Welcome to Property Professional’s speakers corner. Every week we get asked pertinent questions that pertain to the real estate industry and therefor is relevant to any real estate practitioner across all services. This is the place where we bring all these questions and answers together and make it available to our valued subscribers.
Jim Alexander, property consultant writes about the high drop-out rate among intern estate agents and strongly urges principals to become more involved.
Your article of 24 January, “Training Interns…”, asks the question, ‘Are estate agencies involved enough with the training of interns?’
The response states that we have not done this successfully sighting the high drop-out rate as evidence. I can only agree.
As a facilitator for NQF4, my drop-out rate experience over the last 2 years is around 50%.
In my interaction with the learners, the main reasons put forward are:
- An almost complete lack of understanding of the NQF4 study requirements, specifically the study time that is required.
- Extremely low-to-zero principal or senior agent support.
- Unrealistic expectation of the time typically required to close that first sale.
- Unrealistic expectation of the time required to actually receive that first commission.
These points can be summed up as a complete lack of preparedness of the interns. Whose responsibility is that? Who approved the appointment? What kind of induction was in place?
What responsibility must the principals shoulder for this sad state of affairs?
In my interaction with agents, interns and principals it seems to me that most of the principals do not understand the difference between their role as the business owner and that of PRINCIPAL.
How much principal development is taking place in our industry?
Why is their training and development not a key component of the PDE 5 course material?
Against this background, in practical terms, not regulatory terms, why do we need principals?
In my opinion, transformation is a pipe dream if we do not address this developmental issue. And it’s not only transformation that will suffer, our entire industry could descend into an unhealthy mix of rotating interns and illegal agents!
Andre du Plessis, branch manager recently wrote this letter to the Estate Agency Affairs Board (EAAB). Shared here with his permission: There is hardly any point to try and transform the Real Estate Sector with country wide EAAB Seminars when the elephant in the room, namely complete overregulation of this industry by the EAAB, has not effectively been addressed
It is this overregulation that has disheartened many a practising agent, wanting to throw in the towell, let alone bringing in new blood, representative of our countries demographics. Looking at the average agents age, close to sixty, with very little new black entrepreneurs wanting to enter this industry, clearly, the writing is on the wall.
If the EAAB cant or wont see this, there is little or no ointment that will fix this festering wound.
With the last calls for comment on the Property Practitioners Bill being made, we asked whether there were issues that still concerned you about the Bill. Without a doubt concerns about the current lack of professional efficiency at the regulating authority, the Estate Agency Affairs Board, and how they are going to cope with extended responsibilities under the new act ranked as a top concern.
Lyndsay Fowlds, principal and estate agent wrote: The EAAB is already cumbersome! The fact that estate agents have to jump through so many loops to be compliant is one issue we have to face. The other is the fact that we are a remuneration by commission only industry. This is a massive deterrent to young people wanting to enter the real estate profession.
I am writing you this email at 5.03 in the morning. (This is already my second – the first was at 4.30!)
We are practically working all the time just to keep our heads above water. Never mind the constant compliance requirements. I’m all for compliance. It’s establishing our industry as a profession. But at least instil measures in the governmental departments we are directly accountable to that will facilitate ease of compliance.
One glaring example is the ONGOING IT problems with the current EAAB. I’m sure you have reported enough on this ad nauseum, so I don’t need to re-report on the heartache and frustration we as property professionals have to deal with, with the EAAB.
Despite 30 years of experience as a commercial property broker, and being principal of both commercial and residential agencies, I would love to share my knowledge and expertise, and mentor, train and develop young property practitioners. But I already have to work every day of my life just to stay alive …. and even then I’m not with creditors banging at the door with the massive downturn in all sectors of the property industry last year.
It’s not insurmountable, but solutions will have to be reached because I see last month, Property Professional reported on a massive decline of estate agents and the fact that the average age in the industry is 60!
RD Wall, full status agent wrote: I am now even more concerned that, in its present form as proposed in the bill referring to those considered to be property practitioners, the number of individuals who will then need a FFC will place an administrative burden far in excess of what the current EAAB is presently, quite demonstrably, unable to handle.
The Property Practitioners Bill will fail and with it the EAAB will collapse.
I have, every year, completed my CPD, it has taught me nothing. Nonetheless I can still be of use to my business and the industry and whatever legislation we end up with, they can still collect fees.
Anon wrote: The crazy, unconstitutional fines imposed on late payments resulting in agents not being financially able to renew FFC’s. Also, the serious lack of feedback on queries, for example: last year I registered an intern. I completed the application and submitted it with proof of payment and still no registration. I queried, sent proof of payment again and still no feedback.
