SPEAKERS CORNER

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.

If a landlord changes a lease agreement during the lease period citing ‘the reflection of new laws’ as reason, is a tenant obliged to sign? This question was asked in reaction to ‘Six questions tenants often ask

Fred Foster wrote

My landlord sent me a new lease for my rent-stabilized apartment, to commence in December. I signed it and returned it. Now the landlord informs me that he wants to replace the lease he submitted with a new lease which “reflects the new laws.” This is the email he sent: “I received your lease but I will be sending you a new set to sign. The rent laws changed and last week I was provided updated lease forms to reflect these new laws. I will be preparing them and sending them to you to fill out & sign.” Do I have to oblige?

Craig Guthrie, partner at Guthrie Colananni Attorneys comments

First things first, the Rental Housing Amendment Act (the “Amendment Act”) has not come into effect yet nor is there an estimated date when it will. When it eventually does come into effect, the main impact that it will have on leases is that they will be required to be in writing with the rights and obligations of tenants and landlords also being added to the already existing list of items which are required by law to be included in a lease. The Amendment Act will also give teeth to the Rental Housing Tribunal, empowering it to make orders compelling the payment of rental as well as to make any order that is necessary to give effect to the contents of the amended Rental House Act. So whilst it is important to bear the provisions of the Amendment Act in mind when drafting and entering into a new lease, the Amendment Act is not in effect and cannot, at this stage, be relied upon should a dispute arise, as noted in the case of Kondile v Canary and Another. It is more important, at this stage, to ensure your lease is in line with current, effective, legislation such as the Rental Housing Act, Consumer Protection Act and the common law.

The Property Practitioners Bill was signed into law last week but won’t be enacted until the President makes a formal announcement in the Government Gazette. One of the concerns about the new Act is the broader definition of ‘property practitioner’. In reaction to ‘Property Practitioners Bill signed into law’ Les Reynard asked if managing agents would be included.

Craig Guthrie, partner at Guthrie Colananni Attorneys, comments

Reading the Property Practitioners Bill together with the Community Schemes Ombuds Act 9 of 2011 (“CSOS Act”), a managing agent would not need to register as a property practitioner so long as they are providing their managerial services to a community scheme as defined in the CSOS Act. Examples of a community scheme being a sectional title development scheme, a share block company or a home-owners association.

In reaction to ‘Minimum wage is no storm in a teacup’  a property practitioner comments: In a country where unemployment is of the highest priority, I do not understand the continuous obsession to make employers (employment givers) pay minimum wage.
Have nobody noticed that a minimum wage strategy only increases unemployment?
Practically speaking the only change will be the following for me:
My pool of non-performing agents, who I put my trust in to improve and learn, will decrease substantially (this is called risk management). These extra agents will then soon be without any job or income.

Jan le Roux, CE of Rebosa comments

Whether a minimum wage is a good idea can most certainly be debated. It is however also true that, should you employ an agent that sells R1,680 000 pa  (or average of R 140,000 pm ) at 5% commission ex VAT, that agent would receive R42,000 pa = minimum wage. Should you have an employment agreement in terms of which it is agreed that you can deduct the minimum wage paid from commission earned (see detail in Rebosa Report), you could actually be back to square one, ie no additional cost. This is not a big number, would one want an agent that cannot achieve as little?  Surely this can also be debated? Especially because the absence of fixed income has always been one of the biggest barriers to entry.

(PS: The Rebosa event on the new Minimum Wage Act planned for 8 October at The River Club, Cape Town was cancelled.  Editor.)

Learning that interns and estate agents in most cases would qualify for minimum wage under the new Minimum Wage Act have led to concerns being raised about potential job losses as well as other questions such as whether a sectoral exemption for real estate could be negotiated. 

Dennis Hamer

The basic conditions of the Employment Act has been in existence for more than 20 years. If an agent is not an independent contractor, he/she is entitled to paid holiday leave calculated at the average of the past 6 weeks pay. Good luck trying to run an agency where an agent takes his paid leave after a big commission payout. Same applies for sick leave and work on Sundays. Rebosa should engage the Dept of Labour to negotiate a sectoral determination for the real estate industry that will enhance transformation and not add another obstacle to market entry.

Robert Eugene Lopes

I have been to three presentations by labour attorneys in Port Elizabeth over the last two months, directly addressing this problem. The only logical answer is to create a Bargaining Council for our industry. This can then lay down the regulations, and in essence be created by the real estate industry to suit the unique working conditions and paid for by the agents and the interns. This is an industry trying to become a profession, unfortunately it is unique in many ways and very different to all other commission-driven enterprises.

Brent Hamilton

Currently, as commission-based estate agents, we operate as follows:
We work strictly on commission. We earn commission based on a % split with the company broker owners and not all agents are on the same split (which is determined according to your previous performance valuation) – my split is 70/30 (30 % goes to the agency and 70 % to me).
Once we have made a sale, which has registered (which can take up-to three months), VAT is deducted from the commission amount. Then we pay royalty fees of 10% (up-front) to the franchise founder. After this, we are payed our commission according to our split (70/30 split) with our office. Then we pay tax and desk fees, etc. Not leaving us with much of the pie left.
My question – will this change and how? Who will regulate this?

Cyril Pulvenis

Would this mean that an intern would earn less than a qualified agent? How would this affect an agent if the company they were working for was not registered. I was told there is an agency in Durban that’s not registered yet the Estate Agency Affairs Board is doing nothing about it, so what recourse would an agent have in this case?

(Rebosa is hosting a road show on 6 October at The River Club, Cape Town where the new Minimum Wage Act and it’s ramifications on the real estate industry will be fully unpacked. A second road show is planned for Gauteng – as soon as details are confirmed, it will be made known. More information on this critical issue to follow soon. Ed.)

It is better that trustees are not involved in work done for the body corporate writes Mike Spencer.

Trustees are elected to represent the body corporate and must be very careful not to give the impression that they are benefiting from their position.

The Sectional Titles Management Act makes it very clear that trustees may not be present when anything that is being discussed directly or indirectly involves them. The type of thing that will arise would be discussion of quotations involving the Trustee or the Trustee’s company or discussion on arrears owed by a Trustee.

Personally, I often find that trustees can offer to do work for the body corporate at a lower than normal cost, but the trustee must be very careful that they don’t see the normal contractor’s quotation and then do it for somewhat less. This is considered to be unethical. It is better that trustees don’t give quotations for work rather than be conflicted. That’s actually what the STMA suggests.

The problem is that many trustees do do work for the body corporate and I personally don’t see a problem with this, but trustees really have to be careful that no other owner or even tenant think that they are benefitting (even tenants can make a complaint). If the trustee is prepared to do the work for nothing (excepting actual costs of components) then there should not be a problem, but not if the trustee is charging for labour.

Commenting on ‘Minimum wage or maximum earnings?’ Mark Jones wrote that the financial impact will probably add to the reluctance of business owners to take on interns. Many agents also expressed concern about the financial burden implementation of minimum wage will place on small agencies.

Mark Jones, Port Shepstone

Whilst the implementation of minimum wage may well be a reality that the industry needs to deal with, it in all probability further impact on the reluctance of many business owners to engage interns at all.

I would like to comment on the popular misconception that guides the “hit and miss approach” and the narrative that under-performing agents don’t cost principals much because they are on a “commission only” remuneration structure. Many principals themselves (except perhaps those who have true independent contractor contracts in place) have unfortunately never accurately quantified the cost of an agent. When all factors such as office space, advertising costs, personal marketing support and material, phones, web portal costs etc are taken into consideration, a minimum cost of R10,000 per month is not inconceivable.

There is also a very subtle, unquantifiable and seldom considered cost that for want of a better word let’s call opportunity cost. That is the cost incurred when an intern cannot maximise opportunities such as a listing or maybe a buyer because their closing rate and relationship building skills can never match that of an experienced agent. If that occurs six times a year, for example, that is in fact a cost of hundreds of thousands in lost revenue. In a market of limited opportunities, why would a principal expose himself to such risk?

A radical mindset change is required. When you enter the real estate industry, you are not taking on a job or starting a career - you are opening a business. Even if you are associated with a principal you are in business for yourself, just not by yourself. We need entrepreneurs, not employees.

As an entrepreneur, what investment are you prepared to make in starting up your business. If you want to enter this business you need to come with capital and pay a principal for his mentorship, his brand or at least pay for your costs. Where in the world do you get to start a business at someone else’s risk? Food for thought.

Blen

This will have a hugely negative effect on the establishment of small agencies and the resultant employment opportunities. How on earth can a small entrepreneur afford to carry even one, let alone several interns, for at least 12 months? The big boys must be rubbing their hands together!!

Anton Ferero

This will result in more job losses than ever. How can you pay someone if there is no guaranteed income? I have seen agents sitting in offices making phone calls and never sold a property. In three months’ time the estate agency will be bankrupt.

Many agents reacted strongly to the news (‘This is disdain and it spells double standards’) that the EAAB cancelled their contract with PrivySeal, after stalling for five months to renew said contract yet received services without paying for it. Here are some of the comments received.

Clive Levy (email)

It is so typical of the incompetence of the EAAB, yet again! Jan le Roux of Rebosa nails it when he says what we, the estate agency fraternity, have been saying for years: The double standards that the EAAB has when it comes to us having to comply with so many regulations before we are deemed fit enough to be able to ply our trade legally, but the EAAB remains seriously missing with their responsibilities:

"… the utmost professionalism is required of the estate agents by the EAAB. Yet, the EAAB fails to meet the same standard." – Jan le Roux

Get your act together EAAB.

Alan James (email)

The regulator is simply behaving in line with any other state-run endeavour. Why are we surprised.

Marlene (web)

Somebody needs to take the EAAB to task. I am tired of being “intimidated“ yearly with all the processes such as:
1. Company self-assessments
2. Annual audits
3. CPD points
The list goes on and we are told our company FFC’ s will be cancelled if we do not submit by certain dates.

Then on a Sunday evening I get a rather horrid shock by receiving an email in big red letters saying my PrivySeal is cancelled! I am sorry I have no good words left. Can any organization out there at stand up and take these jokers to task.

I seriously don’t feel like renewing my 2020 FFC’s but we all know that will not entitle me to qualify for commission (which the attorneys don’t even ask for). It seems easier to do business without FFC’s because the EAAB only worry about the paying agents and turn a blind eye on illegal operators. As if we don’t have enough to deal with. 

John Fuller (web)

My Privy Seal has disappeared! Am I concerned? No! It’s very rare that I ever see it on other agents’ emails, there has not been an awareness programme to consumers as promised, and why should one in any event need duplicate evidence of one’s qualification? It was completely unnecessary to have introduced Privy Seal in the first place. The EAAB should rather spend the funds and their energy on eliminating illegal non-compliant rental and sales agents. If this aspect was tackled, the industry would have a reduced number of agents, but be much more sustainable, and able to seriously address the costs required to ensure faster transformation in real estate.

Johan Meyer (web)

I find it interesting that they suddenly now comment that they need to follow a procurement process. So, why did the EAAB not start the process before the current agreement with PrivySeal expired or have they suddenly decided it is no longer important. Why was it then so important a few years ago when we were told in no uncertain terms to have PrivySeal on all our e-mails. Oh boy, what a mess we find our governing body in.

‘You need a phone and listings – not a minimum wage’

Commenting on ‘Estate agents could qualify for minimum wage’ long-time estate agent Iavona Engelbrecht shares why she believes a good agent starting out needs a phone and listings more than a minimum wage.

When I started selling properties in 1991 as a rookie, my colleagues, who were already busy for a while were astounded at my success. Without any effort I took the prize for agent of the month every consecutive month. I bought an almost new car cash within the first three months.

Most of the time I’ve found rookies to be more successful than the experienced agents. I absolutely don’t think the taxpayers should be burdened to fund this crazy and opportunistic idea to knock the economy harder by paying an estate agent a basic wage – you either have it or you don’t.

When you start, you just need a phone. Today it’s so much easier, there are internet shops all over, what you need is listings. And what is always so awesome, if you are a nice person and get along well with people, belong to a church or any good organisation you will do well. For those who can’t speak English and Afrikaans well, read a lot, read the newspapers and find out what’s going on around you, then you should have an income within the first three months. Don’t spend all your money, work wisely with it. If you think you need a basic wage, then this profession is definitely not for you.

For those agencies who have been around for a while, making such suggestions is shocking – our country is in a mess because of all the crazy suggestions.

