"We deserve every cent" - estate agent
Why residential property sales' commissions are not far off 10%.
Agents deserve their commissions more than ever, says Linda Erasmus, CEO of Fine & Country SA.
The question currently being bandied about by property industry observers is whether or not estate agents should lower their commission fees in line with the general depreciation of the property market.
My response to this premise is firmly in the negative for a number of reasons, chief amongst which is that agents now have to work harder than ever, under strict new working legislation, for less.
In recent times, the South African propertyscape has changed. The number of successful real estate sales has diminished significantly since the heydays of 2005 and 2006 and the underachievement of asking prices has, to a large extent, become the norm.
It comes as no surprise then that agent fees which commonly run at 6% and 7% (before VAT) have come under the spotlight. It is important therefore, to highlight just how difficult it is for agents to successfully conclude sales in the current climate. Likewise it is necessary to explain how new property industry protocols are further impacting agents.
Up until 2007, most willing buyers were also able buyers. Willing buyers are still in evidence. However, able buyers are few and far between thanks largely to the strict lending protocols imposed by the banks. The recession has also decimated spending power to a large extent. Consequently, agents have to work that much harder to qualify buyers.
Further compounding this already difficult situation says Erasmus, is the new legislation imposed by the Estate Agents Affairs Board (EAAB) of South Africa last year.
The introduction of this legislation, coupled with a weak property market, saw estate agents leaving the industry in their droves. As it stands, the real estate agent complement has dwindled from 80 000 at the beginning of 1996 to a mere 30 000 in 2009.
The fact that a large proportion of independent agents have gravitated to, and merged with, the big corporate property entities is also indicative of the trading conditions currently prevailing in the market.
Up until July 2008, anyone who could afford the registration fee to enter the property industry could do so without any qualification and could operate under minimum supervision as a candidate estate agent'.
After a year, candidates were deemed to be qualified' without any assessment to verify this. Furthermore, agents were under no obligation to maintain their professional skills or keep their knowledge up to date.
As per the new legislation, existing agents may qualify through the Recognition of Prior Learning (RPL) process while new entrants must do so by means of a 12 month long internship.
After obtaining the relevant certificate, aspirant agents will have to pass a Professional Designation Examination set by the EAAB. Full status agents who have been registered as such for a minimum of five years prior to July 2008 will be exempt from the exam.
Draft regulations are also in place which will allow the EAAB to introduce a Continuing Professional Development Programme which will require estate agents to meet specific requirements within a three year rolling period in order to remain in the industry.
The new legislation and less than desirable trading conditions have effectively acted as a form of attrition within the property industry which, although immediately restrictive, will ultimately improve property industry service levels as a whole in the long run and produce better agents.
What does it take?
South African real estate agents and the services they perform are often taken for granted.
Real estate agents work entirely from a commission base and have to carry their expenses themselves. They are also closely involved with every aspect of a deal which takes time and effort. Likewise they need to be au fait with all the legalities related to property sales.
Agents also cover all the costly off and on-line marketing and networking expenses pertaining to sales; weekends are often sacrificed and long hours are also the norm.
Add to this scenario the fact that it has become that much harder to qualify buyers and it quickly becomes apparent that estate agents have to work hard to earn their income. Even so, agents are generally still open to negotiating their commission fee within reason.
In a nutshell, South African agents are working harder for less yet are providing a professional service amidst tough trading conditions. Pay them what they deserve.
Article by: Linda Erasmus -- From: www.realestateweb.co.za