Are estate agents a dying breed?
The number of practising estate agents may have dropped significantly over the past few years, but does this mean that they could completely become a thing of the past in an ever-increasingly technical world?
By Lea Jacobs
A journalist for the Washington Post recently asked the question: “Why do real estate agents still exist?” On the face of it, it is a bit of an insult to even ask the question. However, one has to wonder if there are those who are indeed surprised to see that estate agents are still around and who expected technology to play a part in the demise of estate agents. Let’s be honest here, there are industries that were basically put out of business when the Internet took off. Making travel plans without the expertise of a travel agent, for example, became a walk in the park. Airlines around the world took full advantage of the situation and instead of offering perks to travel agents in an attempt to lure travellers to take to the skies, they focused on the customers themselves. It didn’t take long for people to realise that they could save a great deal of money by going directly to the source and travel agencies across the world started closing down.
How long it will be before bookshops face the same fate? Remember the days when bookworms were forced to take an additional suitcase filled with books along for the trip if they wanted to have a good read while away? No more. E-book readers, iPads and the like have put paid to this practice and even if the consumer is a diehard ‘real’ book fan, it is often cheaper and certainly more convenient to order books online.
Why then are estate agents still around? The web is used extensively to advertise property, buyers can take virtual tours and get a seriously good idea of what the property looks like inside and out, do-it-yourself sales agreements are available at most good stationers and, if the pundits are to be believed, cutting out the agent saves the seller a small fortune in commission.
The fact that the number of practising estate agents has dropped significantly doesn’t appear to have had anything to do with the fact that listings now offer more information, better pictures or indeed a virtual tour of the home. Yes, the numbers have dropped significantly, but this has more to do with the economy than anything else. Unlike other industries, the Internet has benefitted those who sell homes for a living and according to those in the know, will continue to do so for the foreseeable future. The question that needs to be asked is why? Why do the majority of buyers and sellers choose to use estate agents? After all, in theory, a great deal of money could be saved by selling privately. That, it seems, is the problem, ‘in theory’ remains just that: A theory.
“At a first glance, one would immediately think that a buyer would save money by buying through a private seller, but this is not the case,” says Bill Rawson, chairman of the Rawson Property Group. “Most private sellers, being unaware of market trends and the value of similar houses in their area, tend to overprice their homes by up to 30% in today’s climate. Without an estate agent showing them the facts, these sellers are often unwilling to reduce their price and this often results in the home sticking on the market or being sold for far more than it is worth. A buyer is therefore more likely to get a market-related price when dealing with an estate agent rather than the individual who owns the home.”
Then there are the complexities involved in buying a home. Obviously buying an airline ticket is far less complicated than buying bricks and mortar. Apart from the costs involved, there is a very real danger that the buyer is not going to get what he paid for. There are still sellers who truly believe that the voetstoots clause gives them the right to sell a home with a number of undisclosed faults and that because the home is sold ‘as is’, it is the buyer’s bad luck if something goes wrong once he has moved in and discovered the problem(s).
“An estate agent knows the right protocol when it comes to checking and testing a home for defects and they also know what action to take if there were any defects that were missed during an inspection,” says Rawson.
Time is pretty much money in anyone’s book and it is no different in the world of real estate. Selling a property privately entails far more than taking a few snaps, putting them on the Internet and waiting for the buyers to roll in. Pricing is always going to be a huge issue and while there are certainly some who read and understand the market closely, there are many who don’t. Selling a beloved possession like a home is fraught with emotion. Agents often bring up the fact that some sellers (particularly those in their golden years) try to add sentimental value to a property. While the seller may not disclose this to the buyer, it is going to hurt if and when the buyer discovers that he has paid more for the property simply because the previous owner believed that his personal memories of the home added some sort of value.
As an interested outsider, agents have the ability to cut through the emotional aspects and focus on what really is important – getting the home sold with the least amount of fuss in the shortest time possible at the right price.
“Using an agent not only streamlines the process, the agent offers knowledge of prices, marketing and market expertise, negotiation skills and helps to make the complex legal and bond process easier,” says Chris Tyson, CEO of Tyson Properties. “The majority of buyers (and sellers) are not familiar with the legal aspects and are not skilled negotiators. It is also a challenge to be objective and unemotional when selling one’s home. Pricing one’s home correctly is always first prize in achieving optimal value.”
Pricing aside, there are other aspects that can severely hinder the average man in the street who decides to go it alone. “Selling a home is an extremely laborious and time-intensive task. Someone who is working in a regular job, running their own business or maintaining a household simply does not have the time to effectively market a home,” says Rawson.
“The skill set required to sell a home within a fixed period of time is another factor that needs to be considered. An estate agent with years of experience in the area, knowledge of the property market and many contacts in the industry is far more equipped to sell a home and achieve the desired price than someone who is unfamiliar with the whole process. There is also much more paperwork and admin than the man on the street realises.”
The good news is that neither Rawson nor Tyson have witnessed an increase in private sales. However, Tyson does note that agents in his company have been called upon to help with the paperwork involved in a private sale. Rawson says that his group has had a fair number of these cases crop up. “Feeling out of their depth, several sellers have come to our group for advice and/or to take over the marketing of the property completely.”
The other problem and perhaps the most important issue that those selling property privately face in South African is security. Crime is a major problem in this country and allowing all and sundry to walk through a home could have severe implications. There have been a number of reports in the press about cars being hijacked when being test driven by criminals. Homeowners who allow un-vetted people to view their home are putting themselves and their possessions at risk and in a crime conscience society, this could well work in an estate agent’s favour. Even if the seller is willing and indeed has the knowledge to sell his own home privately, the risks involved extend far further than in other countries. Utilising the services of an estate agent may not guarantee that nothing untoward may happen, however it certainly removes some of the risk, allowing the homeowner to feel safer in the knowledge that the person coming into the home has been assessed on both a financial and personal level. Think about it. There are very few agents out there who, upon smelling a rat, will allow a potential criminal within kilometres of any of their listings.