Rising number of property scams alarms estate agents | Malaysian Institute of Estate Agents

Rising number of property scams alarms estate agents

2020-09-29

PETALING JAYA: Property experts agree the number of housing scams during the movement control order (MCO) and recovery MCO may be higher than reported.

Expressing its concern about the increasing number of property scams and illegal brokers in the industry, the Malaysian Institute of Estate Agents (MIEA) recently noted a 30% increase in the number of complaints received during the MCO and RMCO – most of them from members of the public who have been cheated by illegal brokers.

Speaking to FMT, Siva Shanker, CEO of real estate agency Rahim & Co International, said these complaints are just skimming the surface.

“I’m sure there are many more,” said Shanker.

“Scams and con jobs increase during bad times (as) people prey on fear, insecurity and greed. More people are desperate when times are bad. You sell them a story, they buy the story.”

While Shanker noted that Malaysians would not usually lodge complaints unless the sum they lost was “substantial”, a previously insignificant loss might have taken on greater importance during the Covid-19 induced economic downturn.

He said social media platforms were a breeding ground for so-called “property investment gurus” during the lockdown, with numerous courses on how to make millions from investing in property ultimately turning out to be nothing more than glorified get-rich-quick schemes.

“They teach you to make a lot of money but they’ve never used any of their investment strategies for themselves,” he said. “It’s like a diabetes patient teaching you how to control your sugar level.”

MIEA said it had identified 13 ways the public can be scammed, with misrepresentation and excessive commissions key among them.

Among the more common scams during the MCO were illegal brokers promising buyers lucrative deals and then collecting deposits of at least RM1,000 or RM2,000.

However, once buyers proceeded to sign the sales and purchase agreement, they would find that the terms were not as promised, MIEA said. What was promoted as a freehold property turned out to be leasehold, and the buyers would be told that their deposits are non-refundable.

There were also cases of illegal brokers who claimed they could secure homes in low-cost government projects, only to then vanish once they had collected deposits.

MIEA said that last year it had recorded over 70 cases of complaints from April to May, with each case potentially resulting in several different complaints. 

“The numbers are just the tip of the iceberg,” MIEA CEO Soma Sundram Krishnaswamy told FMT.

“MIEA has 25,000 agents and negotiators, but if I had to place a number on the amount of illegal practitioners out there, it could be 20 to 50 times more,” he said.

Former MIEA president Ernest Cheong, meanwhile, estimated there are 10 unregistered agents for every registered agent in the country.

Cheong said that unless the government makes it a law that real estate dealings can only be carried out through licensed agents, illegal brokers will continue to flourish. “The reality is this. If you deal with licensed agents, they won’t run away with your money.”

MIEA said the lack of awareness about the difference between a registered and unregistered agent was one of the reasons for scammers being so rampant.

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