Years ago, selling property was considered a hobby or part-time job. Anyone was able to register and start selling. In 2008 the industry underwent rapid change, and being an agent is now a fully-fledged profession.
Although from a general public perspective, the exact process is not quite clear and there is still a perception that being an estate agent is very much a ‘get rich quick’ scheme. It is common practice for clients to negotiate commission, which is why we look at the common miss-conceptions people have about estate agents.
1. Anyone may sell property for a living
False > A Real Estate Qualification is required by anyone who sells property as a profession and you must be in possession of a valid FFC issued by the EAAB (Estates Agency Affairs Board). The applicant needs to first complete a 12 month internship (no exemptions allowed) whilst being mentored by a professional and experienced estate agent where after they can then proceed to complete the FETC (the Further Education and Training Certificate) in Real Estate at level NQF4. Lastly candidates must also write and pass the Professional Designate Exam (PDE) after they have been found competent by Services SETA in their NQF Level 4 portfolio of evidence. For a new agent, it will take between 2-3 years to complete the whole process and be a full status real estate agent.
2. Agents only earn commission
True > Agents do not earn a fixed income and work only for commission (there are rare exceptions in the development sectors). Agents work at their own risk; if they do not succeed in a sale they will not be earning an income. Professional agents are constantly investing money and time into the marketing of their properties and their business, to ensure they have the clients to match the buyer and seller up quickly. This is done with no certainty of an income whatsoever, the commission is only earned by the agent whose marketing actions were the real cause for the property to actually sell. The percentage commissions also vary between estate agencies and one would not expect to pay a standard percentage across the board.
3. Being an agent is easy money
False > The average time which a property is on the market, is 3 months. This means that for every property an agent sells, they had to put in 3 month’s worth of work. The end result might be that a property is listed and sold, however prior to the property coming to the market, the agent was already busy canvassing their area and shortlisting their clients and all of these activities take marketing material, phone calls, car payments, fuel costs and more.
When it comes to the actual commission, the figure which a seller pays is also not money in the bank. Agents have a commission split with the company they work for which covers part of their costs and for the support and network they have access to, as well as royalty fees if they are part of a network and then of course income tax as everyone else.
All of the funds they spend on marketing, promoting and showing a property can only be regained if the property sells, however if the property doesn’t sell all these expenses fall to them and not to the seller. Hence there is no easy money to be made without constant, dedicated hard work.
4. Agents commission can easily be cut
False > An agent that offers a low commission fee may not be able to provide as wide a range of services and exposure that a larger agency with a higher rate may be able to provide. Sellers often do not understand what exactly an agent will do for the sale of a property and why going the agent route will result in a more efficient sale process and ultimately what the seller will get in return.
In return for the commission, the seller should get an extensive marketing plan specifying exactly how the property will be marketed and which services will be provided (Professional photos, posted on their website; adverts placed on property websites/advertising in magazines). All these costs will be carried by the agent and the agency.
To acquire the best possible agent is therefore much more important than trying to undercut the sales commission, in most cases this is your most valuable asset and you would want the right expertise working on it. Sellers should be very cautious of agents who promise them a higher price based on a lower commission. Often you will still find the listing, 5 months later with a reduced price and an uninspired marketing plan.
The best example to see this practically – will you go to a GP for a specialist consult? Or a friend instead of a qualified attorney? The rate for the specialist is higher, however you know that you are in good, well trained hands.
Agents who easily lower their commission might not value their skills or service provided high enough. Alternatively if you can easily negotiate their commission down – how much faith will you have in their capability to negotiate the best possible price on your home? Just as you would not immediately fall foot-in-door with a bargaining strategy with your doctor, attorney or even your auditor, you should consider the same when dealing with an estate agent as they are professionals in their own field. If we turn the table around, what if everyone wanted to negotiate your salary on a daily basis?
5. Selling real estate can be a part-time job
False > Working as a part-time agent may seem like an excellent idea but it is not as easy as it seems. It takes a lot of hard work to become an agent, if you work elsewhere during this time period getting things done might become quite strenuous. To be a successful as an agent, it takes ongoing training and full focus on daily activities and client service, doing this part time would not be beneficial for the agent or the seller.
Agents must devote large amounts of their time at first to finding future clients and building a reputation and in order to do this they must always be available. Agents must drive to appointments, accept calls from clients at all hours to answer questions and prove themselves on an on-going basis to the prospective clients who might have other options.
Real estate is an all-hours job, you may not have to work 40 hours per week, but you will have to work all hours of the day and weekends. Agents must always be in the pursuit of other potential clients and impress them with their superior and professional skills to maintain a solid reputation and relationship. It is a very competitive market, and there are other agents who are also willing to work just as hard.
Many people have dreams of making it big as a real estate agent, but they want to start slow. People want the freedom, income, and the other benefits that come with being a real estate agent, and this would be ideal, but unfortunately in the real world – we can never have it all.