Lots of monies have been given to you to train old experienced agents as interns. You have sold many houses over many years, the average age in the industry is 58 years, why should people go back to Sub A and the poor taxpayers had to pay for these ideas that are so costly.

So, in a nutshell, no to basic wage, the funds are much needed to grow our economy and restore SA.

Why am I still in this game – because it is the life!

Roger Lotz, sales partner with Rawson in Somerset West, was asked recently why he is still in real estate to which he instantly replied “I love it” but that night he started thinking about it. He shares his answer as follows.

I am always thinking of ways to enhance my business, like get up early in the morning and prepare my mind for the day, keep myself updated with current market trends and market myself in whatever way possible to keep me sharp and on the edge. So, I recently identified a few select clients on my database and asked them if I could earmark them as my ambassadors. These are people I keep close and they, in turn, refer business my way. While having lunch with one of my senior ambassadors, he posed the question to me.” Why are you still in this game Rog? Surely it gets tough sometimes.” I laughed it off and gave the expected answer saying “I love it” which in all honesty I do. That evening, as I lay in bed, the question kept running through my mind, keeping me awake. So, I decided to get up and write down the answer to his question.

For me, being in this industry, you need to have real grit. It is very challenging to keep up with market trends and the ever-fluctuating economy. It can be very competitive and at times it can beat you down to the ground. There are so many things that are out of your control and often the disappointments, and hours, for that matter, don’t seem to be worth the 5% (if that, sometimes) we fight for. You really need to be tough, and I don’t mean hard-headed and obnoxious tough, I mean that cowboy-you-see-in-the-movies kind of tough. The one that manages to keep riding and heading for the horizon, making his way home to his family through the icy cold winters and the dry hot summers, never losing focus of what is waiting for him at the end of his journey. You have clients sometimes with unnecessary demands, buyers with cheeky offers, sellers with extremely high expectations and often, some really inconsiderate requests. So, while writing this, I’m seriously asking myself, “why am I still in this game”?

Well, each and every time I do a deal, something just north of brilliance happens. There are those young first-time buyers and newlyweds who are so eager to start their journey, and watching them go through the process of learning how to buy a house and walking them through all the necessary qualifying steps to get them there, is always entertaining. There are those young families that are not looking for a house, they are looking for a home and it makes you feel as if you are starting a family all over again, remembering how it was for you and guiding them to avoid some of the mistakes you made. There are the more senior clients that want to get away from the empty nest syndrome and you highlight their sale by introducing them to the young family who will flourish in their home. Then there are the tough ones, like a break-up, or a health issue or loss, and even though those ones are hard, you get a sense of servanthood by assisting them and somehow making their load seem just that much lighter.

Every deal is different and each deal I do holds a new memory for me and an even better lesson. Most of the clients remember me and a beautiful friendship is formed. Some clients may move away and then the phone calls dwindle and then stop. Whether these clients remain in contact or even if they never remember my name, they will always remember how my profession in some amazing way impacted their lives. So, to answer your question as to why I am still in this game, Mr Ambassador. To me, this is not a game, ” THIS IS THE LIFE” and I intend to live it to the full.

 

2) Alma Bronkhorst shared her personal opinion about the EAAB: I have been a registered estate agent for more than 35 years, paid my fees and received a beautiful professionally printed FFC every year.

The last few years the fees went up exorbitantly, you have to print your own certificate, attend CPD meetings that take you out of the office for half a day.

I learned to do eLearning to curb time and cost – Now why must I pay R2,500 to sit at my desk and do unnecessary training of myself? It is a never-ending 3-year cycle, surely we can do it every 5 or 10 years.

What happens to all our money, our fund should be billions, we never get anything back, not even a printed certificate. Surely the interest on our fund is enough to pay their salaries and create bursaries to several approved interns.

I had no freebies, paid for my own petrol, walked the streets, got bitten by dogs, had to deal with unfriendly people, had no internet, no cell phone and had to pay for publication of adverts in newspapers. We did it the hard way.

Today everybody sits behind their desk, a necessary evil. You are consumed by administration, printing costs, internet advertising fees, auditor’s fees and, am fearful of the EAAB. Now they are using the attorneys to police us … “no FFC, no commission”. Really?

Will enforcing minimum wage be too much of an additional financial burden on agencies, making especially smaller entities hesitant to take on interns? Many agents thought so after reading ‘Estate agents could qualify for minimum wage

Charles Haigh

With the majority of agencies having a “hit and miss” approach to taking on interns, this legislation will have a severe impact across the industry namely:

  1. 1. Current “non-performing agents” will be retrenched for non-performance
  2. Agencies will be reluctant to take on interns
  3. Interns cannot be independent contractors
  4. Franchise models with costs per agent will have to rework their cost model.
  5. The act creates yet another barrier to entry
  6. The act is also counter-productive to the transformation drive
  7. Small businesses simply cannot afford an overhead like this.
  8. Interns will be subject to vastly different operational requirements from
    employers so gone will be the days of flexible hours for agents.
  9. Interns will be subjected to harsh probationary periods.

The list could go on, but these are the glaringly obvious and indicative of yet again a short-sighted implementation of legislation without role-player consultation.

Lee Clarke

I’ve worked with intern estate agents earning a stipend and, to be frank, ulterior motives around the use of said stipend are always evident … the die-hard motivated and successful agents in our industry attended the school of hard knocks and with it some enlightening lessons around work ethics, determination and the drive required to achieve success in this field. This is utter BS and obviously an ingenious way for government to walk away from the stipend centric initiatives the recently incorporated to assist PDI’s penetrate the property market … our market place without the buy in from their Public Works budgets.

Francois P Theron

What if the Government pays the minimum wage for the first 12 months if the average income is less than the R3 500 minimum wage so as to curb the ever-rising unemployment? Perhaps similar to “3000 unemployed youth will be trained by this R250m programme. … With the additional funding of R250 million, CapaCiTi will now be training 3000 candidates with industry-demanded technology and business skills, placing them in permanent jobs in South Africa’s leading companies.” I guess unsustainable and lack of funds …just asking?

Alta Fourie

The EAAB has a “One Learner One Agency” not enforceable policy in which they expect an agency to train an intern at its own cost. Add to this the implications of the Minimum Wage Act, estate agency principals will rethink any training of new estate agents. The average age of estate agents is around 53, mostly white females.

The news that Leadhome dropped the fixed-fee model in favour of a ‘variable fee’ drew a lot of response, mostly from traditional agents with some proposing the disruptor offer an apology for their bad rap of the former. Here are some of them:

Website comments:

Leon Jackson

As a fellow property practitioner in the industry, I believe in the method of building face to face relationships with clients. The values of honesty, integrity and service delivery cannot be compromised when dealing with clients most valued assets and in an effort to build long lasting business relationships.

Clients still prefer personal hands on expertise and with the use of technology we as agents have a platform to be more innovative in how we derive and achieve results, that’s beneficial to our customers all the time and every time.

A lesson can be learnt, and all too often people and organizations get it wrong.

I still believe, one should slowly go about one’s business without passing judgement and publicly making negative comments, and let success be one’s noise. This way if all else fails at least you can still show face. Hard lessons …

Michael Black

I think before they move into the same real estate industry that they ran down to build their brand, they should make a formal apology to the entire real estate industry for their destructive entrance into the industry.

Leigh Brodie

I see a place for both technology-based agents, as well as traditional agents. God speed to all.

Adele Pretorius

Computers can’t think out the box…. something agents have to do on a regular basis. Computers can’t advise you. Professional agents are well worth their fee. And it doesn’t take the same amount of work for every deal ... high or low … not true. Each deal is completely different and you never know what to expect. You have to be ready for anything…. pretty much 24/7.

Adrian Grove

Driving high volume in a slow market to justify set fees was always going to be difficult. Purplebricks in UK and Canada still going strong, they strangely used a different model in new markets in the US and Aus. Time will tell if investors will keep supporting them. Have a look at Realogy (US) and Countrywide (UK) stock prices – some traditional models suffering more.

John Fuller

Most of the bottom feeders who have recently entered the industry openly slander and denigrate professional estate agents; and greedy sellers who support them lap up false information and believe by listing with them they will save money.

The truth is:

  1. Low fees don’t sell property! Professionals negotiate better selling prices that far exceed a few thousand rand saving in fees.
  2. Professionals have an expansive data base and large referral network.
  3. Professionals have strong brand awareness which is attractive to buyers.
  4. The real estate industry has been offering all the technology benefits, and much more, to buyers and sellers for years, plus many years of expertise, knowledge and other value-added solutions.
  5. The “technology” companies merely jump on the bandwagon, subscribing to technology that the traditional professionals have developed over many years. They have not developed or added any industry beneficial techno systems themselves.
  6. Traditional agencies market property; and advertise real estate across a very wide spectrum of websites and portals locally and internationally. Their branded websites are highly ranked. The bottom feeders merely advertise on some property portals and hope for a lead.
  7. Do an internet search and see how many of these wizkid businesses are ranked on the first few pages of the Internet?

I am looking forward to the next year. The current economic slump will sort the men out from the boys!

Email:

Gail Gould

I have been selling real estate since 1989 and the majority of my business comes from my database and referrals. My clients prefer to work with me (a trusted and knowledgeable agent) and pay a fair commission, than go with an agent they don’t know for cheaper and risk a bad transaction. Computers don’t have local knowledge. Technology has a place, clearly, in the future of real estate, but human interaction and trust cannot be replaced.

Geoff Stroebel

Only a matter of time before PGP realize just how much they paid for a model doomed to fail … Soon it’ll be cheerio Eazi.com and PropertyFox.

The boom in sectional title units may be short-lived according to some of the comments received on ‘Why sectional title sales are booming in SA

Winston

Why the trend towards Sectional Title accommodation ?…the answer is simply because the initial escalation of PRICES of the household properties and the affordability ongoing, of living in a SUBURBAN HOUSE….especially now , in the Western Cape, is too HIGH… what with the huge increases in Rates affecting the Western Cape., as a result of the DA local government increasing the Municipal Valuations by 30-50%!
As a result , this action will have a rolling add on effect that will necessitate higher prices in the near future especially on Sectional Title units which come up for sale ! NOT SUCH GOOD NEWS!

Avril Mitchley

Absolutely correct re your last comment, Winston. Sectional title units may be selling faster but the main reason for so many sectional title units becoming available is the problem of high rates and levies being imposed. Many sectional title owners (especially investors) are finding that the rentals they are asking cannot keep pace with the levies and rates they are paying. Rental amounts are actually coming down because of the financial constraints of tenants. Owners are paying higher rates and levies (which often include special levies and CSOS levies), so holding sectional title units is no longer seen as an attractive investment and they are being shed by disillusioned investors. Eventually the glut of stock will also impact on investor sellers as they try to get good prices for their units and don’t succeed.

The barrier that regulatory ‘red tape’ poses to transformation as explained in ‘Meaningful transformation requires a shift in attitude’ struck a cord with some agents.

Charles Haigh

Fully agreed, after all this time there is no apparent improvement in the drive for transformation. This week I received a copy of a letter from the Cape Town City council refusing to issue board permits to agents if they are in arrears with their property rates and taxes in addition to forcing non-selling principals to register for board permits in order for interns to obtain their permits. The question begs:

  1. Does the City view the industry as a soft target to fill their coffers?
  2. How are agents that do not own property dealt with as they do not have rates to pay?
  3. All of their policies create yet another barrier to entry and goes against the national government policy of unemployment alleviation and job creation.

The departments throughout the various parastatals need to co-operate with each other and ensure that policies do not clash or at least compromise, so that all can move forward in one direction instead of pulling in different directions. Or we’ll face stagnation as we currently do, and as a result we now have this transformation idea that hasn’t gained traction because of the various agendas at play.

Emma Madola

It is quite a very sad story more especially to us as the ‘novice’ to break-through in this industry and as the writer alluded, the biggest barrier is that of lack of access to equity and enterprise development funding.

The most disheartening matter is that at a grass root level you find that the beginner has done pretty well in terms of owning that piece of land and developed it to be what it is today, but in order to climb up to another level the funding is needed.

Indeed, the industry needs to prioritise programmes that support and develop emerging real estate enterprises.

Mike Spencer, principal estate agent with Platinum Global, writes he believes equally important to selling a property is educating a home buyer, especially a first time buyer, on all that this big decision entails.

Most first-time home buyers often know next to nothing about the ins or outs of buying a property. There are also many new buyers that come from a background where property ownership is unknown and I personally believe that estate agents have a moral, if not legal, obligation to make sure that these new buyers are informed about all that happens when anyone buys a property.

