Why is it so hard to find new estate agents?
MAIN IMAGE: Mike Spencer
By Mike Spencer
In many countries the real estate industry offers an opportunity for anyone who is hard-working and ambitious to make a good income. South Africa has been no exception, yet the number of registered estate agents is on the decline. Why is so hard to find new estate agents?
The number of people who are involved in the real estate industry is often a good indicator of the health of a country. South Africa included, but over the last decade, despite calls for transformation, the number of estate agents and estate agencies has declined quite dramatically.
Fewer younger agents have stuck it out resulting in the current state where the average age of most estate agents are over 60. This pool of skills is unlikely to be around for many years to come and there is an urgent need for new entries to the industry and transfer of skills.
Why is this not happening?
More than just selling houses – Firstly, we must have a more realistic idea of what the industry is all about. It is NOT just about selling property, especially residential property, though this is what many people understand real estate to be. The reality is that the estate agency business is about developing, letting, selling and managing properties of all types from residential to commercial to industrial. Estate Agents and estate agencies don’t just sell houses, flats and townhouses. Many of them are more admin orientated and do massive body corporate management and property letting. They employ far more people in these admin roles than do most residential sales organizations.
Too much red tape – It is important to understand that a good real estate industry creates huge wealth and job opportunities. Transformation is a fact of life but so many hurdles are being put in the path of existing estate agents that the appetite for helping this process is rapidly fading. A case in point would be that the EAAB (Estate Agency Affairs Board) requires that an estate agency, who would like to accept intern agents, must have a tax clearance certificate and a BBEEE certificate. Most estate agencies do not work on government contracts and do not need these items. These requirements have nothing to do with whether the company is competent to train new agents or not and discourages principals from employing new agents.
There is no doubt that current legislation in general is anti-business. It does little to nothing to encourage businesses to expand by imposing ever more red-tape which restricts the will to do more business, especially in small business which the government acknowledges is the most likely source of new employment. While large business can have specialized departments to deal with this red tape, small companies find this a major time and cost disincentive to doing business.
Competitive industry – A further problem is while many estate agencies are struggling to find new estate agents, the qualities that many intern agents bring to the industry don’t match the qualities that the companies need. Selling property is a very competitive occupation with winner takes all results. Most of the new entrants into the industry seem to find this a very difficult way of working and the drop-out rate is exceedingly high. This is in itself discouraging employers to take on new intern agents as they are a heavy training burden on the senior people in the company – with the prospect of little positive return.
Many from the current pool of youngsters also finds it difficult to work without income until sales that they have concluded bring in commission – a period of four to six months. While successful estate agents can earn very good incomes, they need to have time to get into the market. Fact is, it is the well-organized, determined, and focused agents that are successful, especially those that have built up a good reputation over many years. These are very difficult people to compete against if you don’t have the skills and determination needed to succeed. Many youngsters seem to think that they are entitled to an income and fail to understand that an estate agent can only be paid if they bring in business to the company and no company can afford to employ salaried estate agents that cannot prove that they are or will certainly bring income to the company.
Training – Furthermore, the EAAB as an organization is not helping matters. They are not an efficient or effective organization by any means. Their systems are complicated and expensive and often irrelevant to the industry. While they do offer some compulsory training to the industry, the quality and relevance of this training misses the mark by a wide margin. They would be far better served by allowing industry organizations to run these courses with a more practical direction than what is currently being offered. All that they have achieved is a new industry that has sprung up to give training to estate agents, but the cost of training is way above what new estate agents can afford. Which intern agent can afford to pay R25,000 for an introductory course in Sectional Title Management at Pretoria University? As a principal estate agent with over 45 years in the industry would baulk at paying that for any course.
But recruitment of new young agents needs to happen because these are the people who will be there when the current generation of older estate agents have left. Sadly, unless there are some real and realistic reforms what is going to be left is an industry of undertrained poor-quality estate agents who try to do the very complicated work that is done in the industry.
About the author: Mike Spencer is an experienced principal estate agent and professional valuer with a passion for the real estate industry.
Editor’s note: The fact is the local property sector must become more representative of the country’s demographic profile – it is the right thing to do and it must happen – the question is how. You are welcome to send your thoughts on how more new agents from the previously disadvantaged groups can be encouraged consider real estate as a profession and how they can be supported to make a success of their career despite all the challenges. Send contributions to firstname.lastname@example.org for consideration to be published. Publication remains at the discretion of the editor.