The estate agents’ profession has been rocked by a string of sensational events over the first few months of this year starting with the forensic investigation into the affairs of Wendy Machanik Properties and ending (if it has ended yet) with the dismissal of Nomonde Mapetla, the chief executive of the Estate Agency Affairs Board (EAAB).
Paddy Hartdegen writes a regular column for Property24.com
Estate agents in South Africa have, for many years now, been struggling to attain the status of a “profession” in this country and many dedicated people have worked tirelessly to try to improve the image of estate agents throughout the country.
Moreover, the government has stepped in to impose legislation on the estate agents and these regulations range from having a Fidelity Fund Certificate granted and renewed annually to being licenced to practice as an agent by the Financial Services Board.
So a lot has been done to “clean-up” the profession and while it may not yet have gained the same sort of professional status that engineers, doctors and lawyers might enjoy, it is nevertheless working towards achieving this.
These development are good for property buyers and sellers in the long run and will help to get rid of the cowboy agencies who prance around the profession with a cavalier attitude to what they are doing and how they are doing it.
I get complaints on a frequent basis from people who feel they have been ripped off by an estate agent for one reason or another. Most of the time I refer them directly to the EAAB because there is a well-defined, although rather cumbersome process for lodging a formal complaint against an agent.
In fact the saga surrounding WMP – and subsequent sagas involving Pam Golding Properties, Seeff and Wakefields among others – is a result of a complaint being lodged with the EAAB either by an individual or by an employee within an agency.
So the means to complain – and the action that is taken if a complaint is justified – certainly does exist and is worth using. The problem is that so many of these complaints are simply swept under the carpet. There is no effort to name or shame the agencies that have transgressed the bounds of acceptable (even legal) behaviour.
I personally think that it is high time that agencies found to have transgressed any aspect of the profession’s code of conduct should be named and shamed. People need to take estate agents seriously and unless there is some transparency, people will not believe that the agents are regulating themselves.
But what interests me even more than that is the apparent lack of investment that is made by owners of estate agencies in the future of their profession. Before everyone over-reacts to my statement, consider the following:
- There is no programme in place to encourage new graduates into the profession and pay them while they learn the business;
- There is no paid “apprenticeship” process even though newcomers to the industry have to spend the first six months working with a registered agent and earning a fraction in split commissions;
- There are no allowances for stipends for those agents who are battling to learn how to sell houses properly and professionally.
I know a number of young people who are interested in joining the estate agents’ profession but they take one look at the terms and conditions under which they will work for the first year or so and immediately walk away from this sector of industry.
Marketing and financial service graduates, who have done a three or four year degree and have excelled at university are snapped up by graduate programmes being run by a cross section of organisations ranging from Unilever to Eskom.
The same pattern occurs in major financial institutions with graduate programmes in place that range from banking to short-term insurance. These companies are all investing in their own future and they are snapping up the best brains and giving them a three-year fixed term contract where they provide exceptionally good training that will stand the graduates in good stead for years to come.
The salaries, too, are impressive. Some students I know are earning R17k a monthly straight out of ‘varsity while others in the insurance sector are picking up a salary of R25k a month. Why are companies paying this? Because they want the profession to attract and then hold onto some of the best brains in the field.
So I find it ironic that a profession such as that of estate agents does not have any graduate programme in place and has no means of attracting talented young brains into the field.
In fact, as things stand right now, a pupil estate agent (one being trained) is expected to work for between six and nine months without earning a penny just for the privilege of joining the profession.
And then, the amount of money they earn is minute compared with what they would earn in any other commercial sector in the country.
Surely it is now time for the estate agents – and the principals and franchise owners – to reconsider this position and put in place a range of apprenticeship options and a graduate programme for aspirant agents who would like to learn the business, but cannot afford to be effectively unemployed for the six or nine months it might take to secure a fraction of a sale.
My own opinion is that this is completely bone-headed. Estate agents should, in my view anyway, band together to establish a mentorship programme using a levy system to collect the necessary funds and then paying some of the top young brains to join the profession today and be invaluable to it sometime tomorrow.
I really can’t see any reason why, if the industry wants to adopt a more professional approach to property sales, it hasn’t already set up such a programme.
*Hartdegen writes a regular column for Property24.com. The content of his columns constitutes his personal opinion and doesn’t pretend to be facts or advice. Contact him at paddy@neomail.co.za.