Few people buy more than the home that they live in and as a result over a lifetime they might buy a flat when they are young, a house when they have a family, and a sectional title unit when they retire. In other words, they only buy a property every 10 years or so – and there can be major changes in how this is done over that time.

In terms of the Code of Conduct of the Estate Agency Affairs Board, an estate agent is obliged to explain the contents of the offer to purchase that the buyer is signing. In practice, if the estate agent does try to comply, they often just read the contract to the buyer. This does not explain it. I would suggest that in most cases the buyer is simply asked to sign here, here and here!

Should estate agents go further? In our company every new buyer is firstly interviewed about what they would like to buy, why they would like to buy and how much they can afford to pay. Before the buyer is shown any properties, they are connected with a leading bond originator who pre-qualify them for finance. With this information our estate agents are able to show properties that the buyers can afford – including taking into account the transfer and bond costs. During the interview we help the buyers by explaining the buying process particularly with focus on things such as explaining extra costs, rates, levies, water and electricity. Also explained is a sectional title buyer’s responsibility for looking after their unit and to some extent how sectional titles work. For us an important discussion is around payment of the bond and transfer costs. Further to this we explain how bond payments are calculated and the real advantages of paying extra on their bond.

While our job is to sell a seller’s property we believe that it is equally important to educate a buyer on the buying process.

Educating the buyer will result in fewer problems for everyone.

What can a landlord or rental agent do about a tenant that is continually 3-4 weeks late with their monthly rental payments? Rental law expert Marlon Shevelew, director of Marlon Shevelew & Associates shares advice on this and other rental-related issues.

What can a landlord/rental agent do if a tenant is continually 3-4 weeks late every month with their rental payments?

If a tenant is late with his/her payment, and assuming we are dealing with a natural person, then a formal letter of demand is required. The demand can clearly state that in the absence of payment within 7 (seven) calendar days, legal action can be commenced for the amounts owing plus costs. It bears mentioning that in any month, if the payment is still not forthcoming within 20 business days from date of the demand, the lease may be cancelled and the occupant provided a period of time to vacate. Note: the notice should also make express provision for the tenant to remedy his default within the stated 20 business days in order for the right to cancel the lease to accrue to the landlord. 

What happens if a tenant signs a 12 month lease and leaves after four months but the rental agent took commission on 12 months upfront? Does he/she have to refund the landlord for the balance of the lease?

A procurement of a tenant is a specific mandate that a landlord provides an agent and if the agent has done its due diligence when placing the tenant, there would not be an opportunity for the landlord to claim back the commission earned for the balance of the lease. There is no law that provides for a claw back of commission in such an instance, especially if the actions of the tenant are no fault of the agent. Note: the landlord may be entitled to levy a portion of the lost commission to tenant in the form of a cancellation penalty pursuant to section 14(3) of the CPA - this will have to be a pro-rated amount. 

What happens if a property is sold after the tenant moved in and paid a deposit? In this case, the tenant didn't get his deposit back and the new owner is also demanding a deposit which seems a bit unfair.

In short, the tenant is not liable to pay any further deposit. This deposit should be paid over by the previous landlord to the new landlord whom has stepped in his predecessor’s shoes. Note: the principle of huur gaat voor koop would apply so as to ensure the validity and enforceability of the lease going forward. The tenant’s obligations thus remain the same, as do his / her rights. In terms of the RHA the landlord is required to invest the deposit in an interest bearing account, and upon expiry the tenant is entitled to return of same (along with accrued interest), less any amounts deducted for damage to the premises and other amounts that may be owing in terms of the lease. Thus, it follows that in the event of the property being sold the previous landlord is required to pay the deposit to the new landlord, as the new landlord will be obliged to refund the tenant upon expiry of the agreement.  

Many estate agents have complained in the past that Property24 tallies every click on the agent’s phone number or email on a listing as generated leads and bills them accordingly. Jim Alexander, area manager from Mossel Bay, laments this method and explains why. This is his letter.

We are all familiar with the term P.O.P. It usually means Proof of Payment but can also mean Proof of Purchase.

For example, like many of you, I subscribe to Windeed and when I use their service, say to get contact details, they send me an invoice stating the number of times I searched for contact details in that month. There is a record of each search I made, and I can send myself an email of the contact details as further proof to check when the invoice arrives.

The same is true if I use Lightstone services – there is a record of my transactions that I can cross-check with the invoice.

Not so, Property24!

With P24, apart from the significant charges each month for my listings, I get charged monthly for any ‘leads’ that were generated through their portal. Well, on the surface of it, that could sound reasonable, but it’s not and it gets worse.

Even if I do agree with their definition of a ‘lead’ (which I do not), I have no way of checking. All I can do is go into my Agent Zone and will then see that the number of ‘leads’ generated is recorded there. If I ask for IP addresses, they are unable to provide same. That is their proof of purchase, their statistics backing their invoice.

I must just pay – and preferably shut up! Because, according to Charles Scott, their General Manager, he has evidence that most sales made in our industry (I think he said 90%+) are generated through the P24 portal. He waxes lyrically about how important P24 is to us agents and even states that, if he was forced to change the method of charging, he would do so in such a way that P24 would generate the same revenue – or even more!

So, what is my problem, you might ask? Here it is.

If someone opens a listing of mine on P24 they will see under my name at the right-hand side 2 blue hyperlinks. One says, “Show Contact Number”, the other says “Show Email Address”. If either of these is clicked on and therefore opened to view, P24 defines that as a ‘lead’. It doesn’t matter that I did not get a call or an email, that is a ‘lead’. Fake news, anyone?

If you go to Wikipedia, amongst a lot of information on the different meanings of the word ‘lead’, you will find this wording “a lead is usually allotted to an individual to follow up on”.

How can you follow up on someone who never called you, never texted you or never emailed you?

One of my agents who normally gets an average of around 15 ‘leads’ got 77 this month and no way of checking, no proof of purchase, just pay up.

This method of generating revenue is the height of arrogance.

Finally, I ask, “Who is to blame for this blatant profiteering”?

To quote Walt Kelly’s phrase “We have met the enemy and he is us”. I have decided I no longer want to be my own enemy. I will be delisting my properties from P24 this week, who will follow?

Comment from JP Farinha, CEO of Property24

The clause in our monthly subscription agreement clearly states how a “lead” is defined and what agents are paying for. If we were able to charge only for actual leads, we would need to track phone calls which would be an added expense and our prices would change to reflect each actual lead as opposed to the current definition. It would not reduce our pricing, the cost per lead would simply increase.

Charles Scott, general manager of Property24

Leads are defined as an active click on the “show contact numbers”, “show e-mail addresses” or completion of the capture form that can be sent to the agent/agency as an SMS (and copied via e-mail).

With regards to leads and lead quality classification, we treat our lead brackets as indicators of listing distribution, brand exposure and market interest. We do not operate on a strict pay per lead model, nor do we associate a particular value or fee to each type of lead. We view an aggregation of all lead types as a trended measure of opportunity over time and have thus priced them accordingly.

(Scott also indicated that Jim Alexander wasn’t the contract holder with P24 but his business owner who had agreed to the terms and conditions of the contract but passed the costs unto each such individual agents. Ed)

In response to ‘SSETA leading the way’ Angela van Deventer wrote and asked: “Will we be able to do our PDE this way. Looking at next year.”

Janet Alexander, CEO of PropAcadey answer

The Estate Agents Affairs Board (EAAB) set the Professional Designated Exam (PDE) and they embrace elearning. PropAcademy have an easy to follow online PDE course for both Level 4 and Level 5 and have an extremely high pass rate. With this elearning course we offer free webinars and if required a face-to-face half day workshop.

“New real estate models and technology advancements are increasingly challenging the status quo. This is why it is currently not a clear-cut choice on whether to go for franchise or independent agency if you are looking to start a new business”, comments Adriaan Grové, CEO of Entegral on ‘Want to own a business? Joining a franchise is one option’.

Based on client feedback from over 14 years and closely monitoring international trends, there is however indications that opting to go the independent route, has opened up more value compared to 10 or 20 years ago. Today you need less red tape and a more agile business model to survive the onslaught of disruptors entering the real estate market and compete in a more competitive market where commissions are increasingly under pressure.

Looking at the US it’s hard not to notice how Wall Street is throwing money at new real estate models and companies that are starting to dwarf existing franchises in terms of valuation, but that not necessarily profitable. This is the new normal. Big changes are coming in real estate and the focus is on efficiency and scale for exponential gains. A lot of franchises are re-positioning themselves to be seen as more tech focused, but I’m wondering it this is a little too late for a lot of them if you look at share prices.

At Entegral we’ve seen an increase in the number of agencies converting to a more virtual environment to reduce operating costs. No franchise border restrictions helps with efficiencies both in terms of the size of your operational areas and agents you attract. At the same time we see smaller operators having big success in smaller more focused areas, where they have stamped their local authority with a few high performance agents.

Today the internet is an equaliser with small and large estate agencies competing with each other on the same property portals, social media platforms and in many cases use the same back end software.

Independant agents make up the majority of the market when it comes to agent count. It’s a trend we see in the US too and companies like Redfin and Compass has put a damper on the agent growth of many franchises. The franchise of the future is the one who can focus on maximizing profits and efficiency for their agents.

This year has probably been a record in the number of franchises looking to go the independent route with no less than 3 large franchises converting to independent status in the last month with Entegral.

Some of the feedback we received from owners includes issues with having to compete against your own brand in the same area and the freedom to try new initiatives without head office restrictions. Another major advantage for them is that they are not forced into agreements with certain suppliers and not having to pay royalty fees improves their cash flow.

Fact is, today many independent service providers have systems that are on par or superior when you compare it with franchise offerings. Independent service providers like us receive a constant feedback stream from a variety of real estate models, leading to better focus on the critical features required by everyone, it is not dictated by a few within a certain real estate franchise model.

In the end of the day, both franchise and independent agencies can be mediocre or industry leaders, no matter what resources they have available to them. To me, it is all about the leadership that drives a certain vision and that is open to change.

A drawback currently for independents is that there is no collective bargaining structures in place. We’ve seen this with some franchises having shareholding agreements with portals and bond originators, leading to benefits on their bottom line through for instance, more preferential subscription fees.  On the other hand, some would prefer a business free from bureaucracy and it is here where the independent model while shine for some.

‘The EAAB should focus their attention on investigating non-compliant agents than policing the compliant agencies’ says on ‘Rebosa says EAAB must halt wasteful inspections

Kim van Niekerk

I have been in the industry for 20 years.
From 2003 every year until 2017, I spent many hours compiling lists with names / cell number / website addresses etc. and checked on the EAAB website if these persons had FFC’s and indicated this on the forms. I personally handed these lists to various EAAB officials at numerous “stakeholder” events… as well as via the whistle-blower route. In the end I had inspections done at my company with no problems on my site but for the past 16 years NOTHING has been done against those on my lists. These persons still trade and this includes attorneys who have “agents” that “work” for them!

This is disgusting as we who are agents that jump through all the hoops, red tape, audits, FIC compliance, register for VAT etc. etc.…cannot sustain our agencies due to these illegal operators! A large portion of our income goes to being compliant and these rogue agents get away with all of this and get the mandates as they can operate on 4% commission. Shame on the EAAB…but it is the norm for them!

Fatima Ahmed

To obtain consent to conduct compliance inspections from estate agents who hold valid Fidelity Fund Certificates will not root out the ones operating without an FFC. The Board must run through their files and check on the disqualified estate agents. The word goes around that some of these agents opened estate agencies where they act as managers and/or directors in such agencies. The Board must do a thorough investigation in this regard. This is my opinion.

John Fuller

The EAAB should focus on approaching the hundreds of unregistered agencies and thousands of illegal agents as well as the so-called (unqualified) property consultants working for low cost attorney firms. And, when is something going to be done about the thousands of illegal rental businesses and their unregistered agents, including all the online home rental businesses? All of the aforementioned are undermining the industry, threatening the viability of compliant entities and therefore impacting on transformation.

Dirk Reuters

The property industry would totally collapse if agents only charge 2% commission as suggested that SA does the same as the UK. One must consider the principal agency takes 50%. Ridiculous suggestion.

Adriaan Grove

The majority of homes in Australasia sell by tender and not via auction as stated in the article. About 24k homes are on sale in NZ currently, with only about 1k marketed as auctions.

