Deal only with qualified estate agents

There are some estate agents in South Africa who have been working tirelessly to gain a form of professional status for those people engaged in the business of selling houses.

Paddy Hartdegen writes a regular column for Property24.com

And some of their efforts have paid off too, with the stipulation that agents must have a minimum recognised qualification in order to sell houses and that they must have a valid Fidelity Fund Certificate issued by the Estate Agency Affairs Board.

And, the reasons for wanting some form of recognition are well-founded if you consider that the investment made in a home is often the largest investment made by any family at any time in their lives. Estate agents need to understand the complexities of a property transaction and to effectively guide both the buyer and the seller through the tangled processes of selling fixed assets.

Ideally estate agents need to be specialists who have a thorough understanding of the benefits and pitfalls of a particular property transaction. The problem is that the estate agents earn money from the person who is selling the house – rather than the person buying it – and as such, their loyalty is to the seller. 

But that’s beside the point really because the more important point is that all estate agents are supposed to be correctly registered with the Estate Agency Affairs Board (EAAB) and each one of them must have a valid Fidelity Fund Certificate (that is renewed each year) in order to practice as an estate agent.

The basis of the certificate is to warrant that the agent has met the provisions of the Estate Agency Affairs Act and is suitably qualified – either by completing a particular series of courses or because of on-the-job experience gained over the years. In essence the Fidelity Fund Certificate warrants that an agent is able to conduct a property transaction and is an upright citizen in good standing within the community.

He or she might not be squeaky clean but at least, when it comes to the business of buying and selling property, he or she most certainly is.

The purpose of the act is to ensure that would-be buyers or sellers are not going to be ripped off by crooked agents. And that’s all well and good as long as the provisions of the act are properly regulated and enforced by the authorities (such as the EAAB).

So you can imagine my horror when I read reports from the EAAB that as many as 10 000 estate agents – out of an estimated 27 000 – are operating illegally. It emphasises for me just how many South Africans will readily ignore and flout the laws of our land at the drop of a hat.

And without even the slightest prick of a guilty conscience.

We are talking about almost 30% of estate agents flagrantly, and knowingly ignoring the provisions of the Estate Agents Affairs Act and the provisions of its very own regulatory authority as well

And why not?

Because, for most agents there are no consequences for breaking the law? Unless of course you’re Wendy Machanik and then you lose everything. In fact the Machanik saga seems to have unlocked a plethora of malpractices among estate agents and agencies and begs the question of professionalism in a business that’s based on selling something to someone else for an enormous amount of money.

Now before I have 17 000 estate agents climbing down my throat, let me quickly say that there are some very good agents in South Africa and those ones are providing an excellent service that can stand up to the scrutiny of ethical business dealings anywhere in the world.

There are some estate agents you can just trust with impunity.

And there are others who can’t be trusted at all. But how do you tell the difference?

Crooked estate agents don’t carry a sign saying: “I’m a crook so don’t trust me”. In fact crooked agents are invariably very warm, charming, well-read, erudite people with a wide general knowledge and an excellent understanding of human nature. They can talk to you about any subject with a sincerity that defies mistrust.

So how can you tell if you have a trustworthy agent?

The answer is simply through their compliance with the provisions of the Estate Agency Affairs Act and the regulations laid down by the EAAB. That’s the warranty that says that this agent can be trusted.

So are the 10 000 estate agents who are operating without a Fidelity Fund Certificate intrinsically dishonest or does it mean that they are just poor administrators who forgot to get their certificates on time?

The simple answer is this: Yes they are intrinsically dishonest and they should not be trusted with your business. Full stop

And here is where I think the EAAB itself is to blame – not the estate agent, not the franchisee and not the agency principal either. You see the EAAB should enforce its own regulations on its own profession just as Engineering Council of South Africa does and just as the medical profession, the quantity surveyors the chartered accountants or the lawyers do for their professions.

It’s the EAAB that’s failing in its duty to enforce the act and it is the EAAB that’s not doing its job properly.

So here’s what needs to happen: first the sellers must insist that before paying the agreed commission to an agent they have appointed, they have physical sight of the Fidelity Fund Certificate. If the agent can’t produce it then the seller must prevent them from acting on their behalf.

More importantly those conveyancing attorneys who are tasked with the final disbursements of monies – after a house has been sold and the title deed registered – must only pay commission based on a valid Fidelity Fund Certificate. Without one, no payment can be made. That’s it

My reasoning is simple: hit an estate agent where it hurts (like in his or her pocket) and you’ll quickly see how readily they’ll comply with the provisions of the act.

Not a penny should be paid to an agent without physical proof of compliance with the terms of the act and there should be no “ifs”, or “buts”, or “maybes” either. If agents want their commission they must comply with and meet the provisions of the act. If not, they don’t get a single brass farthing.

Surely it’s time for an attitude of zero tolerance when it comes to non-compliance? Surely we as sellers can enforce compliance by not paying commissions and insisting that the attorneys we appoint do not pay them either.

Compliance should be a matter of personal pride for every estate agent in South Africa but clearly it isn’t. It seems to me that the EAAB’s unable to effectively wield its big stick and that means that we must do it for them.

And we can do it too. Just think of the money that could be saved by not paying commissions on properties sold by agents without valid Fidelity Fund Certificates.

The amounts would be astronomical.

*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  via email.

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