MAIN IMAGE: Berry Everitt – CEO of Chas Everitt International, Denese Zaslansky – CEO of FIRZT Property Group, and Fritz Swanepoel – CEO of Leapfrog Property Group
Editor
Should you quote high and negotiate down, ask for more when an offer beats the price, or accept a developer’s incentive? We asked Berry Everitt, CEO of Chas Everitt International, Denese Zaslansky, CEO of Firzt Property Group, and Fritz Swanepoel, CEO of Leapfrog Property Group, how they would handle commission, from the first meeting with a seller to the day it is paid.
Agreeing the fee
Asked about the most common commission mistake, Everitt says agents “discuss the percentage before understanding why the client is moving or explaining what the fee covers”. His agents start by understanding what the client hopes to achieve. “Once we have listened carefully, agreed on the plan, and explained the service, it is usually easier to align on the commission,” he says. He doesn’t favour quoting an inflated rate and then discounting it.
Swanepoel says agents too often defend a percentage instead of explaining the expertise and results behind it, and some discount too quickly because they lack confidence in their own value. He prefers a fair, commercially justifiable rate from the outset. “Don’t compete to be the cheapest agent. Compete to be the agent who delivers the greatest value,” he says.
Zaslansky sees the mistake in the fee structure. Agents tend to negotiate a fixed amount upfront, she says, instead of fixing a minimum amount based on service delivery and results. If a seller hesitates to pay 6% or 7% because another agency charges a minimum amount, she suggests a predetermined minimum commission that can be negotiated higher depending on the service, the marketing, and the price achieved.
What goes in the mandate
Everitt lists the essentials: “The mandate should state the agreed fee, how it is calculated, VAT treatment, who pays, and when it becomes payable.” A sole mandate should also record its expiry date and the agent’s obligations. Swanepoel adds the mandate period, qualifying transactions, and any provisions that apply once the mandate expires. All three set different rates for resales, new developments, and rentals.
The mandate should also anticipate a seller deciding to let rather than sell. Zaslansky says it should state whether commission is earned on a sale or a rental, while Everitt would put a separate letting mandate in place. Swanepoel cautions that a sales mandate should not automatically be read as an entitlement to rental commission. “The key is to avoid ambiguity,” he says.
An offer above the agreed price
Zaslansky sees a higher offer as evidence that the market has improved and that the agent has secured the best achievable price. In that case, she says, the agent should negotiate a better commission.
Everitt advises presenting the bona fide written offer and helping the seller weigh the price, conditions, timing, and certainty, leaving the decision to the seller. “If commission is calculated as a percentage of the purchase price, the rand amount will rise with the price, but the agreed percentage remains the same unless the parties agree to change it,” he says.
Incentives and extra payments
All three confirm that some developers offer agencies higher commission or incentives, although Zaslansky says these are generally low and do not appeal to agents. Everitt says such arrangements must be disclosed and must not drive recommendations, and notes that some arrangements involving preferential treatment in residential developments are restricted. “A good commission should be the result of a good transaction, not the reason for recommending one,” says Swanepoel.
On payments beyond the agreed commission, Zaslansky says there is no risk if the payment is agreed between the seller and the agency and documented. An extra amount offered by a purchaser must also be reflected as commission in the agreement, as she believes undocumented fees are construed as tax avoidance. Everitt wants a clear basis, full disclosure of who is paying and why, and written agreement in advance. “Client consent is essential, though it should not be treated as blanket permission,” he says.
Swanepoel points to the obligations the Property Practitioners Act and the PPRA’s Code of Conduct place on practitioners regarding remuneration, disclosure, and conflicts of interest. Where an agent is paid by parties with materially different interests, he says, everyone affected must agree in writing. His biggest concern is that extra payment could compromise, or appear to compromise, the agent’s independence.
Splits and dual roles
At Firzt, the split with another agency is discussed with the seller before the mandate is signed and is usually 50/50 or 60/40 in favour of the selling agent. Zaslansky recommends recording it in the offer to purchase so that the conveyancer pays both agencies at the same time, which she says avoids delays and misappropriation. Everitt says the agencies should agree the split in writing before working together, and the seller must agree to anything that would add to their cost. “The seller should not be exposed to unexpected additional commission claims simply because two agencies failed to agree on their respective responsibilities,” says Swanepoel.
When one agent acts for both seller and buyer, Everitt’s agency discloses the dual role to both and obtains informed written agreement. If the agent cannot protect both clients’ confidences, another agent takes one side. “If there is something about the agency relationship that could influence a client’s decision, it should never be hidden,” says Swanepoel.
Protect the fee
Finally, we asked each leader for one piece of advice on protecting commission. Everitt’s advice is to put the agreed terms in writing before marketing, disclose fully, and then deliver the promised service.
For Zaslansky, it comes down to doing the groundwork properly. She advises agents to provide the best possible service and marketing and to know the property well, from whether there is decent water pressure to whether the alarm or intercom works and whether there is damp. Point out patent defects when the property is listed, and complete the offer to purchase properly within the legal framework. She also recommends checking the seller’s outstanding bond and other costs at listing, so there is enough money to pay the commission on registration of transfer.
“Protect your commission by protecting your professionalism,” says Swanepoel. He advises keeping records of every buyer introduction and negotiation, and reminds agents that contractual arrangements do not override the statutory requirements for earning commission, including the Fidelity Fund Certificate. “Ultimately, our industry should be moving away from the question of how much an agent charges and towards a far more important question: What value does that agent deliver?”