Stock price of Purpble Bricks dropped. But is it worse than Realogy (holding company for Sotheby’s, Century21, ERA etc) which lost more than 50% of it’s value since start of the year. Truth is, traditional franchise models are currently under a lot of pressure. The only winners today are the portals (look at Zillow and Rightmove stock prices).

In the UK, the published rate is about 2% commission but nearly all London high street agents actually charge between 1-1.5% fee. Agents work on basic salaries ((£15 to £20k basic per annum) and then take about 10% commission split. You need to factor in cost of living and longer work hours, so the commissions are in fact much lower there.

In the US, due to seller/buyer agent representation an agent makes 2-3% and not the full 6% in most cases. The US antitrust division is currently investigating MLS buyer commission structures, which might disrupt the whole MLS market, kill buyer agents and open the door for low fee agencies like Redfin.

Mike Sutcliffe

In the UK agents work for a salary of 2000 pounds per month and a small commission after so many units sold, I do not think that system will work in SA.

Comments on ‘high’ commission rates of SA estate agents in response to comments on ‘Hidden costs when using set-fee agencies

Graham

I’m not a fan of one of the biggest “fixed fee” agencies as one has to show potential buyers your home and there is no agent present. I agree with most of the article. Traditional estate agents need to be far more flexible as their commission rates are too high. They would not get away with those rates in other countries such as the UK where the rate is around 2% not 5 or 6%.

Sam

Graham – commission rates are indeed much lower in the UK but property prices are much, much higher in the UK. The proceeds of sale of a rather average home in the UK would buy you a ‘dream’ home in Cape Town. Also, it’s a more efficient market with higher turnover, especially in metropolitan areas; from a technological and regulatory perspective, it’s much more up to date and sophisticated. If we were all selling R15m – R40m homes in CT regularly, then 2% wouldn’t be so hard to bear – but we’re not. If agency commission rates dropped to 2% here, I think a very large number of agents would leave the business, as they wouldn’t make any money at, say, half of 2%. Moreover, their employers would either go bust, or have to drastically reduce agents’ share of the gross commission (prompting more agents to leave the business) – and the remainder might have to convert to digital, just like the disruptors the article refers to. So best keep commissions where they are and provide the best possible service to clients.

Laura

As an ex agent and principal of 30 odd years in the SA industry and now living in the UK, I can tell you that while the commission rates here are much lower (2-3%) the agents in SA earn and deserve every cent of their money. Agents in the UK do not have to go through the onerous task of studying (or RPL) or in fact be qualified in any way. They only work business hours, they do not go out to show properties but rather either send the buyer on their own or employ “viewing agents” who merely open the door but have little or no info about the property. The agent merely verbally passes on the price offer to the seller, the solicitors then write up the contract and also does the finer negotiation on fixtures, occupation date etc. Both the buyer and seller have to engage their own solicitor so in spite of the low commission rate, the seller in addition still has to pay for his legal representative and this runs into a couple of thousand pounds. All in all, South Africans get a much better deal for similar cost. When buying our house here, we dealt with nine different agents from the same agency – none of them took accountability, knew pretty much nothing and could not give us any advice or direction.

One estate agent commented that the safety tips in One agent assaulted, another hijackedwere “fabulous but not practical”. Read her letter and share your thoughts whether you agree that verifying a client’s identification before showing a property is not only impractical but could cost your agency sales.

The tips are fabulous but not practical. I think ‘no ID, no viewing’ is not possible unless the EAAB makes it compulsory. I am of the opinion the moms and pops agencies will take buyers out regardless and so the reputable agencies will lose business this way and thus just be forced to compete with 1st call answered or 1st viewing arranged mentality from the buyer.

If a buyer drives past your For Sale board and calls to view the home, it is impossible to check email addresses etc.

If you take a client to one house and they want to see two or so after that appointment, there isn’t always time to call the office, but yes, this one could probably make the most sense of all of them.

A code work such as ‘Check the electricity box with address’ is impossible when you are in an armed robbery as my business partner was a month ago. She had a gun to her head and we all knew where she was (as I was supposed to be there but was running late) and so there was no way of knowing that she was standing with a gun to her head as the armed robber was not going to give her any “one last call” opportunity, so no code word in the world could have helped her here as there was no way of knowing there was a problem. She wasn’t alone. The developer was with her and also the helper. Not ONE of them could use any code word of any sort. All they could do was pray.

Group viewings – a great idea, but again you may not have a group interested in viewing the property and so many times you end up with one viewer OR have to co-ordinate a group’s diaries … impossible task.

Show houses – you often have one car stopping and another a minute after, and so while greeting the current viewers the second family already enter. It is thus impossible so assess the situation and make a call to close the gate in their face.

All these tips are really grant ideas, but I find none of them truly useful.

My aim is not to challenge the tips or opinions but rather to TRULY find a solution to the dangers we face many times in a single day.

I had a professional person view a home the other day. A lawyer, in fact, and all legit as I had to call him back at the office. I was asked by this person if I would care to pleasure him while the owner of the house was downstairs. This to me is our biggest risk, you cannot trust anyone. Not even a professional in a fancy suit. And so, if we cannot trust anyone, then what is the answer to keep us safe or sane actually?

On the role of machine learning and artificial intelligence (AI) in real estate (in response to ‘AI in real estate need not be feared’) there was some difference of opinion. Here are the comments from our Facebook page.

Adriaan Grove, CEO of Entegral, real estate tech provider

Yes, because in general AI does not exist yet but rather subsets like machine learning which is increasingly used in the real estate industry. If your aren’t a tech company, you won’t understand 😉 (Why ‘real estate tech companies’ are the future of real estate).

But in all seriousness, if AI can build self-driving cars, why can’t AI predict something like house values? This alone is already disrupting the market, as we are seeing in the US with iBuyer model. Give it time for SA. Technology won’t replace the agent but make him more efficient and work smarter. Those who can embrace it, is the agent of the future.

Marlin Oakes

My thoughts exactly, and actually planned on saying it. The ‘tech trend’ by marketing homes [happened] in the USA years back and have only reached our shores now as we are always a few years behind. Eventually the need for a real estate agent will be replaced by real estate sites that allows one to view properties you are interested in while in your own home. Drones also allow one to view properties and the surrounding areas from an aerial point of view. Take how eazi.com is making use of it and offering a standard rate in commission. Most recently HomeBid as well. Jump on the bandwagon? Yes, most certainly! We are moving to a time where the human touch will not be needed anymore!

The article ‘One agent assaulted and another hijacked’ once again illustrated the vulnerability of estate agents when hosting show houses or meeting clients to view a property. Here is what some of you had to say:

Danie Barnard wrote via email

I want to suggest that the industry through all its platforms “promote” the fact that buyers need to be informed/advised that it is becoming a requisite that they need to provide ID before viewing will be permitted. I would even say that they have to provide proof of residence as well whilst at it. They will need to in any case by the time they wish to make an offer.

By all platforms I suggest that the likes of Private Property and Property24 publish it somewhere in the showhouse adds as well.

Charmaine van Antwerp wrote via email

I agree with the fact that agents should ask their prospective buyer for a pre-approval letter from their bank or their bond originator together with a copy of their ID document before viewing any properties.
I have personally done so for a while already. However some agents have made appointments with me for their clients to view and when you ask them the surname of their client, I have often been told that they don’t know the surname of their client (only their client’s first name).
This is shocking to me that an agent can run with people that they don’t even have a surname of as I can tell people over the phone that I am Sandie when I am in fact Charmaine.

Property Professional website comments:

Justin

It is nerve-racking to list property in areas, especially where crimes are least expected. I believe all agents should be armed with some sort of protection like pepper spray, tazer, gas gun etc.

I am an agent and was assaulted in an area in Polokwane. Six tenants under the influence of alcohol threw me with beer bottles. One even got in my vehicle. I drew my firearm and all disappeared in separate directions. No one was harmed, but things could have gone real bad. I reported the incident to my principal and the owner and was told to rather not list in that area again.

I agree at least two should work together and still be armed. We are there to make a living and agents will go anywhere to make a deal happen. This is their food on the table. Be safe, be armed! (Comment shortened, Ed.)

Jenny

I believe the only time the issue of agent security will be properly addressed is when one of us gets killed. Show days should be banned on a national basis. Appointments checked out before viewing.

Here are some of the comments received on ‘Hidden costs when using set-fee agencies’:

Hayley le Roux

Well said, most local agents tend to go the extra mile. It’s not just about listing and selling, it’s about knowing your market, building relationships with buyers, sellers and other role players. It’s about stepping in when a seller is out of town and requires assistance. It’s about assisting the purchaser who doesn’t drive but wishes to view, assisting with requesting plans … the list goes on and on.

Tim Smith

Two possible major factors that are often overlooked when ‘employing’ a budget agency option to market your home (marketing does not necessarily lead to a successful sale), are:

  1. The inherent inability to deliver a high level, sustainable marketing plan, that exposes the property to potential buyers that are ready and able to purchase your property at a premium price.
  2. Unmotivated estate agents and support staff, that are not able to cover their cost of service delivery to the seller, could result. The lack of incentive alone is an indicator of possible failure to deliver, and acceptance of first-come, first-served offers from potential purchasers becomes an option.

Possibly seen by struggling estate agents as a short cut approach to real estate marketing, it is simply not a sustainable business model, and the client potentially loses.

Graham

I’m not a fan of one of the biggest “fixed fee” agencies as one has to show potential buyers your home and there is no agent present. I agree with most of the article. Traditional estate agents need to be far more flexible as their commission rates are too high. They would not get away with those rates in other countries such as the UK where the rate is around 2% not 5 or 6%.

“The Estate Agency Affairs Board (EAAB) overburdens the real estate industry in South Africa – for the industry to flourish and grow fewer regulatory and costly barriers to entry are needed,” comments an experienced property practitioner. Here follows the rest of his letter:

The EAAB is not only frustrating the industry but oppressing our businesses and prescribing how we must run our enterprises, to our own detriment and that of our industry.

They are the cause why our industry has regressed instead of flourishing and gaining new members. Their barriers to entry and rules and regulations, the compliance imposed on existing members and new applicants, make it impossible to grow a business, employ new staff and grow the industry. They are the cause why a great majority of potential estate agents are not prepared to join the industry.

For individual agents the monetary costs for licence fees, logbooks, NQF4 fees, PDE and keeping themselves going is indeed a huge challenge. Most persons seeking employment in the industry are down and out elderly persons with a small income, looking to boost their monetary situation. Where are newcomers going to get the money to enter the industry, sustain themselves, pay for expenses for private über, or running a motor vehicle, paying for basic expenses, business cards, registration fees, cell phones etc?

The majority of estate agencies are family-based small operators, perhaps just a husband and wife, or medium sized companies and cannot carry others in their businesses or assist financially. They can only help a select few that show some potential and stability.

If you take into account the countrywide statistics of real estate sales and compare it with the number of agents whether registered and compliant or non-compliant and illegal you will discover that the average agent is on a starvation diet.

If we are going to transform this industry, we want no barriers of entry, just a small registration fee to ascertain who is registered as an estate agent and what the count of our registered members are. We will double the influx of estate agents to our businesses in a matter of months

‘Intern’ agents will be allowed to operate totally on their own after a year or 18 months. They can earn more money on commission splits after writing a practical exam set by the board and passing same. If an individual wants to establish their own business, they can, say after a minimum of three years of uninterrupted practical experience in the industry, take a further exam. The board sets the study material and the final examination.

The EAAB can also consider creating a practical and educational real estate school for interested newcomers to the industry and all graduates from that facility will be employable immediately. It is impossible for a principal today to tutor, fund and taxi interns and still have time to do everything else that is required to run a successful business.

Why must the EAAB place themselves between the existing laws of the country and the real estate industry? There are existing laws for misrepresentation, latent and patent defects, theft, fraud, FICA, unfair competition and anti-competitiveness etc.

In any industry, the business owners or directors are always responsible for the actions and omissions of their employees and staff. In the same way, real estate principals and directors are responsible for the actions of their employees and staff.

We have to create an easier way to recruit. We need an environment where the real estate business can flourish and gain new members who will remain loyal and become successful employees as well as new members who will learn the business and start their own. This is what has always happened in the past.

About a decade ago there were over 80,000 registered estate agents in this country. Those figures has dropped dramatically since, keeping in mind that a percentage of the reduced membership are strictly speaking non-compliant not to mention the percentage that is unlicensed. One phenomenon that all stakeholders must accept is that the real estate industry since its’ inception has always had a large turnover of staff. Like the saying goes a third are coming, a third are leaving and a third are staying. This is the greatest challenge for any type of business or industry, especially real estate.

