Up until 2008 just about anyone could become an estate agent by paying a registration fee, but the recession and new legislation has put a stop to that.
Over the years, tough property market conditions and stricter qualifying criteria have largely rooted out fly-by-night property practitioners in South Africa. This in turn has changed the dynamics of the industry and brought an end to an era where ‘mom and pop’ estate agencies were common. Despite this progress there is a lingering perception that the real estate industry is a ‘soft option’ populated largely by individuals out to make a quick buck.
Up until 2008 there was reason to believe this was the case. Seemingly anyone could become an estate agent and make a good living just by paying a registration fee. Unfortunately stories of botched property deals were common and the industry lost a fair amount of credibility.
The recession and new legislation changed all that says Jason Parker of Verna Herbst Properties. “The recession and new legislation changed the rules of the game. Deals dried up virtually overnight and agents had to meet certain standards in order to be able to practice. For many, it was simply too much and many agents left the industry.”
Putting the fallout into context, at the beginning of 1996, the number of South African real estate agents totalled 80 000. Today, approximately 30 000 agents are registered with the Estate Agents Affairs Board (EAAB).
“The upshot is that only genuine, committed estate agents capable of meeting the requisite standards remain,” notes Parker who points out that aside from fewer deals and more stringent qualifying criteria, there are other factors which make property marketing an extremely demanding occupation.
“Estate agents have to acquaint themselves with local property market conditions and statistics, work around individual budgets and wish lists, understand legal issues and realistically appraise properties. They have to price counsel sellers, identify suitable buyers, network, list the property, prepare all of the marketing material and ferry around clients to properties, usually all at their own cost.
“Agents also have to fend off other property hungry estate agents, deal with feuding couples or families and are routinely snubbed by clients who simply leave them hanging. Seven day work weeks are not uncommon and estate agents are often expected to put their own lives on hold to service clients at all hours.”
What’s more is that assuming a 50/50 split with the agency on a commission of 7% this means that an agent is earning approximately R34 790 per deal before expenses and tax on a R994 000 home (the average price of homes transacted in January 2015).
All of this aside, even when a house is ‘sold’ there is no guarantee that it will actually go through says Parker who says that a significant number of sales still fall through because of failed bond applications. Even when a deal does go through, payment is only received three to six months after the fact he points out, which means things can really get tough if an agent only closes a deal every few months.
“In short, the real estate industry is not for the faint hearted. Fly-by-night estate agents haven’t cut it and those that remain are qualified, dedicated and hard-working, all of which ultimately actually serves to improve the industry and enhance the service delivered to clients.”