Commenting on the complaints about the EAAB, Jan le Roux, CE of Rebosa responded: “The complaints are totally valid. Rebosa is getting legal advice to address non-delivery issues in respect to the EAAB.”
Debbie Wall-Smith, principal and estate agent had a concern about the BEE compliance requirement for companies that have a R2.5 million turnover. She wrote: My biggest concern is the BEE certificate, our turnover has always been well under R2.5M, suddenly this last year we had one transaction which pushed us over the limit, my ex-partner took his money and left the country.
Now I am left with the complications of BEE compliance without the income.
Turnover of under R2.5M should be exempt from the BEE certificate and turnover needs to be over R2.5M for at least two years running before the company has to apply for a BEE certificate.
Our company has always had a low turnover, I encourage my staff to study and contribute towards their studies, one of my administration staff has just got her matric she is over thirty and is now studying bookkeeping. I did not realise that within the Property Charter estate agencies and valuers with a turnover of over R2.5M were subject to BEE compliance. I thought we fell under services at R10M turnover.
Our company has three full time salaried employees, my husband and I draw a salary when there is money to spare, we have two full time brokers plus ourselves. Also, to attract brokers one gives them a high portion of their commission, so the company income is significantly less than the turnover.
The point I am making is, it is a feast or famine business and a company of under 10 people should not be expected to comply with BEE, it is far too burdensome cost wise. Our compliance as estate agents is already excessive, with auditing, FICA, EAAB self-assessments, COIDA, CIPC etc. At least 40 hours of my year is taken up by compliance, on top of that I have to do CPD in two disciplines as an estate agent and a valuer, look after staff and earn a living.
Very few people make it in this industry, people try it, but after a few months it does not work and they leave the industry altogether.
Ideally, I would want the threshold for BEE certification to be R5 000 000 (five million rand). R2 500 000 is punitive. A company with a regular turnover of over R5M can afford to pay for certification and has a few more quality full-time employees.
None of my non-white staff are interested in trying their hand at sales, they want a fixed salary, so I have to look outside of my company for a BEE shareholder.
It is also really sad that no credence is given to ownership by a white woman. I think I may be one of very few white women wholly owned commercial brokerages with more than 5 employees, surely there should be some points for that? We are in a hugely male dominated industry. The Property Practitioners Bill simply ignores white women.
Trevor Harris, principal from Paarl wrote: Having read the recent article by Mike Spencer, the only real answer to bring in persons from the previously disadvantaged communities is for the industry to pay a basic wage, plus a very much smaller share of the gross commission earned per sale agreement.
This will also stop all the “quick start up, low capital” agencies and leave only those agencies dedicated to the growth of the property industry as players in the property sector. It will also level the playing field. Many franchisors believe that their offering is the only one that will make the franchises successful, but when you unpack the franchise, you will note there are huge deficiencies, such as:
- Franchise limits the franchisee to operate in a pre-determined geographical area only.
- Franchise requires hefty contributions to marketing spend by the franchisor, which build the franchise brand only, but not necessarily in the franchisee’s area of operation, nor for the direct benefit of the franchisee, who then has to support this with local brand building and thus adding further to his / her marketing costs.
- What exactly does the franchisee get for the up-front franchise payment, often in the range of R250,000 – R500,000 [depending on location] where that same franchisee still needs to rent space, equip the office, put up signage and branding, and have sufficient working capital to survive all the operational and monthly franchise costs for at least 6 months, before there is income from any sales that might have taken place. This capital costs in a small agency would be a further R250,000- R500,000, a total capital need of between R500,000 – R1,000,000.
- Over and above these operational costs, the franchisee needs to recruit new agents, train these agents, and often support these agents until the cash flow from sales comes into the agency
- By paying agents a small stipend and much less of the final gross commission, I believe there would be much more promotion of the franchisee’s name, and franchised brand directly into the local market place, than that of the “global brand” positioning by the franchisor who is the bigger beneficiary of this process, not the local franchisee.
Have a close look at the Australian property market where the so-called auction sales system is prevalent, handling around 70% of sales by auction. This is a glorified sub-franchise selling system.
The conventual 50’/50 % selling model is antiquated and no longer cost efficient for the agency, where costs for the company often exceed the 50% company income portion.
Kgoroshi, member of community scheme, wrote: I read an article about CSOS. I agree there is a serious problem at CSOS. Something needs to be done.
