The crises that isn't
A horde of agents will leave' the industry next year - as they did last year and the year before
Estate agents will have to work harder to keep their jobs next year, as the property market settles down after six years of booming growth.
But forecasts by major agencies of 20 000 estate agents joining the ranks of the unemployed are wishful thinking: there won't be more pickings for the agencies. Despite complaints of a tightening market, deeds office data collected by Standard Bank shows houses selling steadily at about 160 000/year. It is likely to be the same in 2006.
The negative inference seems to have come from Sotheby's International Realty chairman Lew Geffen, who based it on the 2004 Estate Agency Affairs Board (EAAB) annual report. It showed 40% of agents were earning less than R10 000/month.
Though EAAB secretary Lindiwe Bulo agrees that the property market is stabilising, she says this doesn't mean 20 000 jobs will be lost next year.
Some smaller agencies at the top end of the Cape Town market have closed down, says Jan le Roux, chairman of the 14 000-member PA Group. "But for years about one-third of the registered agents have dropped out annually," he says. "They have been replaced by new entrants because the barrier to entry is so low."
Le Roux adds that another third are not active as house agents. "I would be surprised if 27 000 of the estimated 67 000 registered agents were active in the market."
Pam Golding Properties CEO Andrew Golding says the barrier to entry in the property industry is "notoriously too low", adding that the reported 20 000 agents expected to be jobless seems exaggerated.
"Though it is difficult to quantify, the figure sounds high," says Golding. "There will be losses, but I don't think it will be to that extent."
Says Remax SA CEO Bruce Swain: "Because there are no barriers to entry in our industry, a lot of unqualified people have been entering the market - particularly in the past four years on the strength of the boom. As the result of the market tightening up, the fly-by-nighters are not going to be able to cut it. But it's an overstatement to imply that 20 000 will lose active agency jobs."
The biggest threat to dilettante estate agents next year will be the improving standards of the larger national and regional agencies.
Vered Estates director Darryl Mayers says any job-shedding has a positive side, since it will enforce professional standards. "It's a good thing, because there are far too many agents focusing their attention in the same territories. This should lead to natural attrition."
Mayers says shedding will up the game for agencies and their agents. "They will have to become more customer-focused and attuned to their markets, as well as offer a broader service."
But he forecasts a difficult year for smaller agencies.
Jawitz Properties CEO Herschel Jawitz says international standards for estate agents must be considered. "The industry needs to be better controlled in terms of education as a minimum entry standard. In the US, for example, there are compulsory courses and exams for those wanting to practise as agents. But one has to balance such requirements with the unique circumstances in SA."
Sotheby's director Barak Geffen says selling residential property involves complex processes and, therefore, there should be strict and thorough training procedures for it.
He suggests a method that combines practice with theory and a three-year proven sales track record at least. "Besides the EAAB, there should be a secondary qualification that could be regulated by the industry.
"There should be different methods for entry-level and for more established agents."
Article by: Xolile Bhengu - http://free.financialmail.co.za