Co-agency arrangements — trending now in a slow market

RECENTLY, there has been a rising trend in the real estate industry where real estate agents join hands to seal a deal. From what used to be every man for himself during better times of the market, the current slow market has prompted many real estate agents and negotiators from different agencies to work together.

The Malaysian Institute of Estate Agents (MIEA) terms this as “co-agency” arrangements.

“We used to say ‘co-broke’, but come to think of it, ‘broking’ isn’t a legitimate term for legal agents, hence we prefer ‘co-agency’,” its current president Erick Kho tells TheEdgeProperty.com.

Kho says one of the reasons for this trend is the economic slowdown. However, just like anything else, there are pros and cons when it comes to a co-agency arrangement, says Kho.

Benefits

“The first major benefit would be speed. People who are new to the real estate industry don’t have a lot of listings. Through this co-agency arrangement, these newbies can get help from other agencies by working together and closing the deal within a shorter period of time than doing it on their own.

“It helps even more in such challenging times to move deals along a bit faster. So you may see more of this happening in the industry,” he says.

Associate director of Hartamas Real Estate Sdn Bhd Christopher Chan concurs, saying that nowadays almost half of the transactions are done through co-agency arrangements.

“For consumers, they will like it because this speeds up the whole process as there are more options for them — doesn’t matter whether you’re buying or selling a property. Because if an agent agrees to a co-agency arrangement, you can tap into the resources of the other agents,” he says.

Disbenefits

The obvious price that real estate agents and negotiators have to pay for such joint arrangements is the splitting of professional fees, say both Kho and Chan.

Both also stress that when entering into a co-agency arrangement, it is important for the negotiators and agents involved to be clear with the terms and conditions to avoid disputes.

Chan advises them to find out about the table of professional fees for the particular deal before entering into the co-agency agreement. He also urges agents to do their due diligence on the listed property.

“Under such an arrangement, an agent or negotiator who has a buyer or tenant will talk to the listing agent/negotiator who has properties listed for sale or rent to see if they’re able to do a co-agency agreement. So the thing to look out for is to ensure that the listing agent has a genuine listing in the first place, because there are times when you’re talking to a listing agent who doesn’t have a bona fide listing.

“It’s also important to check the availability of the property and its selling price or rental as the price discussed may be different from what is being advertised. These are things that an agent has to find out from the listing agent,” Chan points out.

Last but not least, Chan notes that “chemistry” plays a crucial role in a co-agency arrangement as well because if both parties cannot get along, it will be difficult to proceed with the entire arrangement.

MIEA’s Kho believes that as long as the agents/negotiators hold on to trust and integrity, a co-agency arrangement will work well and, ultimately, benefit the whole industry.

As for property owners, both Kho and Chan say they will not be affected by the co-agency arrangement.

“As a consumer, regardless a buyer or seller, it really doesn’t affect you at all, because this arrangement is done between one real estate agency firm and another,” says Chan.

This story first appeared in TheEdgeProperty.com pullout on Dec 2, 2016, which comes with The Edge Financial Daily every Friday. Download TheEdgeProperty.com pullout here for free.