I saw many complaints on Hello Peter on how ordinary citizens are treated.
I was horrified to receive an order when I did not receive a notice for hearing.
PLEASE help me what to do. I am frustrated.
Editor’s note: Kgoroshi was directed to contact the CSOS Ombud and reported back on the same day that he is happy that his case has been reinstated
Geoff Stroebel, principal from Plumstead wrote: I have read the article by Ronel Bomman, and it certainly makes total sense to focus on professional training for interns.
Sadly, the commission-only nature of the beast will ensure that there will always be a consistent drop-out rate and the mission of the EAAB and the SETA to attract and recruit agents from the previously disadvantaged community has, in my opinion, effectively failed.
We tried years ago at one of the top agencies to pay 6-month “retainer” stipends to new appointees, and yes, you guessed it, most if not all of them disappeared in month 7!
The industry needs a commission system not dissimilar to the life insurance industry, where agents are perhaps rewarded in tiers once a mandate is secured, with the bulk of the commission still due on transfer. But this will be very difficult to administer.
Linda Byron, office manager from Port Elizabeth wrote: Good afternoon, I have just been reading the latest article regarding of training interns.
Firstly, I believe there is not enough commitment from the companies taking on the interns to ensure that they adhere to the need for completing their logbooks. These are seen by interns as an onerous task instead of an opportunity to use it as a learning tool.
The majority of interns in Port Elizabeth are allowed to renew their FFC’s endlessly with no one ensuring that any of the learning that should have happened has. We have interns who have held FFC’s for 4 years and longer that have not even downloaded the logbook.
The EAAB holds full status agents responsible for completing CPD points annually and blocks accounts should they not BUT nothing is being done about interns not complying with educational requirements. Lack of training leads to lack of learning which leads to lack of success which then leads to interns either leaving the industry or jumping from one company to another.
I have just joined a new office and I have set up compulsory workshops for the Interns to attend every 2 weeks to monitor progress, set new tasks and provide the necessary guidance and mentoring to get the logbook completed by June for those who are lagging behind with completion. Commitment is required from both interns and companies if they are serious about our profession.
The EAAB have never even bothered to keep the information in the material they sell to Agents for PDE4 & PDE5 updated from 2008 and yet the material is used for an open book exam. Changing course material like changing laws is only effective if there is monitoring and accountability for adherence and completion.
John Kirstein from Jeffreys Bay wrote: Dear Sir / Madam, I was one of the disqualified agents. Not for any reason other than my FFC payment for 2018 was apparently not received. In the EAAB’s wisdom, they took the FFC fees from my R2000 (2017 CPD fee) which left a shortfall that was never disclosed to me.
The “lodge a query” has never ever worked for me. I was reinstated (after paying more than R3700 of which R750 was a penalty for being disqualified).
However, since the re-instatement, I have tried to get them to open e-learning so I could do the 2018 (CPD) before 2019 arrived, I haven’t received any correspondence to why (I could) not other than the message of “you must first pay”. The queries I lodged was “successfully resolved” without any correspondence.
I went as far as asking Mr. Raymond Shokane to send me a list of all my payments (for which I have always sent proof of payment). E-mails was also never replied to. It is like agents are mushrooms that “ must” grow in the dark!
What I cannot understand is the lack of communication from the EAAB’s side. Ignorance and no replies are costing the agent extra monies.
4000 agents paying R750 in penalties = R3,000,000 In aid of what?
Ronnie Nonyane wrote: Please advise me here. We have a client whose properties we rent out here.
Every time he comes into the office he makes racist remarks. Today, he came in and said, among other things,’hoekom wil julle tussen die wit mense wees?’, referring to me.
I asked him ‘wie is julle’ refering to the question: ’Hoekom wil julle swart mense tussen die wit mense sit’
I told him he is not white and I am not black and I can sit and be where ever I want to be. By this time I was at my wits end.
Should any office keep such a client?
Jan le Roux, CE of Rebosa was asked to comment and answered as follows: “Fighting racism, just like charity, starts at home. Agents are strongly advised not to deal with clients as per this example. The behavious is clearly racist and unconscionable.
“Agents are strongly advised to sign the Rebosa equality pledge which is easily accessible on rebosa.co.za.”
Penny Irvine wrote with reference to ‘No FFC no commission’: I find the judge's ruling contradictory. No commission but then the application for 1st Jan to May that Signature and their agents should not have operated was dismissed!
I know of many agents waiting for their FFCs, due to the EAAB backlog.
I would never take the greedy and opportunistic route and refuse to pay them on what we agreed upon.