The composition of the EAAB Board should also be structured totally different from what it is at the moment. There are many astute persons serving on the Board, but I am amazed that only a few of those serving on the board have come through the ranks of the real estate industry. How can they make rules and regulations when they have no practical experience of the vast complexity of the real estate industry – the challenges, the hardships, the competitiveness, the frustrations, the financial demands, recruitment difficulties, exploitation by some of the property portals, print media expenses, the marketing costs associated with our industry? Surely the existing successful practitioners and leaders in the industry can give some guidance on what the practical challenges of the real estate industry are and offer some possible solutions. That said, cognisance must also be taken that some of the franchisors/franchisees have different agendas to further their own goals and aspirations to the detriment of other competitors, newcomers, rules and regulations and independent owners. The ideal “Board” should therefore consist of estate agents (60%) of which 30% maximum represent franchisors/franchisees and 30% represent real estate independents. The other 40% on the board should be public representatives such as attorneys and people representing other fields of expertise.

An Imbizo should be held by the EAAB with all the major role players. It must be also noted and understood and brought to the attention of all, especially the EAAB, that the perceived BIG players do not necessary do most of the real estate business in any given town. If you do a survey you will find that the independent estate agents combined might be doing more business than the bigger brands. A lot can be learned from the “smaller operators” which is where all today’s big business brands started. The Board should be more attentive to the huge challenges that both parties are experiencing at the moment and I am surprised and perplexed that we cannot solve these problems and yet we all have the same goals to grow the industry.

These ideas have been restated on numerous occasions. The time to engage with the EAAB is sooner rather than later if we are going to achieve what both parties are envisaging.

P.S. Remember that acts, rules and regulations can be amended and changed if you dedicate yourself to the process.

The ‘One Learner’ estate agent training programme is a great concept as long the promises made about stipends and proper follow-up are kept. A few principals shared their experiences with the first roll-out of the programme in response to the article ‘EAAB recruiting for ‘new’ One Learner programme.

Debbie Wall-Smith, director Core Property Group

I love the idea, but here is my experience:

About 7 years back I employed an intern, enrolled him on the program - neither he nor the company ever received a cent. He dropped out.

About 5 years ago I employed another intern and tried to enroll him. One morning at 8.30 am he received a text saying we had to be in Observatory for orientation. I cancelled all my appointments, signed wads of documents and never heard another word. Neither the intern nor the company received any money. After 4 months I reduced his salary with the hope that by that time he would be earning commission and he left.

In 2018 I enrolled an intern who had already started with a real estate training school, the promise was a stipend and free tuition. We filled in every form, got a time table and eventually received a curt email saying she did not qualify because she was enrolled at another school. Clearly the real estate training school was getting the money and in control.

In 2019 I employed a young chap with a property qualification on a stipend. I promised to pay him more if there were any incentives from the EAAB or SSETA.
Three weeks in, he was contacted by the EAAB as they were offering jobs, he took the day off to meet with them. He returned with an email address for an EAAB employee, and the belief that he would be on the program with our company as the employer. I emailed the EAAB employee twice, no response whatsoever. The intern emailed and got a response. I was given another name and I emailed that person, no response. Towards the end of March or April IEASA advertised on a Friday morning on Facebook that the EAAB is looking for host employers by 5pm that evening, for induction the following Tuesday. I saw the Facebook ad at 7pm and responded. No response to date.

This intern previously enrolled on a program and has now been fined R1500 by the EAAB for not paying R350 for his FFC last year when he was unemployed. One would think that this would be waved for a black intern.

How can the program be successful when estate agencies are not asked to participate?
I have so much knowledge to give but paying an inexperienced person a salary indefinitely is a cost to the company. The EAAB should be paying me to train interns, they would learn so much.

Some companies get 10 interns on stipends, but legitimate companies like mine do not even have emails returned.

I really question the process for the selection of the estate agency employer. Why is every application my company makes unsuccessful? It simply does not add up, the EAAB and Services SETA need to explain why:
Every principal wasn’t informed by personal email of the program. To find out about a program, advertised by a voluntary association on Facebook on the day the offer closes, is beyond ridiculous.
If an intern is signed up, the payment is never received?
Why only some schools qualify for the program?
Why it is always done in such haste and such a disorganised way?
Why EAAB employees ignore emails?
Why such a few estate agents are given the opportunity.

The concept is great, but the implementation is not.

John Webb, (commented on the Property Professional website)

When the One Learner program was set up some years ago, I embraced the process and interviewed a number of suitable candidates and took on a learner that had a 2 or 3 year entrepreneurial diploma. As a result, I was immediately able to place her as an intern. The EAAB provided the stipend for 12 months while I and other senior staff in the office mentored her.

The fact that today she is now a qualified agent has nothing to do with the EAAB. She received no educational help from the EAAB. At the end of 12 months her stipend fell away although I pleaded with the EAAB to continue the stipend until she qualified. I made the decision to appoint her and provided the resources to ensure that she received the educational training. At the time the EAAB wanted 20 000 learners on the program. My gut tells me that less than 20 learners on the program qualified as agents. If you work out the cost per qualified learner, it paints a very scary picture.

Many estate agents says they were inspired by Willard Nyamagodo’s success in property sales without a car of his own and wanted to know how did he do it? Here’s his answer and some of the comments on the article.

Willard Nyamagodo says

The answer to that is as an estate agent you must manage your time and make sure you are on time for your viewings. I did that using Uber nothing more.

Bandi

Congratulations Willard for all the hard work and the motivation you have contributed to the likes of me. When I think of the fact that presently I have no car, I get a bit demotivated and a bit anxious but with your input here, I am going to push forward just like you and hope for the best.

Kim

Well done!!! I am sure you will prove to be an excellent agent who will achieve great heights of success. It just shows you with determination you can achieve your goals and you were relentless in all the obstacles that you were given. There are many agents who sit back and moan about what is not happening in the real estate industry and having all the tools to work for them. You have now proven what can be done and with hardly any resources. I say again, well done to you.

Lucky Matamboye

Well done Willard, I know that you are aiming higher and you have shown that it’s possible by being resourceful in your own way and its paid off ... congrats go get that 30 million … I am also motivated.

Mike Spencer, principal of Platinum Global in Bloemfontein writes that government should look at using underutilized industrial sites to solve the housing crisis.

We are all aware that there is a shortage of zoned low-cost residential sites and we are plagued with informal housing projects. These unsightly and illegal developments are a blot on the landscape and are often developed in quite the wrong spot for entirely the wrong reason. Their presence often causes a host of problems from unsightliness to security and health issues. The government is struggling to control this illegal development which is encouraging widespread disregard for proper town planning across the population.

It would seem that the government has not made provision for housing sites for the lowest income population and has been overwhelmed by the shift from rural to urban living. In many cases this is exaggerated by populations moving from one province to another as is evidenced by the shift of population from the rural Eastern Cape to the Western Cape.

At the same time, in many parts of the country formal development of industrial areas has taken place, often in excess of the requirement for industrial property. Many of these sites are now unused or underused with many standing idle and in older industrial areas with little hope of ever being used for industrial purposes. Even parastatals have excess property that could be given up and used for other purposes. Transnet has a network of unused stations and workshop areas that could be made available, much of which is situated in the centre of towns and cities or close by.

Much of this underutilized industrial property was designed with heavy production in mind and are supplied with high levels of water and electricity connections which is more than sufficient to cater for the population of a new residential development. These sites are already situated within zoned areas and could be used (often without rezoning) for residential purposes. They usually have some public transport associated with the area and are served by existing road infrastructure.

Could these sites not be purchased or reallocated for use for low cost and indigent housing?  Instead of informal settlements, without any facilities and subject to the risk of fires and rioting, formal low-cost housing could be created on formal sites that are already supplied with the necessary infrastructure. These sites are also well situated near to potential sources of employment and at worst are on formal transport routes for commuting to where work is available in other parts of the city.

Use of these sites would be cost effective. The necessary changes could be implemented with the minimum of fuss and time delay and would allow for a far higher level of affordable housing at minimal cost.

Perhaps it is worth thinking about and investigating further.

Keri Ferreira, principal of Home&Equity Property Services asked why sectional title property managers don’t have to register with the Estate Agency Affairs Board (EAAB)? The principals are registered but the individual portfolio managers working in the sectional title property companies are not. This is unfair practise and something the EAAB is turning a blind eye too?

Comment from the Estate Agency Affairs Board

The definition of ‘estate agent’, as contained in section 1 of the Estate Agency Affairs Act, was expanded by a Specification of Services notice published under Government Notice R1485 of 17 July 1981.

Regulation 2(a) of that notice extends the definition of estate agent to include any person who collects or receives money payable by any person to or on behalf of a developer or a body corporate in terms of the Sectional Titles Act in respect of a unit or proposed unit. The regulation deals, in essence, with the payment of monthly levies or other moneys due by the owner or purchaser of a sectional title unit to the body corporate. The EAAB, thus, exercises jurisdiction over sectional title managing agents who collect or receive money payable by any person to a body corporate in respect of a sectional title unit. The EAAB, in addition, has jurisdiction over managing agents who institute legal proceedings to recover payments owed to a body corporate.

The principals, and various other persons in the service of the sectional title management enterprise, are required to register with the EAAB, and to be issued with a valid fidelity fund certificate, to enable them legally to perform their sectional title management services. It may sometimes happen, however, that specific portfolio managers are not actually involved with the payment of monthly levies or other moneys due by the owner or purchaser of a sectional title unit to the body corporate.

The ‘Has SA become too unsafe for open show houses‘ article had numerous readers commenting on this topical matter on the Property Professional website link. Here are some of the comments received:

Robert Slabbert

I live in East London and when we put our house on the market and it was a show house, our problems started. In a short period of time we had 6 break-ins and that was with 4 big dogs in the yard. After I put beams on the outside it stopped. So crime is really on the increase, also in complexes which we now live in. Show houses also bring criminal elements.

Estelle Piek

Show houses are unsafe both to agent and seller. It is time to do a virtual tour of properties at the office, or a restaurant, after a formal qualification of what the purchaser can afford. Principals need to modernize their marketing methods. Real modern buyers prefer this time-saving method. Once this pre-approval of both buyer and property took place, a formal viewing can be arranged.

Jeanette Hall

I have felt strongly about this subject for years!!

I believe a set appointment with viewers during the week gives the buyers every opportunity to view the property in a shorter space of time. In fact, this creates exactly the auction type excitement show days are supposed to do. I used this method effectively in Gauteng and Durban. Genuine buyers will attend.

It’s way past the due date to hold Sunday show days. In SA it’s not sensible anymore. What is everyone waiting for? A tragedy? This has already happened to agents in SA and to have two agents going to meet a client is not going to stop a robbery, it just means two agents are going to be vulnerable.

Show days can also be held at an open office and agents can go from the office to the property (on a Sunday if this remains popular) with the clients. With other agents/buyers around it’s less likely people, like the sellers, the agents or even buyers will be vulnerable and lessen the chances for opportunists. It’s time to change current methods and consider everyone in the equation: sellers, buyers and the agents who are so vulnerable. It’s about caring for everyone concerned.

Monica Coetzee

The event in Rustenburg proves that even working in a team doesn’t make a difference (the agent took a colleague with her) – all that does is increase the number of victims. Any time of appointment – whether it is an open show house or viewing by appointment – is a risky business. Agents have to come out of the bubble of “it won’t happen to me”, become more vigilant, put systems in place (like a panic button and a tracking app on their cell phone, e.g. Life360) to let somebody know when they are in trouble, and proper self-defence training (e.g. Krav Maga) is extremely important. At the end of the day, there is nothing like a physical viewing of a property by a potential buyer, which ‘feeling’ I don’t think any virtual tour will ever be able to achieve.

Robin Willmot, principal Willmot Properties

Being an agent who has been involved in selling land, I do not have this problem. I once had a seller of land in an estate who refused to let me go on show. I notified certain select clients (about six of them) that I would be on show at a certain time, no ‘On Show’ boards etc. I had an excellent turn out and sold one property … it really works! These days to have six genuine buyers at a show is a fair response! The buyers also arrive with a feeling of importance knowing they have been ‘selected’.

