Why agents need to understand the world of investment

Globally, intensive estate agent training has become essential in getting the most out of agents and ultimately the best deal for buyers and sellers. One of the most important aspects of this training is the financial component, given that they are advising others on the biggest financial decision and largest transaction of their lives.

“Negotiation is vital in this business, and agents need to understand the different investment mindsets of a homeowner in order to guide them into making the right decision,” says Greeff

As a result, South African agencies are taking requests to professionalise their agents very seriously.

CEO of the UK’s Guild Property Professionals Association (The Guild), Marcus Whewell says in the next five years, individuals need to be better informed and qualified, meaning agencies should prioritise training and development.

The Property Investment Professionals of Australia (PIPA) are even lobbying for direct property to be classified as a financial product by the government so that financial advisors would have to have adequate training to be authorised to give property investment advice.

“This would mean licensed real estate agents would be banned from providing property investment advice, while buyers’ agents, mortgage brokers or accountants could only be authorised to give advice on the completion of a diploma,” says Ben Kingsley, chairperson of PIPA.

He says while laws and regulations differ between countries, leading South African estate agencies are well aware of the need for financial and investment training among their agents.

Mike Greeff, CEO of Greeff Properties, says he recently launched a series of investment training sessions for his estate agents with the intention of expanding their financial skills, amongst others. “The property game has become a lot more professional and sophisticated.”

Seeff and Pam Golding both have internal academies that provide their agents with the necessary qualifications to work as estate agents, and then continue to provide grounding in the skills they need on an ongoing basis.

“Negotiation is vital in this business, and agents need to understand the different investment mindsets of a homeowner in order to guide them into making the right decision.”

Greeff believes that the nuances of each individual’s property and financial requirements are one of the reasons why people will keep coming to estate agents, rather than taking their business to online portals.

“Buying a property isn’t about just picking a location and doing the paperwork. There are so many steps along the way that require a human touch – but that human element has to be delivered by a properly trained professional who understands not just the property buying processes, but the financial implications for all the involved parties as well,” says Greeff.

“Investors do not think like everyone else and this is where there’s often a disconnection. For example, an agent may tell an investor, ‘This property is perfect for a large family, while most investors would rather hear, ‘This house could produce $250 a month in passive cash flow’,” says Brandon Turner, US author and real estate investor.

Seeff and Pam Golding both have internal academies that provide their agents with the necessary qualifications to work as estate agents, and then continue to provide grounding in the skills they need on an ongoing basis.

Magnus de Wet, a director at Vista Wealth Management, says the model for calculating the investment value potential of a property needs to include parameters such as initial investment value, interest rates, rental income and property value increase – all of which are influenced by multiple external factors.

It’s clear that understanding the vagaries of investment is tricky, he says.