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"While it may not yet have gained the same sort of professional status that engineers, doctors and lawyers might enjoy, it is nevertheless working towards achieving this." Please let me know, when ANY respected University, anywhere in the world starts a degree course of 3 years or longer, for Estate Agents. Ask yourself why so many Estate Agents in South Africa are divorced women, who in turn have minimal standards of education."In fact, as things stand right now, a pupil estate agent (one being trained) is expected to work for between six and nine months without earning a penny just for the privilege of joining the profession. So what?Have a look at the terms and conditions that anyone wanting to become a Commercial Pilot has to pass through. - Ian
Paddy you make an interesting point about payment for candidate estate agents, even though it is probably coming at the worst time when all agents are really struggling to survive. However, I'd like to point out that marketing and financial services graduates arrive fully trained and the keyword here is "graduates". They are highly-qualified individuals in a specialist field. Candidate estate agents are very rarely graduates, and are appointed by Principals solely on the basis of their future potential as agents. They may have nothing more than a matric and a patchy CV. It is a situation that can be fraught with risk. I have been burnt badly, twice. I am a small town, small agency boss. Twice in the last five years I have appointed candidate agents. I have invested enormous amounts of time and expertise in training these candidates, while carrying all the costs - office rental, advertising, signage, telephones and internet facilities - for them. Both candidates were, on arrival, given an agreement that they would earn 50% of commission on all their sales. I know some agencies start candidates on a pittance, but that's not my policy, which is to motivate my agents highly and at the same time give them all the training and knowledge from my 20 years' experience. No holds barred. Both these agents became excellent salespeople and I was gratified and proud of my choices. Agent One resigned after 3 years and set up in opposition to me with a ready-made new agency that had already been registered a year previously - obviously unbeknown to me! Agent Two did not sell his first property for almost a year and was later off for another three months for major back surgery. Not long after that, now filled with confidence, with the gratifyingly high profile I'd helped him build in this small town, and with excellent training entirely subsidised by me, he resigned and set up in opposition to me. So - in a tiny town, with a very small property pie, there are now two new agencies with principals both trained by me, competing for their slice. Am I going to pay any candidate agents, ever? I think you know the answer. - Helene
Would somebdoy from your offices please just give Pat Hardegen a smack back into the 3rd world country he lives in? As things are already in this country with the EAAB, NCA, CPA, banks not giving sufficient loans and a rapidly deteriorating real estate economy...where does he think even large agencies would get capital to train nitwits into a industry in a country with no real estate future and no support from government, when the biggest names in the industry are already digging into their trust funds to try and stay on a daily float? These rediculous systems belong to a 1st world country...We are most definately not ready for all these systems. These systems will all fail, mark my words, very soon and people like Pat will only then realise that they are worse off than before when the house they live in ain't worth a cent because they think they can turn this country around by quickly implementing a couple of acts and laws. It's just stupid and unreasonable, especially in these uncertain times and it's creating more job losses. - Riaan
I agree with Paddy to some degree. New agents should be paid a stipend whilst learning. The government / Services Seta should arrange a learnership programme for new estate agents. The government does want to see more black agents / BEE systems in place in this industry so they need to get a system in place. They spend some time every week in a classroom and some time out with a mentor. Our president wants to create jobs. Here is a great opportunity to create jobs. Many estate agents have have become assessors and/or moderators so new agents could be enrolled on a 1 year learnership and paid a stipend by the government / Seta while they are trained and mentored. Alternatively the stipend could be split between the franchisor and government. After all the agency will also earn commission on deals undertaken by these learners. They should be able to earn a percentage of the commission if they tie up a deal with the assistance of their mentor and in addition should be able to earn some income from leads / referrals. By the end of a 12 month period they have gained experienced and obtained a qualification whilst earning some money This industry is not for everyone. After a 12 month period one knows whether this is for them or not. - Rene
Thanks to Paddy for this unheard-of and original take on the estate agency industry. For me, the title of the article hits the nail on the head “Would you become an estate agent?” Let me explain myself. I came across a recent Tweet by Robert Kiyosaki, “@theRealKiyosaki An entrepreneur who can sell will always make more money than the A+ college grad”. Nuff said? Therein lies the essence to my comments. Estate Agency is, on the ground, at the sharp end, entrepreneurial and not corporate in the SAB or Unilever sense.
University graduates are found as estate agents. Anyone could do their own research and ask a few agents or just look at qualifications on some business cards. So what? And those of us with information asymmetries (nod to Freakonomics) are aware that all over the world reputable Universities offer undergrad and post grad degrees in Real Estate. Pretoria University, Faculty of Engineering, Built Environment & IT, Department of Construction Economics offers BSc Real Estate (three-year programme). So what? The issue is not at all about comparisons with doctors and lawyers, that is futile and nonsense anyway, (will a residential estate agent ever have the professional gravitas or responsibility of doctors, lawyers and engineers for example? I doubt it.).It’s all about who would want to work as an estate agent?
In my empirical estimation, one in 20 graduates are estate agents (very few new graduates by the way). Someone could show stats about how many new graduates start up their own entrepreneurial business. Most new graduates still want to work for Unilever or SAB or Absa after leaving University and earn a regular salary with all the benefits and perks, not to mention security. So it does not matter how hard the estate agency industry would work on attracting new graduates, only those with entrepreneurial aptitude, skills and motivation to sell houses will apply, and you end up with the same ratios above. As Paddy pointed out, the Government is far down the track in 2011 regulating educational and licensing standards for estate agents, but this is not an academic University thrust.
So, I think Paddy has raised many a good debate point in his article for those Owners/Directors of Estate Agency Companies, but I don’t think the prevalence of new University graduates will increase on the ground as estate agents. Wanting to sell houses, earning commission fees only, operating on your own in your residential area or “farm” and succeeding or failing by your own property listing and selling skills is not everyone’s entrepreneurial cup of tea! - Randal Bostock
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