The purchase of your family home – or the sale of your existing property and the purchase of a bigger and better one – will probably be the most expensive and significant investment of your life.
It is therefore of the utmost importance that you make the right decisions along the way, and of the many that you will be making before you move into your dream home, none will prove more important than the initial selection of a reputable, reliable, effective and efficient estate agent.
First of all, why use an estate agent?
Very simply, the purchase and sale of immovable, residential property are complex transactions requiring special skills and knowledge. For most people this is a rare experience, which should not be spoiled by unnecessary complications. A good estate agent will provide you with all the practical advice you require on your property needs, and will negotiate all property transactions on your behalf.
This assistance can reduce risks and avoid unnecessary stress when you are either buying or selling property. It will save you time, money and frustration to use an experienced and efficient estate agent, who is well aware of the many pitfalls peculiar to property transactions.
How does one select a suitable estate agent?
It is most important that you ensure that any estate agent you choose to consult is registered with the Estate Agency Affairs Board. In terms of the Estate Agency Affairs Act, an estate agent must be registered with the Board, must be in possession of its Fidelity Fund Certificate, and must comply with the provisions of a special Code of Conduct framed in terms of the Act.
The Estate Agency Affairs Board is the regulatory body for the real estate agent industry. It licenses practitioners to uphold standards and protects the public’s interests. This ensures that the interests of buyers, sellers and estate agents are protected in terms of the law.
In order to obtain registration and the above certificate, the estate agent of your choice will have either passed the Estate Agency Affairs Board examination on the principals of real estate and estate agency, or will have completed a practical training period of one year as a “candidate” estate agent under the guidance and supervision of a qualified “full status” agent. The status of the estate agent – “candidate” or “full status” – will appear on his or her Fidelity Fund Certificate.
It is an offence for an estate agent to act as such without having obtained a Fidelity Fund Certificate issued by the Board. The estate agent concerned would then be operating illegally, and would not be entitled to commission or other remuneration in respect of transactions negotiated.
Also bear in mind that these certificates expire at the end of each year. You need to ensure that the registration and certificate of the estate agent of your choice are both current.
On the other hand, proper registration immediately establishes an estate agent’s credibility with both potential clients and fellow estate agents. It holds the promise that you will receive a professional service which adheres to a strict code of conduct, and it will encourage the belief that it is safe for you to do business with the estate agent concerned.
What duties can you expect your estate agent to perform?
A buyer does not actually give an estate agent an official mandate, but rather a statement of intent, providing details such as the type and size of house and property required, the preferred location in terms of suburbs or areas, and the price he or she is prepared to pay. It is the seller who gives the estate agent an official mandate to sell a particular property.
Having obtained a mandate from a client, the estate agent’s activities normally involve the selling/buying/letting/hiring of immovable property, including negotiation of proposed sale or lease agreements. Generally, this will include handling all forms of negotiations involving any proposed sale or lease transactions, and aimed at closing the transaction in question.
Specifically included are such activities as: showing and/or discussing properties with prospective purchasers or tenants; arranging show houses; negotiating or explaining the terms of a proposed transaction; presentation offers to sellers/lessors for signature; all forms of advertising relating to a client’s property, including the drafting and wording or press advertisements; and arrangement of loan finance pursuant to a transaction concluded by the estate agent.
What does a mandate involve?
An estate agent is given a mandate to sell when asked by a seller to sell a particular property. Please note that no estate agent may market a property for sale until mandated to do so by the person entitled to sell that property. In law a mandate need not be in writing and can be given verbally, but in terms of the Code of Conduct of the Estate Agency Affairs Board, a sole mandate must be in writing.
A seller is never compelled to give an estate a sole mandate. The decision on whether to give a sole or open mandate to an estate agent is, however, and important one which can affect the way the property is marketed. Both sole and open mandates have advantages and disadvantages which should be explained carefully by the estate agent before the seller decides which option best meets his or her specific needs. Estate agents are of the opinion that a sole mandate will deliver a more dedicated marketing service in terms of time, money and effort spent in promoting a sale.
