Lockdown: how estate agencies mitigate the economic impact
MAIN IMAGE: Dr Andrew Golding, chief executive of the Pam Golding Property group; René Bekker, principal René Bekker Properties; Samuel Seeff, chairman Seeff Property Group; Berry Everitt, CEO Chas Everitt
South Africa’s nationwide lockdown to fight the spread of the deadly new coronavirus is expected to have a devastating impact on the country’s already flailing economy – many businesses will close and many people lose their jobs. Property experts share their plans how to mitigate the expected impact on the residential property sector.
From Friday 27 March the country will be in a full lockdown to contain the spread of COVID-19. In line with this most businesses will have to close. However, those that can operate remotely are encouraged to do so. This is the route many local estate agencies are following as listing and marketing of properties can continue online and thanks to technology there are still a range of services that can be offered.
Impact on the property market
The local property market report they’ve already seen fewer sales in the past few weeks as the severity of the coronavirus pandemic increased, and its’ expected devastating global and local economic impact became clear. “Recent international experience reveals that global economic shocks of this nature inevitably cause property transactions to taper off, as other priorities take over,” says Dr Andrew Golding, chief executive of the Pam Golding Property group.
However, local estate agencies are opting to believe that the long-term stability of property as an investment option will prevail once the pandemic is over. Golding says “with the extreme volatility currently being experienced in the global stock markets, it is probable that, as has been seen over decades during times of great turmoil, that many will regard residential property as a safe haven amid the current hightened economic uncertainty”.
“I cannot avoid the uncertainty. I’ve had two deals cancelled due to the uncertainty since Monday night, however I handle each case accordingly and re-assure our clients and market that we will recover from this, it’s a matter of time,” says René Bekker, principal of René Bekker Properties in Richards Bay, KwaZulu Natal.
Berry Everitt, CEO of Chas Everitt, says they took a look at the reaction of the property market to previous global virus outbreaks such as SARS and H1N1, as well as various financial crisis. “We concluded that stability is likely to return within three to six months. “We are expecting a short, sharp shock to the economy and the property market as a result of the lockdown but also believe there will be a strong rebound once the virus scare has passed,” he says.
Time for new strategies
During the lockdown the Deeds Office as well as most conveyancers will be closed. Estate agents won’t be able to conclude sales which means they can’t earn commission, for many their only source of income. This is a great source of concern for many, especially the smaller agencies.
Heather van der Spuy, principal of Steer Properties, says a small retainer would be most welcome as agents have been accustomed to only receiving commission on transfer and there are many large gaps between one payment and the next.
“Real estate, as one of the ‘would be’ highest hit sectors, has multitudes of agents who have been caught off guard, and may not have sufficient savings, and therefore would definitely require assistance to carry them over this period. However, as we know, millions of South Africans are in the same boat, caught off guard, and therefore, new ways of thinking and new strategies are required,” says Matseleng Mogodi, principal of Snooks Estates in Gauteng.
Matseleng Mogodi, principal of Snooks Estates
Government, the banks and the private sector have announced plans and funds that will bring relief to small and medium businesses in distress. Read more about that here.
The rapid adoption of new technology has made it possible for the real estate sector, despite the lockdown, to largely operate and transact electronically, coupled with personal interaction – albeit at a distance at present, says Golding.
Also, in today’s world buyers tend to start their house hunting online says Samuel Seeff, chairman of the Seeff Property Group. Buyers can continue to browse property listings on the websites of agencies and on property portals with detailed information and a series of images as well as direct digital links to agents who will be available on their mobile phones, email and other digital means for any enquiries.
“One positive of most people being confined to their current homes now will be that those who are in need of a new home – bigger, smaller or more luxurious – will have more time to go through online listings to find their dream properties,” agrees Gerhard Kotzé, managing director of RealNet estate agency group.
Gerhard Kotzé, managing director of RealNet estate agency group
He says in fact they’re already seeing an increase in online traffic and enquiries. Recent developments such as the decision to raise the transfer duty threshold to R1 million, and last week’s announcement of an one percentage point rate cut, with more predicted to follow later in the year, are both strong incentives to first-time buyers and also buy-to-let investors.
Kotzé says their agents have also been taking additional photographs and making video walk-through’s of as many of their listings as possible – while also taking the proper sanitizing precautions of course – so that they have additional information and visuals to offer prospective buyers.
“This is a good time for agents to review their current listings to ensure that images and property descriptions are professional and enticing, and make sure that these listings meet all listing-score requirements in order to achieve high rankings on the various portals,” adds Tony Clarke, managing director of Rawson Property Group.
Tony Clarke, managing director Rawson Property Group
Clarke says their agents are also encouraged to use this time to brush up on their skills through their eLearning platform. He says franchisees should likewise take this opportunity to upskill interns by introducing them to the eLearning platform and guiding them through information that they may be unsure off.
Strategies around the closed Deeds Office
The Deeds Office is closed which means that all property transfers have to wait until they reopen. Also many buyers will be reluctant to sign an Offer to Purchase (OTP) without seeing the property in person, but there are things that estate agents can do to minimise the downsides of the situation, says regional director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa
“Agents should still be following up with clients via virtual tours and face-time conversations, trying to line up as many sales as possible so that they can hit the ground running as soon as the lockdown period is over. To protect buyers who purchase homes over this time, agents can draft OTPs with a suspensive condition that stipulates that the purchase will only go ahead once the home has passed a physical home inspection which can be conducted once the lockdown has been lifted,” he advises.
In conclusion, Everitt soberly points out that momentum among first-time buyers will depend on the avoidance of severe long-term damage to the economy and consumer confidence after the lockdown. “This will depend not only on the effectiveness of the various measures the government has put in place to save small businesses, protect wages and salaries and save jobs, but on all South Africans co-operating so that the lockdown need not be extended,” he ends.
Heather van der Spuy, principal Steer Properties
On a lighter note, Van der Spuy notes that there is “comfort in knowing that we are all in this together, and even though there are strange and stressful times ahead, we will emerge with new skills and innovative ways of marketing and selling property”.