Beverly Pekema, comments on ‘There’s no excuse for poor marketing’

Even worse, the same agents who complain about crime and lawlessness are the same people who illegally place advertising boards on the median and in fact just anywhere they want in contravention of the bylaws. I fully agree with this well-written article and know that the change begins with me.

Numerous agents commented on our Property Professional website and on our Facebook page in reaction to ‘Agent robbed at gun point by ‘home buyers’. Shockingly quite a few indicated that they had also been victims of crime during home viewings.

Peta Ann

We at Urban Spaces Realty in Sunninghill don’t have open show days. Our show days are organised for a certain time during the week, whereby we become familiar with the potential buyers and have all their details before the viewing.

Julie Hodge

I was a real estate agent for over 20 years and ran my own company for 14 years. I received a call from a so-called “seller” who asked me to come and valuate his property in Quellerina (Jhb). I made an appointment for the next morning and when I arrived, he was nowhere to be seen. I walked through the garden gate and saw this man bending over the flower bed who said that he was looking for his remote. I said I would help him and turned the other way. When I turned around again, he was spraying pepper spray in my face and came behind me and that is all I remember. I was unconscious for 2 hours and when I came too, I found my 2 carat diamond ring and hand bag was stolen. I was kicked all over my body and he obviously tried to strangle me and thought I was dead. After many months of therapy, I decided to close my business.

Roleen Beelders

I was held up at gun point – gun against my head in a show house. Let me tell all of you it is a fear that will never leave you. Since then I will not to show houses even being 2 in a show house. If 3 guys walk in with guns, what can you do? Nothing. We don’t sit at our own homes with our doors open allowing stranger to walk in.

Stavros

I honestly believe that when the agent arranges for the potential buyers to meet at the agency’s offices, a photo of the buyers should be taken to add to all the other documentation such as ID, vehicle registration number and proof of residence.

Maria Nenkov

No open show houses – only controlled viewing.

G Delport

Pre-approval of a potential buyer can sort this out. If it is a serious buyer, they will certainly have no problem with giving their info. Without that, rather lose a sale than your life.

Lynn Kaufmann

Perhaps view by appointments should be considered for the near future. We all know as agents that show days are the best way to obtain exposure and names of prospective buyers, however in the present economic climate in SA reality indicates that crime is paramount.

Victor

Learn self-defence, including awareness training and last resort, emergency options as part of your skills set.

Danielle de la Coliniere

Show houses, by law, should be done away with. A genuine buyer obtains ample info on the website maps and can then schedule an appointment during working hours to view the property.

In response to ‘Looking at ibuyer: Proptech won’t replace agents say expert’ Adrian Grové, Entegral CEO wrote to share his thoughts about proptech and the new ibuyer model.

There is clearly a misunderstanding of the whole iBuyer model in this article. My thoughts:

1. iBuyer is not a ‘technology’, it describes a completely new disruptive real estate model and a different way of selling a home by not going the traditional route. Technology is only a part of it (predicting the house value), but the whole process including home revamp and customer experience is part of this model. It is also not house flipping, this is a model that is designed to run at scale with very thin margins.

2. Online agencies didn’t start the ibuyer model, new tech companies did (Opendoor who invented it, followed by Knock, OfferPad, Redfin and Zillow while some franchises like KW are also dipping their toes into this. None are true online agencies).

3. “…aimed at buyers who need to sell in a hurry, usually due to an urgent need to relocate or some sort of personal/ financial distress…”.This is probably the biggest misconception. The attraction with the ibuyer model is a quicker and simplified sale… plus who wouldn’t want a guaranteed cash offer? A 6% ibuyer market share in Phoenix achieved in a very short timeframe is testimony to this. As the public warms up to the idea of an instant sale and iBuyer offers move closer to market value, we will see market share increase exponentially.

4. “…in return for a fairly large discount on the price…”. Data from researches show that margins are actually very small 1-2%, and with increased competition and advancements in data modeling techniques will become even thinner.

The real money for someone like Zillow is possibly in the add on services, e.g. they own a mortgage company. Plus, it is a brilliant way of generating new sellers leads. Even if people don’t opt to sell instantly, the lead can be passed on to agents (at a price).

5. “Online agencies” like Redfin are not dressed-up versions of low-commission agencies we’ve seen for decades. These are technology companies built to scale. Redfin has a highly successful portal that for instance draw more traffic than Remax, and a unique business model that makes their agents super efficient even on a fixed salary model. Redfin agents close 4.5 times more transactions than the average agent.

Proptech won’t replace agents, but it will marginalize any inefficient models. This is where a real estate franchise perhaps have the biggest challenge, as large overheads including royalty fees and office costs will put businesses under pressure. In an already competitive market where commissions are squeezed, we are seeing an increase in the number of enquiries with Entegral from franchises looking to convert to independent status.

iBuyer is here to stay, Wall Street is pouring billions into this new end-to-end customer experience. The initial target markets (cookie cutter neighbourhoods where prices can be predicted more accurately) will be expanded as models are refined. With machine learning technology, this process will be accelerated faster than most are able to perceive. The key here is to keep supplementing the machine learning models with additional data and even visual feed analysis like photo tours to make price predictions (and instant price offers) more accurate. If we can build self-driving cars via machine learning, why can’t we predict house values?

At the current rate, some predict that we might see about 50% of home sales in the US done through the iBuyer model in five years. That’s Uber growth like and a real possibility of happening.

For the iBuyer model to work you need three things: seller leads, capital and data.

Zillow and Redfin have the advantage here as they are both well-funded and their portals draw the most traffic with 37 and 15 million unique visitors a month respectively. They have all the data too.

In a South African context who is best positioned that has access to loads of capital, seller leads and data? Makes you think, doesn’t it.

In response to ‘Security: landlord or tenant’s responsibility?’ Christine Ireland asked: “If a tenant decides to terminate a lease early because of a break-in, is it fair to impose the early termination penalty? Rental expert Shaun du Bois of Just Property gives advice.

Shaun du Bois says: Crime is an unfortunate reality in South Africa but neither the Rental Housing Act of 1999 nor the CPA make any provision for a victim of crime to be given any additional relaxation in terms of early cancellation or associated penalties.

Section 5 of the CPA regulations provides some guidance but as they cover almost every industry they are fairly vaque.

Section 5 seeks to provide guidelines on the following:

(a) The amount which the consumer is still liable for to the supplier up to the date of cancellation;

(b) The value of the transaction up to cancellation;

(c) The value of the goods which will remain in the possession of the consumer after cancellation

(d) The value of the goods that are returned to the supplier;

(e) The duration of the consumer agreement as initially agreed;

(f) Losses suffered or benefits accrued by the consumer as a result of the consumer entering into the consumer agreement;

(g) The nature of the goods or services that were reserved or booked;

(h) The length of notice of cancellation provided by the consumer;

(i) The reasonable potential for the service provider, acting diligently, to find an alternative consumer between the time of receiving the cancellation notice and the time of the cancelled reservation; and

(j) The general practice of the relevant industry.

The penalty imposed would need to consider the above factors and the tenant could motivate that he/she has needed to leave due to no fault of theirs and ask for a reduction in penalties, but the landlord would be under no obligation to accept this. It is important to understand that the penalties are not set in stone and the parties are able to negotiate what a fair penalty would be. The tenant should seek to find a suitable replacement tenant which would mitigate the landlord’s potential loss and reduce any penalties charged.

Geoffrey Manning comments on ‘Why people sold property in 2019’s first quarter’: Believe it or not, there is a price war out in the market place. The smaller agencies who operate from a home office that is tech savvy has a competitive advantage, as they do not have the ridiculous overheads of the “Big Five.”

The whole industry uses the same advertising portals and methods of marketing. Hence the individual agent can give a better personal service and achieve the same results at a lower commission.

The pricing of the property is simple and transparent using the valuation portals.

Gone are the days of overvaluing a property to obtain a sole mandate.

Being that we are in a difficult market, if the seller does not have to sell now, he will see an upturn sometime in the future.

Deon Swanepoel comments on ‘Looking at ibuyer’: The ibuy program will eat into the volume of residential homes that normally finds its way to an auction.

Walker comments on ‘Demystifying the proposed Rental Amendment Act’: The law still favours a tenant that refuse to pay his rent and squat for months before moving – which leaves the poor investor/landlord broke. We know of cases where the poor landlord paid an attorney and opened a case file. This file got lost in court and two years later there is still no court case and the tenant is long gone. Surely they should investigate this further and come up with a better solution.

The article ‘No FFC no commission to be resolved by Supreme Court’ was shared widely and attracted some comment on the Property Professional social media platforms. Here are some of them.

LinkedIn: Louis Gerber wrote

I hope for everybody’s sake that sanity will prevail and that the court will resolve the matter to everybody’s satisfaction. By far the most real estate agents work hard and add value to their client’s affairs. They deserve to be respected by the community and earn their income when due.

Facebook: Lisa Crossley wrote

The judgement implies there is an effective system to obtain the license. Unfortunately, the administration of the EAAB is so bad at present that it’s taking many months for the board to issue and renew FFCs. Furthermore agents are spending hours and hours on the phone as you are required to log a query to remind them and then call them so that the operator can send an email to the back office notifying them there is a logged query to open etc … and this must be repeated weekly to get a result otherwise the query disappears. Their fees run into the millions every year because of the the cost of the compulsory CPD training at R2000 per agent (and there is 40 000 plus agents) and this is besides registration fees. The organisation needs an overhaul.

Facebook: Roleen Beelders wrote

The EAAB better do their work correctly. So many agents paid for FFC and months later no FFC received. If you have proof of receipt that you paid the EAAB, how can you be held responsible if the EAAB don’t supply your FFC?

Dean Ash wrote: The EAAB will block an agent’s profile and withhold the issuance of the agents FFC if the agents CPD (Continuing Professional Development) programme or payment thereof is not up to date.

In the past an agent’s FFC or licence was issued annually to the agent, providing the agent had made payment timeously. So, an FFC was similar to renewing your motor car licence each year. So, like the licensed motor vehicle driver, the licensed agent would renew their FFC (licence) each year.

But then the EAAB decided that a licensed agent should only be considered licensed or legal if they undertook ongoing training and paid for such ongoing training annually in advance. I feel that this is unconstitutional.

Once an estate agent or motor vehicle driver is licensed, the licensing authority cannot after the fact, re-define or re-evaluate the authenticity of the individual’s licence. Either they were deemed licensed or they were not.

I feel that the EAAB can amend criteria for new agents entering the industry, but they cannot rewrite history and deem the already licensed agent unlicensed should they not undertake new training to make them more licensed or more qualified. I feel that the entire real estate industry in South Africa was hoodwinked here.

I feel that where it comes to the EAAB and regulation of the real estate industry in South Africa, that estate agents and real estate agencies do not stick together. There is always strength in numbers.

I think too often a dispute between an individual estate agent or estate agency and the EAAB is like a muffled voice in the wilderness.

These are my personal views.

In letters this week the EAAB and the commission-based structure of the property industry were also identified as barriers to transformation. There were more suggestions that bursaries and other solutions be considered to lower the cost barrier to fulfilling the educational requirements. Read more here.

Mike Spencer, professional valuer

Hi Jan I can hear the frustration. The EAAB is not run in a professional economical and efficient manner. It is NOT about race. I really believe that most people don’t give a damn about what race, colour or creed you are but whether you can do the job or not. Clearly the people who are currently there cannot. By changing those people for people who can – and there are lots of people who can - the situation would improve. Transformation is not the problem. I have lots of black staff. The problem is the system. Trying to register them is a nightmare. Most of the time you simply give up. I just cannot get their registrations out of the EAAB despite most of them having some sort of a degree.

Then there is the training. I am supposed to monitor and mentor them. The EAAB have NEVER contacted me to say that I am the appointed mentor, they have never been supplied with a copy of the Code of Conduct, and they have never been supplied with workbooks. I have NO IDEA how I am supposed to support them with their workbooks.

The EAAB has become a money making and spending exercise. The training is pathetic and totally irrelevant to the day to day lives of estate agents. The EAAB has no clue as to how estate agencies work, especially those that hardly touch sales but rather do body corporate management, letting and the like. They cannot understand that they are responsible for the estate agency industry, so people who work in associated fields such as valuation are ignored. I spend days on valuation training but this is not recognized by the EAAB.

This new act is just going to be more of the same. Ignore it and it will go away. Only those who are registered with the Board will be chased, audited, debarred. Unregistered agents who steal money and who have been reported to the EAAB will simply continue to operate.

I hear your frustration.