A sole mandate with an estate agent must give a clear description of the following: the duration of the sole mandate; the price you are prepared to accept; details regarding the commission to be paid to the estate agent; and a clear job description in terms of aspects such as advertising, show houses; access arrangements; minimum price; and any other specific requirements the seller has.
Also bear in mind the following important issues which need to be clearly defined to avoid any disagreement further along the line:
- It is the duty of an estate agent to convey to any prospective purchaser all facts relating to the property that are or should reasonably be within his or her personal knowledge, and which could have a material effect on the sale. It is therefore incumbent upon the seller to disclose any defects in the property to the estate agent to avoid later disputes.
- For the duration of a sole mandate the seller is prevented from selling the property through any other estate agent. Sole mandates often make the seller responsible for the payment of damages to the appointed sole agent if he or she sells the property during the mandate period.
What a seller may expect from his estate agent?
Professional service:
A seller is entitled to a professional service from the estate agent, but the estate agent, in turn, requires the full co-operation of the seller to be able to market the property professionally.
A thorough inspection:
A professional estate agent will undertake a thorough inspection of the seller’s house, outbuildings and garden, in order to be fully acquainted with all relevant facts and information, advantages and disadvantages, and the current condition of the property.
Advice on market values:
Another important function of the estate agent is to advise the seller on the likely value of the property, and to help in setting a realistic price.
Courtesy and cooperation:
The seller is entitled to ask the estate agent to make appointments before showing the property to prospective purchasers. He or she should not accompany prospective buyers through the property, but can request the estate agent to provide regular sales progress reports.
Speedy finalisation:
Although not obliged to do so, most estate agents try to speed up the transfer of the property into the name of the purchaser, thereby ensuring that the seller receives payment of the purchase price with a minimum of delay. The estate agent concerned may also be willing to act as a mediator in settling minor disputes that may arise between buyer and seller after the sale.
An estate agent is obliged to protect the interests of the client (usually the seller) to the best of his or her ability, and must try to sell the property on the best possible terms and at the best price. Nevertheless, the estate agent has equally important responsibilities towards the purchaser of any property he or she handles.
The estate agent and the purchaser:
Buying the right property:
Every purchaser of a home wishes to buy the ideal property at the right price and on the most favourable terms. A professional estate agent can assist the purchaser in achieving this objective, as long as the purchaser provides the estate agent with a good understanding of his or her needs, financial resources and motives.
Making an offer to purchase:
Once the purchaser has decided to buy a property, the estate agent will fill in the necessary “offer to purchase” form. The agent will also assist the purchaser in applying to the bank of his or her choice for a home loan, by completing and submitting all the necessary application forms. He or she should also be able to advise the purchaser on alternative options if necessary.
Communication between estate agent and purchaser:
Regular communication between the estate agent and the prospective purchaser will ensure that misunderstandings and later disputes are avoided.
Duty to the purchaser:
An estate agent has both a legal and an ethical duty not to make any misrepresentations about a property to a prospective purchaser. The agent is obliged to disclose all material facts relating to the property that he or she is aware of, including all defects.
This article has discussed why – as either a buyer or a seller of a property – you should seek the services of a reputable registered estate agent; how to go about making your selection; and what services to expect from the estate agent you have chosen.
Remember, the Estate Agency Affairs Board has as one of its main objectives the protection of consumers in their dealings with estate agents. Every estate agent must comply with the Code of Conduct framed in terms of the Estate Agency Affairs Act, and should you – as a buyer or seller of a property – feel unhappy about the conduct of a particular estate agent, a written complaint should be sent to the Board for investigation and possible disciplinary action.
The Board has set up an arbitration tribunal where commission disputes between estate agents and members of the public can be resolved without the lengthy time delays and high costs of a court trial. It also administers the Estate Agents’ Fidelity Fund, from which consumers who have suffered loss as a result of theft of trust monies by estate agents, are reimbursed.
Disclaimer: This article is for information purpose only and does not constitute legal advice. Call on our attorneys for legal advice, rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing.