Lies, lies, lies and damned estate agents
Property sellers admit to fibs; SA's rip-off property sales commssions in spotlight
JOHANNESBURG - This week in Tabloid Tuesday, a snapshot of property news: Britain's estate agents have got property owners in a tizz after admitting lying to homebuyers.
This was revealed in a fascinating survey of real estate dealings.
Back home in South Africa, our estate agents might claim to be more honest about a property's defects in South Africa but residential property owners are being ripped off if you compare the average commission to what we pay down on the tip of Africa.
Property profits. Estate agency bosses in the United Kingdom reckon it takes two to three years for a new estate agency to start making money, such are the costs associated with starting up and running a residential property sales outlet. That's according to a survey released by the Office of Fair Trading.
Tabloid Tuesday suspects this long run-up period to turning a profit is because the UK's estate agents charge paltry sales commissions of less than 2% of a property's selling price and often much closer to 1%, the survey reveals.
Perhaps they should charge the average 7,5% (excluding VAT), occasionally agree to 5% but aim for 10%, like they do around these wild parts of the content. That way they'd most surely find themselves in a position to join the happy brigade of estate agency bosses and agents who earn so much money even their spouses drive luxury cars.
On Cape Town's wealthy Atlantic Seaboard stretch, for example, we hear that if you're a Seeff agency wife you can expect to drive an out-of-the-box luxury SUV and, if you really ask nicely, a Porsche.
Ag shame, man. Those poor English estate agency entrepreneurs. Perhaps some of them should seriously consider immigrating to sunny South Africa and giving our lot a run for their money?
A word of warning, though, for any who are considering doing just that: Make sure you open your own business. By the time you have handed over most of the spoils to the boss, a recent South African survey suggests, the average estate agent in South Africa earns a mere R13 000.
Home comforts. Where British estate agents score, though, is that they enjoy various referral fees from other service providers. Lawyers (solicitors) involved in processing property transactions are the main source of this type of revenue, says the survey, with nearly half of estate agents surveyed saying they receive "a referral fee or commission from the solicitor". Insurance providers and financial advisers are also a source of income.
More than two-thirds of estate agents do not share this information with buyers and sellers. About one in five revealed that there would be a referral fee, but they declined to stipulate the amount.
In South Africa estate agents are not legally entitled to kick-backs and various perks from lawyers, so these have to be carefully procured and structured. Have you noticed, for example, how many law firms seem to "share" buildings with estate agencies? If you have bought property, you will also remember the estate agent offering to put you in touch with a conveyancer (a lawyer).
Some law firms sponsor cars, glossy brochures, advertising supplements and occasionally fun get-aways. They don't do this to be kind.
Making things all the more complicated in good old SA is that many lawyers have shares in estate agency businesses.
Estate agents can and do, however, enjoy income from helping to find mortgage deals.
Honest about dishonesty. Creating the biggest rumpus in the UK, meanwhile, are the parts of the survey revealing that estate agents don't always tell the truth.
The Times of London said "estate agents conformed gratifyingly to type this week when the Office of Fair Trading issued a report on sharp practice". It asked its readers to take this quiz:
How many estate agents have lied to homebuyers, according to the Office of Fair Trading? Is it a) 25%; b) 44%; c)100% (answer below)
Now we know our own estate agents down here in South Africa are, erm, often frugal with the truth, too. Last year a finger was pointed at Re/Max for creative number-crunching. And a Port Elizabeth estate agent became infamous in the law books after she successfully managed to get some nasty hidden defects past the buyer. You can find her details and those of other estate agents who have angered buyers and sellers by clicking on Realestatweb's Rate Your Agent listings - where anyone can rate an estate agents' service - and here to catch up on the law around hidden defects in properties.
The answer to the quiz: a).
Article from: www.realestateweb.co.za