Johan Meyer, trainer wrote

I read with interest the article relating to the above which I think speak for themselves.

As an educator in the real estate industry, who at one time was on the Board’s Education Committee where we represented all the training institutions in the country, I would like to take this from a different perspective.

We all agree that change in the industry had been very slow and that we all need to be participants of change. The biggest barrier remains not the education programme and the cost thereof but the "employment" in the industry.

It is not one in which salaries are paid and it requires financial backing. The industry remains largely a commission-based industry which requires financial self-sufficiency in the first year at least. It also requires modes of transport that the agent must provide as well as a fair understanding that if you are not successful you are unlikely to make it. A down market, such as currently exists, it makes it even more difficult.

The second problem with transformation is that the responsibility seems to fall on the big agencies such as Seeff to drive this. I do not have the exact number at hand but would guess that most participants are small one man shows or partnerships which often are small family-run businesses.

The possible entrance into the industry could be through a rental portfolio/ business where at least there is usually a small basic and the commissions are forthcoming from month two.

I am aware that there are some companies, mainly online businesses, which offer basic salaries and maybe this is the start. The changes however are going to be slow and I am pleased that at least the EAAB have made some effort in finding ways to accommodate the PDI's.

Mona de Wet, principal wrote

Thank you for the chance to give an opinion.

Any transformation is always a first hoo-ha before they will accept the change.

However, if the land – South Africa – and role players will keep on doing what they are doing and treat it as a black and white, we can forget to ever have transformation and live in peace.

The fees that we had to pay just to RPL was hectic in a time when we had no sales to fund the RPL. They didn’t ask if we had the money or not, it was just to be completed before a certain date.

After that it was still the yearly FFC certificate and then the PDE.

After that is was the yearly CPD of R2000 and R2500 for the principal.

I would propose that we treat all role players the same. If you want to be an agent, you have to work under a principal. That principal can then apply for a bursary for that year from Services Seta.

You can also ask the principal from the company to pay the fee for the FFC and the internship and then as soon as your first deal is signed, they can make arrangements to deduct the fee from the commission over a certain period of time.

I can just mention that I paid for my RPL and FFC, PDE and CPD from funds that I loaned from my husband’s bond. So, yes, lucky me, I had a bond who could help me.

My one agent was all on her own with no income and I had to sponsor her as well. She didn’t even had money for electricity or the municipal fees. She had to loan money from me, as her principal and from her mother, who was a widow with limited income. Still, to keep operating as an agent, she had to finish the RPL and pay for her yearly FFC – no questions asked.

I would also think that the new entrant can maybe pay off the FFC over a certain period and not in one lump sum. You can even sign a debit order or ask the principals to pay it over monthly.

Once again, if you don’t have deals at first, you can make a deal with your principal to pay it over and then deduct it from your sales, once signed.

I would also like to ask why the CPD is so expensive as it is the most expensive continuous learning in the industry. Almost all the attorneys give certificates for continuous learning and it doesn’t cost the EAAB a cent.

Once again, I think it is time that we treat all people the same, no matter their skin colour.

To be an agent is hard work, you work long hours and months on end doesn’t get any money for your phone, petrol, ect.  and that is a real problem as I think this is the biggest reason why not everybody can be an estate agent. You have to have somebody or some money to begin with. The question of how I can’t answer as the principal can’t keep on sponsoring the agent for telephone and other expenses as well.

Dieter Konieczny wrote

Hi, I agree with helping people to become agents, but I don’t agree with lowering standards.

Certain people, black and white, cannot afford to become agents. This is purely for financial reasons! My suggestion would be to support these people financially.

The money can then be paid back once these people start earning a living wage.

This payback can be enforced by withholding the FFC if payments are not forthcoming! This would be similar to the students grant!

Following the article, ‘EAAB will assist previously disadvantaged agents with FFC’s’, some of you wrote to explain your concerns about this plan. Read here what they had to say and share your view by writing to editor@propertyprofessional.co.za.

Andre du Plessis, estate agent, wrote: Dear Editor, reading the article on FFC exemptions for PDI, I could not help but feel the unfairness to new ‘white’ entrants.

I take it Rebosa will challenge this in a class action against unfairness/unconstitutional in the Constitutional Court. I think the EAAB’s ‘help’ is misplaced.

Surely, allow new blood into the industry, as the average age is 58, not limit it

What the EAAB is doing with unintended consequences, is to make PDI recipients dependent, telling them, they are unable to stand on their own feet, what a slap in their faces. This unfair ‘BBEE’ arrangement won’t work either, time will tell.

The PDI will probably get internships easier and remain employed by bigger firms whereas white candidates will find the only way to survive is doing their own small start-up, but please don’t disqualify or exclude, because of colour of skin – it remains unconstitutional and makes PDI candidates feel subservient, ‘lessor’ and almost the ‘beggars’ of the industry, surely not what the EAAB  intended ?

Linda Byron, office manager, wrote: I attended the Transformation Workshop that took place in Port Elizabeth and the first thing I noticed was that the majority of the people in the room were in fact the very PDI’s this discussion pertains to. When I queried with the representatives of the EAAB why the majority of the “white” principals had not been notified or appeared unaware, their response was “our target was 100 attendees and we got 100”.

The problem with their 100 was the completely wrong target audience. As has been pointed out the majority of the Real Estate offices are currently “white” owned, therefore surely it was important for them to be there to understand what the EAAB is planning and how they can assist in the process.

Then we come to the actual plans – I am 100% in agreement that we should exempt PDI’s from all the costs involved with becoming an agent. I am even prepared to agree with the deviation from audit requirements but what I believe is something that should never be entertained is doing away with or lowering the standards of education. In 2008 we as a profession made strides with regards to “professionalising” the industry with new educational requirements. Instead of exemptions why don’t the EAAB do the following:

  1. Publish updated learning material in 2 or 3 of the main languages other than English. (This would enable learning in a language they can understand)
  2. Provide study bursaries to cover the cost of the NQF4 qualifications.
  3. Provide online learning modules to assist the Interns to obtain the necessary education and qualifications.
  4. Remove the costs for the PDE exams.
  5. Remove the costs for the CPD.

I think it is demeaning to not give the PDI’s the opportunity to educate themselves in a profession they have chosen. How are they ever expected to compete in a competitive market without the required tools. Why should home sellers and buyers living in PDI areas be expected to receive real estate service and advise from Agents that are not trained or qualified to provide the service. They have the right to access the same level of professionalism and have their hard-earned money protected by the same level of diligence and professionalism. Transformation is not about exemption it should be about opportunity, upliftment and empowering people to develop skills.

Baruch Keren wrote: Dear Editor, I would like my opinion to be published; and this would be about …. decision The Estate Agency Affairs Board (EAAB) says soon estate agents from previously disadvantaged groups (PDIs) should be able to apply for exemption from some of the current requirements to qualify for a fidelity fund certificate (FFC).

In what country do we live?

This is a pure act of discrimination by colour, race and origin.

Why is EAAB making segregation on the grounds of race?

We are living in a free society and it’s already 27 years after the apartheid era was gone!

Please question those clerks from EAAB…where do today’s previously disadvantaged groups come from … after this country for 27 years being a free and democratic society?

Maybe tomorrow someone alike EAAB will suggest that previously disadvantaged groups (PDIs) could be exempted from current requirements to be a medical practitioner?

Why are they lowering the standards of this country which are already below a low level?

ESKOM is already making us used to living 4-6 hours a day without electricity.

We must stop such practises in this country!!!

(Disclaimer: The views and opinions expressed in these letters are those of the authors and do not necessarily reflect the official policy or position of Property Professional.)

FICA Act:

Lauren Levin wrote: I am hoping you can answer and clarify these 2 questions I have for the new amendment to the FICA Act for estate agents:

  1. Does an agent have to have visited the client’s property to verify their physical address and if they have not, does the client have to have his proof of address certified by a Commissioner of Oaths.  Also, with regards to people out of the region or Foreign Nationals – do they have their I D documents/Passport certified?

Comment from Emil Bihl, Director of the Risk Management Division at Erasmus Motaung Inc.: This is an excellent question.  If I am able to answer this question, then it means that we are back to a checklist approach [a rules bases approach], which is exactly what the amendment wants to prohibit.

If you the estate agent deems this specific client a risk, then you should follow such additional measures to confirm information. I think it wise to have all documents certified by a commissioner of oaths, as you then transfer the risk to that Commissioner of Oaths.  Just ensure that you get the original certified copy.

  1. What is the new cash reporting threshold for cash paid into your account?

Comment from Emil Bihl: It remains at R25,000.00

E-logbook:

Sharon Blignaut wrote: I read your article on the new logbook system. I have already started, however think this is a great idea and am going to give the digital one a try.

In response to the article on e-logbooks, some intern agents who registered in 2019 asked whether they could also file their logbooks on the e-logbook system. One, asked to remain anonymous, said all his logbook information is stored online and he is yet to print out “the mountain of paper work for his final submission”.

The Estate Agency Affairs Board was immediately approached for comment but has not replied to date. Registered facilitator, assessor and moderator Jo-Anne Strydom was also approached a few days later. She said no, it is only new interns that registered in 2019 that may use the new e-logbook system, not interns from earlier years.

Linda Grove wrote on our Facebook page: I am a little perturbed and would like some clarification on the following rumour. I was just informed by a Mortgage originator if an existing FNB client make application for a bond,the Mortgage originator is required (and forced by their system) to submit a bond application to FNB first AND allow FNB 24/48 hours response time before any other bank may be approached? Can anybody confirm this is in fact the case?

Marlon Shevelew, director with law firm Marlon Shevelew & Assoc. answers: I can confirm that this is not the case. 

We do not have to wait 24 / 48 hours to submit to the other banks , we submit simultaneously to all of the banks.

Same applies for example , an Absa client , we also don’t have to wait a 25 / 48 hour period before submitting to the other banks.

With the deadline for compliance with the amendments to the Financial Intelligence Centre (FIC) Act looming close from 2 April 2019, we’ve asked Emil Bihl, Director of the Risk Management Division at Erasmus Motaung Inc to respond (comments in italics) to queries from readers.

Erna Rossouw wrote: I would like to clarify the aspects of registration of an estate agency, within 90 days with FIC, under the new legislation and would thus appreciate if you could assist with the following:

As an existing registered and in all aspects compliant Estate agency, do we have to re-register with FIC, or does the previous registration for the agency remain valid?

Comment: It is not needed to re-register. What is required is to update the details on the FIC’s new reporting system. If you are already registered, you should have received an email from the FIC with your new identification code [Org ID] with prompts to log into the website and access the registration portal.

If the Compliance Officer remains the same person as before the implementation of the FIC Amendment Act, must FIC be notified or does the status quo prevail?

Comment: This is a great question, as the person who posed this question, clearly understands the importance of the relationship between its compliance officer and the FIC.

Because there is a new reporting system, it will be required to update the compliance officer’s details, especially the email address of the compliance officer is very important to the FIC to ensure accurate communication with the correct internal stakeholder.

Registration on goAML – is that to be done now already, or only once the first reporting takes place?

Comment: FIC requires you to attend to registration now.

Khulile Macoba wrote: If I may ask, are the property developers affected by these developments. For instance, where a developer is selling units, are they affected by these developments?

Comment: Let’s be all attorney about this and start with the definition of an estate agent…

Section of the Estate Agency Affairs Act, 112 of 1976:

“estate agent”

(a)  means any person who for the acquisition of gain on his own account or in partnership, in any manner holds himself out as a person who, or directly or indirectly advertises that he, on the instructions of or on behalf of any other person

(i) sells or purchases or publicly exhibits for sale immovable property or any business undertaking or negotiates in connection therewith or canvasses or undertakes or offers to canvas a seller or purchaser therefor; or

(ii) lets or hires or publicly exhibits for hire immovable property or any business undertaking or negotiates in connection therewith or canvasses or undertakes or offers to canvass a lessee or lessor therefor; or

(iii) collects or receives any moneys payable on account of a lease of immovable property or any business undertaking; or

(iv) renders any such other service as the Minister on the recommendation of the board may specify from time to time by notice in the Gazette;

Should the developer’s actions in selling these properties fall under this definition of an estate agent, then the developer will be deemed an accountable institution and will need to be compliant with FICA requirements. The FIC’s requirement is only to be defined as an estate agent in terms of Act 112 of 1976.

Do you have more questions about compliance with FICA requirements? Email editor@propertyprofessional.co.za .

