Circumventing Real Estate Scams

In an increasingly digital age, where the quest for a dream home or a property investment often begins with a click, the landscape of real estate transactions has unfortunately become fertile ground for scams. Year on year, the number of real estate scams has not only grown but become far more sophisticated and innocent individuals are losing significant sums of money, caught in a wide array of deceptive methods. 

Understanding these prevalent threats, how to verify the legitimacy of a property agent and what crucial steps to take if one falls victim has never been more vital. One deceptive tactic involves properties offered at prices significantly below market value, often with seemingly generous discounts. These tempting offers are typically fronts for impersonations of Malaysian government agencies or reputable real estate developers. Unsuspecting buyers, lured by the promise of an incredible bargain, pay deposits or even full sums, only to discover the entire transaction was a fabrication, their money irretrievably lost.

Another prevalent scheme features criminals posing as legitimate property owners. These impostors might rent out homes they don't own, collecting security deposits and initial rent from multiple tenants before vanishing. In more elaborate frauds, they attempt to sell a property, defrauding buyers of substantial down payments or mortgage installments using doctored identification and forged deeds. Victims are left not only financially ruined but also embroiled in complex legal battles, with no legitimate claim to the property.

More complex, speculative frauds include the 'Buy-2, then sell-1' schemes. Here, the future potential of a real estate project is wildly exaggerated. Buyers are persuaded to purchase two properties with the promise that one can be sold for a significantly higher price upon completion, effectively making the second unit free. These schemes often culminate in profound disappointment, as the properties fail to appreciate, leaving buyers burdened with enormous debts for unsellable assets in a stagnant market.

Some scams tragically exploit the desperation for affordable housing or financial solutions. Perpetrators falsely claim to offer exclusive gateways to government-backed programs or expedited loan solutions. Vulnerable victims are then convinced to pay exorbitant handling fees or administrative charges to secure non-existent services, their money vanishing without a trace.

Deceptive advertisements and promotions also play a significant role. These frauds use false information, heavily retouched photos or strategically omit crucial details to defraud deposits. When issues inevitably arise, illegal real estate agencies refuse refunds, citing fabricated reasons. Furthermore, unscrupulous individuals may conceal the true price of land or real estate transactions, manipulating information or tampering with land deeds to secure huge, illicit profits, causing significant financial loss to buyers.

Finally, renovation scams plague homeowners. These involve contractors providing deceptively lowball quotes, only to demand escalating payments for unforeseen circumstances. Homeowners are left with unfinished work, substandard results, or worse, contractors who abscond after collecting substantial deposits, leaving behind a damaged property and a drained bank account. Thorough research is paramount before any real estate transaction.

One property advisor said: “If a deal sounds too good to be true, it usually is. As a buyer or tenant, this should immediately set off your internal alarm bells. Falling for scams is also in part the victim’s fault. Deep down, they already know it’s a possible scam but there’s that mentality that it can’t happen to them. In wanting to cut corners, instead they have their corners cut.”

Do the due diligence

Given the common reliance on real estate agencies, verifying an agent's legitimacy is non-negotiable. In Malaysia, real estate professionals fall into two categories: Real Estate Negotiators (REN) and Real Estate Agents (REA). Both require specific certification and licensing by the Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEA) to legally offer services. RENs complete the Negotiator Certification Course (NCC) while REAs pass the Probationary Estate Agent (PEA) exam, undergo an internship and an interview.

A key indicator of legitimacy is the agent’s displayed license. A licensed REN carries a red license, while a registered REA possesses a blue one. Both licenses must visibly display the agent's name, photo, identification number, license number (eg REN 12345), their real estate company's name and registration number, a QR code and the BOVAEA logo. If you have concerns, always request to see their license and scan the QR code. This links directly to BOVAEA’s website, confirming the agent's legitimacy and details.

Another vital method is verifying the real estate company's registration with BOVAEA to avoid fake licenses. BOVAEA’s website offers a comprehensive database for company verification or you can call their hotline at 03-22876666. Checking the agent’s license number directly on the BOVAEA website is often the quickest verification method, as only certified agents are listed there. If an agent isn't displaying their license, ask for the number to verify.

Remember, a real estate agent must be affiliated with a registered real estate company. They cannot operate independently. Confirm this affiliation by using the Search for Firm option on the BOVAEA website or by directly contacting the real estate company.

Finally, scrutinise property listings and advertisements. BOVAEA regulations mandate that all real estate ads, online or physical, must include the agent's electronic registration number, name, the real estate agency's REN number and a contact number. Any ad lacking these details is suspicious. Capture a photo as evidence and report it to BOVAEA, providing the location, date, time and your contact information. These five methods collectively safeguard buyers and investors from illicit operators. Unlicensed real estate practice in Malaysia carries severe penalties, including fines up to RM300,000, imprisonment for up to three years or both, under Section 30(2)(b) of the Valuers, Valuers and Estate Agents Act 1981 (Act 242).

It is crucial that victims remain calm and act swiftly to impede the scammer's progress. Immediately pause any ongoing transaction or transfer process and contact your bank to temporarily suspend credit card or bank account services involved in the fraud.

Promptly inform the police, providing all available details and documentation to aid their investigation and bring perpetrators to justice. Concurrently, file a complaint with the relevant government departments, as different agencies oversee specific types of fraud. Report real estate agent scams to the Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEA/ LPPEH). For online fraud, contact the Ministry of Communications and Multimedia Malaysia (MCMC). Financial fraud should be reported to Bank Negara while renovation and construction scams fall under the Construction Industry Development Board (CIDB). For broader consumer fraud, reach out to the Malaysian Ministry of Trade and Consumer Affairs (KPDNHEP). To ensure future security and a seamless property experience, always engage a trustworthy real estate agency from a reputable company. Credits: Star Media Group Berhad - Star Property - Published 2nd Aug 2025 -  Joseph Wong