I am not implying this is what happened with Signature.
Read ‘No FFC no commission’ article here
Alex Thema wrote in December: I would want to add my voice to the happenings at EAAB
In my case l started querying my points in 2016. I wrote several email to them and continued to write up to 2018. Not a single reply was received.
How on earth can an organisation run on a system that does not take into account communication with its subjects. They told me that they do not recognise emails as a means of communication. This is why they did not respond to my queries in two years. Regarding their system of lodging queries, I did so several times and not once did I receive feedback. I challenge them to produce proof that they ever interacted with anybody after he/she lodged a query.
I visited the EAAB and had to go there twice before they could solve part of my problem. Each time you phone they do assure you that the problem has been attended to, but they never do as they promise. I am one of the very angry agents who has no faith in them.
When I went there in the last week, l was assured the money l paid for my CPD is in order, but it never gets done. I have lodged a query in addition to visiting them and nothing has been done. They are completely incapable of doing things on time and attending to each query as it comes timeously. A new system has to be put in place.
James Sayer asked: Please may I have some clarity on the risk management and compliance programme that we are required to implement in our agencies?
Rebosa has done extensive work and this and has published whatever guidelines available on www.rebosa.co.za. You will be best advised to access this information on the website. The RMCP template is also available for download on the site.
Why managing agents can be defined as property practitioners
Since most managing agents do NOT manage property or become involved with letting or selling, why would it be necessary for them to register as property practitioners? Surely this vocation is absolutely unlike anything relating to estate agents.
Coenie Groenewald, COO of National Association of Managing Agents (NAMA) answers: To assume that most managing agents do not engage into selling and letting is not correct. Managing agents, mainly manage property but may also engage in the business of letting and selling.
Most managing agents will facilitate and operate their letting and selling departments under a different business name and entity and as such these companies and persons are indeed registered with the Estate Agency Affairs Board (EAAB).
Thus a letting agent or sales agent will be considered as a property practitioner.
We are still debating the fact whether managing agents should fall under the definition based on various aspects but support licensing and accreditation.
Do I understand the Property Practitioners Bill correctly, i.e. agencies with a turnover of less than R2.5 million and no trust account will no longer be required to provide an auditor’s report?
Jan le Roux, CE of Rebosa answers: Audit reports remain a requirement. The Bill merely allows agencies with a turnover of less than R2.5 million to have a “review process” done by an accountant instead of a full audit by a chartered accountant. It only saves a bit on the audit report. All agencies, unless the minister makes some ruling, are still compelled to have trust accounts.
Comment by Peter Tsikoe
My concern has more to do with, how does government laws protect those practitioners that regularly ensure that their ffc matters are up to date. Are there measures taken to rid the property practice of those that are illegal, i.e. non FFC holding agencies and agents. The property discipline seems to have become a laissez faire. Consumers are as a result at the mercy of fraudsters and money launderers.
Jan le Roux is CE of Rebosa and Chairman of Private Property. Does he have any shareholding/interest in Private Property?
No, he has no shareholding, directly or indirectly, in Private Property.
Does Property Professional (or the owner/s of Property Professional) have any interest/shares in Private Property?
No, neither directly nor indirectly.
Following our stories on FNB’s banking app, our readers had many questions, so we wanted to find a way to answer them that would benefit all our readers. Speakers Corner is the result. This will from now on be a regular feature in our newsletter where we’ll find experts to answer your questions. This week for the questions around FNB and Private Property, we asked Jan le Roux, chairman of Private Property and CE of Rebosa to answer the questions.
How safe are the data listings on ABSA?
We don’t have detailed information on the contractual arrangement between P24 and ABSA but think it is very probable that the same can happen. We also not sure if agents are aware of this arrangement.
What has Rebosa done to promote agents to consumers?
Rebosa has been running a print campaign in all major property papers for more than two years at a value of more than R1,800,000 – Click Here to see ads.
Promises have been made about shares in Private Property being made available to the entire industry. When will that happen and will shareholders enjoy preferential rates, etc.?
Shareholding in the Estate Agency Property Portal Company and in Private Property will be made available to the entire industry in the first half of next year. Shareholders will not get preferential treatment over other advertisers. Like in any other business shareholders qualify for dividends should profits be made and dividends declared.
The entire industry was caught by surprise by the FNB APP. Did Private Property have any prior knowledge before the launch?
Private Property was as surprised as the rest of the industry.
You are welcome to email your questions for consideration for inclusion in Speakers Corner to firstname.lastname@example.org