Keri Ferreira, principal wrote with reference to Rebosa’s comment to a question by Dean Janse van Rensburg regarding the new Bill’s allowance that small agencies of previously disadvantaged groups may apply for exemption from submitting audit reports:

Rebosa’s comment: “The EAAB has launched a transformation initiative in terms of which previously disadvantaged individuals are exempted from submitting audit reports.  To the best of our knowledge trust accounts must still be kept, there are certainly some legal issues around this.”

Keri wrote: Relating to the above – all agencies should need to submit audit reports as its most likely that inexperienced companies, who are not backed up by a large group, will be the most likely agencies, that fall foul of the usage of a trust account.  Submitting a trust account is not onerous and is not expensive in the grand scheme of things!
The CPD points is expensive and a rip off as no subjects are covered that actually benefit the agent!

Guillermo Lapidus (GL), an intern agent recently wrote to Property Professional commenting on the Estate Agency Affairs Board (EAAB) and the new Property Practitioners Bill. We asked Jan le Roux, CE of Rebosa to comment (in italics).

GL: I’ve been involved in property for only 7 months having come from the architecture and construction industries, where their professional bodies are long standing and highly respected institutions by the public sector at large, contrary to the EAAB that is, to say the least, failing to provide the services it was created for.

JlR: It is unfortunately sad but true that the EAAB is certainly not setting a high standard for service delivery.

GL: How can the public respect the real estate professionals when their own representative body is in such shambles?

JlR: The public is certainly not aware of the workings of the EAAB. The respect of consumers can therefore only be earned by the professional behaviour of the estate agent.

GL: Regarding the proposed Property Practitioners Bill, it is so sad that it not only creates problems where there were none, but it restricts the “real” estate agents even more from practicing their profession and most pathetic of all it misses out on a great opportunity to legalize the profession properly by dictating that properties can only be sold by registered and properly qualified estate agents and agencies. And what is more amazing is that none of the CEOs of, at least, the main industry players mention this!

JlR: The industry is legalised, and the Property Practitioners Bill is not limiting entry to the industry any more than the current Estate Agency Affairs Act does. Forcing consumers to use the services of an estate agent is not legalising the industry, it is simply unconstitutional. It is for this obvious reason that serious industry players never raise this point.

GL: What we need is a bill that establishes by law the minimum commission percentage agents are allowed to charge, as it happens in other professions.

JlR: This is not factually correct and a very dangerous subject to raise. Should the government ever get the idea of regulating commission it is virtually guaranteed that it would be a ridiculously low amount.

GL: For goodness sake, even only registered electricians and plumbers are allowed by law to issue a Compliance Certificate.

JlR: Electricians and plumbers are trained and have to qualify to become such. They, unlike other individuals, are therefore in a position to have an opinion on an electrical or plumbing installation – this makes perfect sense. A property can, of course, be sold by an individual without the assistance of an estate agent. Such a property can be advertised, a purchaser can agree on the price and the parties can go to a lawyer to draft an agreement. Of course, we all believe that would be ill-advised because of the many pitfalls such a seller can come across from valuation to marketing, etc. A good case can be made that properties achieve a higher price with the assistance of an estate agent and with less hassle – making it a legal requirement however is not a good idea.

GL: Any salesperson that was selling electrical appliances at a wholesaler can suddenly go and work for a property developer selling units off-plan without the foggiest idea of the legalities or any real estate training? Come on!!!

JlR: Rebosa is in full agreement and has made many presentations to government in respect of the Bill to try and ensure that developers also have to register as property practitioners in terms of the Bill. It is not only unfair but detrimental to consumers if that is not the case.

Dean Janse van Rensburg, sales and rentals specialist asked whether by exempting smaller disadvantaged agencies from keeping trust funds, the Estate Agency Affairs Board (EAAB) isn’t applying double standards.

He wrote: My question is, why do we have to do NQF4, PDE4 and 5, CPD … and if you look on these bank sites and repos on Property24 for the banks they have agents etc. Do they have to do all this training or are they exempt like the attorneys?

There are double standards with the EAAB and they are losing lots of revenue by not enforcing this on those who enjoy the benefits of real estate transactions without the sweat and blood that goes with it.

The reason why audits became mandatory is because of Wendy Machanik’s usage of trust funds for normal day to day business, yet now Mamodupi Mohlala want to exempt small disadvantaged agencies from the audits, is this not double standards?

Rebosa’s comment: The EAAB has launched a transformation initiative in terms of which previously disadvantaged individuals are exempted from submitting audit reports.  To the best of our knowledge trust accounts must still be kept, there are certainly some legal issues around this.

Rebosa shared some of the questions they get asked regularly by estate agents and the answers they gave.

Lawyers are exempted from having to register with the EAAB. What is the situation with bank employees in view of the launch of the FNB initiative last year?

Rebosa’s comment: We do not believe that banks are acting as estate agents in terms of the current Act nor the Property Practitioners Bill - hence bank employees will not have to register. The definition of a property practitioner in the Bill reads: “….means any natural or juristic person who or which for the acquisition of gain on his, her or its own account or in partnership, in any manner holds himself, herself or itself as a person who or which, directly or indirectly, on the instruction of or on behalf of any other person……”. There seems to be no direct “gain” for the banks from a transaction in doing this.

Can something be done about the relevance of the CPD curriculum? These courses add very little value to a practicing estate agent.

Rebosa’s comment: Rebosa participated in a long session with the EAAB officials late last year to enhance the programme. We are still looking forward to improved results, the question is certainly valid.

What is the motivation to have principals pay R2 500 and regular estate agents paying R2 000 for CPD? The courses are basically, if not always, the same.

Rebosa’s comment: This differentiation is totally unjustified, especially when one considers how many sole proprietorships there are in the industry where the agent and principal happen to be the same person. Rebosa has been raising this issue on various occasions with the EAAB.

Surely the launching of e-Learning as far as CPD courses are concerned must have had a positive effect on the costs of presenting these courses? Why have the fees not been reduced?

Rebosa’s comment: This is a very valid argument and once again there is no justification for the current fees. Unfortunately increases were mentioned often to which Rebosa objected strenuously - so far with some success. Unfortunately, the Act does empower the EAAB to raise funds to balance its budget and doing it through CPD fees is not illegal.

With CPD fees being so high there should be a surplus. Surely agents should be informed as to the income/expenditure of the EAAB?

Rebosa’s comments: The EAAB financials are published under “Publications” for anyone to peruse. (Visit https://www.eaab.org.za/publications/annual_report)

Should agents not start a boycott on fees? Registration fees, CPD fees are all unnecessarily high. Has anyone questioned whether tenders for the supply of these services have been considered?

Rebosa’s comment: The EAAB is not outsourcing the administration of FFC’s nor the presentation of CPD courses - hence no tenders were required to the best of our knowledge.

As to the boycott – it is not a good idea. If fees are not paid timeously, FFC’s are not issued, estate agents are then not entitled to earn commission (nor will conveyancers pay such commission once the Bill becomes law. If by not paying fees agents faced a penalty only, a boycott might have worked or had an impact, but under current circumstances it would be suicidal.

In response to last week’s article ‘FFC backlog cleared says new EAAB CEO’, the following letters were received:

Linda Byron, office manager from Port Elizabeth wrote

Good afternoon, I have just finished reading this article and I can only sit and wonder which parallel universe she resides in.

The EAAB last week posted their 2017/2018 Financial Report on their website. Don't bother with the content, just go to the Auditors Report......Qualified Audit result … nearly every paragraph starts with “Were unable to due to insufficient/incorrect …” etc.

Even something as simple as the number of bill boards erected. Target 15, report says 10 actual 6!! Based on this I doubt that any information either given to her or shared with any committee carries any weight whatsoever.

The costs of getting into real estate regardless of your skin colour is high and there are virtually no bursaries made available within the industry.

I do not believe that educational standards should be changed/lowered for transformation purposes. We need to remember that we as a profession are dealing with clients “life savings” and why should sellers or buyers of previously disadvantaged groups have to deal with agents lacking the standard of training

that their white counterparts enjoy. We need to ensure that all our clients have access to the same level of service, guidance and knowledge translating into working in the best interest of!

I think the CEO should pop back to the office and spend some quality time going through each section of the previous Auditors report and address each department with some probing questions!!

Keri Ferreira wrote

Good day, the new CEO has her facts incorrect. I have agents, who paid on time last year and still do not have FFC Certificates issued despite, following up repeatedly via the portal and call centre. In fact, the portal has numerous error messages when you attempt to upload documents or add a new request!

Sam Wade wrote

The EAAB needs to get its act together in servicing the industry... their response time to queries is appalling and many of the staff need to be properly trained in their positions. The general atmosphere of staff seems to be ‘it’s not my problem’ and very few have a work ethic.

To give an example it took me 2 years to get the EAAB to change the directorship of a company I took over and to issue me with an FFC. More than 10 different people tried to assist me, and more than 15 requests were made for assistance in this regard. Eventually I was charged with non-compliance, my portal was blocked and I had to pay a fine before they sorted the matter out. I even had to involve REBOSA. Finally, more than 2 years later, I gave up and closed the company down.

In my other real estate company, I am still waiting for 3 FFCs which were renewed and fees paid way before the deadline. 

Commenting on the question, Should property portals share listings with others?, here is what some property practitioners had to say.

Malcolm Clark, principal estate agent

The basis of this discussion must start with the strength of the sole mandate document. Is this document legally enforceable? If it is and the agent is careful about the details listed on the mandate, then the agent should only approve of their listing being shown to as wide a client base as possible. This is marketing strategy.

However, the agent through the agency pays Property24 for the service that it offers and in light of that, the agent should have the right to determine if the property is to be listed with the banks or not. This should be a question on the listing form that will require a yes/no answer which may not be left unanswered. Any less than this is dishonest dealing, if I am paying for the privilege of listing on Property24.

An additional safeguard needs to be added, that when a mandate runs out or the property is sold or otherwise removed, the property will automatically be removed from Property24 and will thus be unavailable to the bank. Failing this the bank can act like an agent and wait until the mandate has expired and approach the client directly. Can we assume as well that the bank does not have access to the back page of the listing where all the personal details are kept?

I think this is highly suspect and needs many checks and balances before it is live. Perhaps if the bank is that keen to give a service to its customers it could offer space to the agency, who may well be a customer, to place a single add link on their website directing traffic to the agency website. This would lift a whole lot of suspicion. Who knows? The bank may even attract some more agency clients.

Mike Spencer, professional valuer and master

I have been having discussions with Property24 developers about the rather unfriendly way in which Property24 works. It is a great marketing tool, but they are trying to make it into a listing tool where it fails miserably. They are enforcing ways of working that are totally against the interests of the average estate agent who are simply following like sheep.

A typical example is the way in which data is entered into the system. From their point of view they want to control data - that seems to be their primary aim. It feels to me that they are only interested in getting a bigger share of the marketing market, not to making life easy for agents. A couple of examples will illustrate this.

  1. Sectional title detail seems to be rather unimportant to them (from a marketing point of view) but very important to sales agents who need the information to be able to complete sales documents. The information is there on their input form though obviously whoever designed the system was no estate agent. Building numbers are split between building number and building year where as in reality it is one number – the sectional title registration number for example 20/2005.  PQ is somewhere at the bottom of the page in the EXTRA fields space. Door number and unit number are miles apart.
  2. The method of entering data is also agent unfriendly where they force you to put in owners’ details onto their data base in the way that they want it rather than a free field that is put in by the agent. Why? What is the advantage to the agent and why do they need to do it is such a way? Entering data is a nightmare as there is not real logic to the way and place where data is entered. Any ordinary agent or agency simply wants to have a database of properties that they can quickly and simply interrogate and make use of their own data. It definitely does not work that way with Property24.

I have been trying to find a practical estate agency database but that seems to be hard to find. Perhaps there is a gap in the market for such a database that works for agents and agencies rather that big business. Perhaps Property Professional could create such a database as I am convinced that it would be supported by many estate agents/cies. We need a practical solution to a practical problem. A system that does what is needed in a simple KISS way. It should be able to create online advertising in the same way as Property 24 without having to re-enter data for a second time.

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:

  1. An almost complete lack of understanding of the NQF4 study requirements, specifically the study time that is required.
  2. Extremely low-to-zero principal or senior agent support.
  3. Unrealistic expectation of the time typically required to close that first sale.
  4. 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 can't or won't 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: 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.

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.

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 cosumers?

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 editor@propertyprofessional.co.za

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