened to RentKLCC.com? I sold it to Mr K, a Real Estate Agent that I got to know quite well, in December 2007 for RM500. But he didn’t have the time to constantly upload listings to the website. He decided not to renew the web hosting plan for RentKLCC.com By June 2008, RentKLCC.com was officially shut down.
In March 2008, iProperty.com was launched. The rest, as the saying goes, is history.
to be continued…..
Post script:
In 2007-2008 when my short lived PropTech listings portal RentKLCC.com existed, the main advertising channel for properties that real estate agents used was STILL the Star newspaper classifieds section. The real estate industry in Malaysia is very slow to innovate and does not take easily to new technology. I think but cannot be 100% certain, that it was around 2011-2012 the property portals finally supplanted Star Classifieds as the main advertising channel.
Now that PropertyGuru Singapore owns iProperty.com Malaysia (the deal was finalized in August last year) and has announced plans for a NYSE listing by 4Q or early 2022, I wonder if most industry stakeholders in the real estate broking industry in Malaysia have again failed to see what is lurking around the corner. RC thinks the biggest threat to the real estate broking industry is not illegal agents using PropTech……No, I think but cannot be 100% certain the biggest challenge facing the real estate broking industry today is its almost total reliance on property portals to list their properties for sale and rent. What IF PropertyGuru decides to pivot its business model towards B2B after its NYSE IPO ? For example, PropertyGuru might be eying a chunk of the lucrative New Projects marketing business from developers for itself. If PropertyGuru ever decides to get a real estate licence, I wonder how many real estate agencies in Malaysia will have the financial clout and data analytics capability to compete….
I have already dug up some information that is freely available on PropTech websites on who are the major shareholders of PropertyGuru are in my earlier post. For the analysis behind the news, stay tuned to 360 KLCC 🤠
