There are many who are quick to target estate agents and blame them for everything from inflating property prices to lowering selling prices and generally muddying the waters.
Choosing to work with the right agent is almost as important as finding the right property or selling the home. The wrong agent can create absolute havoc and can quickly turn what should be a happy experience into a nightmare. While it may not be that easy to discover the secret to finding the right person for the job, there are ways to quickly determine whether or not an agent is actually up to the task or, more importantly, if they are legally allowed to sell property in South Africa.
An estate agent is not permitted to sell property if he is not registered with the Estate Agency Affairs Board (EAAB) and does not hold a valid Fidelity Fund Certificate (which has to be renewed on an annual basis) and which licenses him to practice. Although agents may attempt to explain why they do not have this essential document, it’s perfectly simple - if they don’t have one, whatever the reason - they can’t sell property, period.
Unfortunately, as with so many other areas of the law, many have adopted an ‘if they can get away with it, so can I’ approach and there are large numbers of agents who continue to flout the law by not being in possession of this mandatory document. The question that buyers and sellers need to ask themselves is this - if an agent is willing to break the law in this regard, what are the chances that he is going to bend the rules in other areas?
In order to qualify for a Certificate, an agent must comply with a number of requirements which include submitting an annual audited report of his trust account to the Estate Agency Affairs Board as well as being found to be a fit and proper person. People with criminal records may not, by law, operate a trust account.
Agents have been known to supply every argument known to man as to why they do not have this vital document and it could be argued that the EAAB itself is to blame for a lot of the confusion. The Board, unfortunately, has a history of not getting these certificates out on time. Whatever the reason, an agent cannot sell without a certificate, regardless of how well qualified he is or how long he has been in the industry. He has to stop operating until he receives the document. The general rule is that commission does not have to be paid to an estate agent that is not in possession of a valid Fidelity Fund Certificate unless, in the court’s opinion, there are mitigating factors.
The importance of this seemingly small piece of red tape is overlooked by most of the South African property buying and selling public and very few agents are ever asked to produce this important licence to sell. Of course, this isn’t a problem when things go according to plan, but it can become a major hassle when money which a buyer has in good faith placed into an unaudited trust account is misappropriated. It is time for buyers and sellers to get their priorities right and find out the basics before entrusting large sums of money to an agent.