Know your broker
According to the latest stats-sa, over 600,000 people in the formal non-agricultural sector lost their jobs in the second quarter of 2020. This was largely because of the lockdown, in honor of the Covid Pandemic, and the resulting downturn in the economy.
The trade, business services, manufacturing, and construction industries alone shed 500,000 jobs.
These are desperate times, as we face a changing landscape in most industries, necessitating new skillsets and new ways of doing things. New lifestyles and new careers.
The property industry is a mirage to many, who envisage it as the land of milk and honey and an easy way to make a quick buck.
It's not! As any property professional or "Trump University" attendee can tell you, there is no easy ride into a successful career in Real Estate.
But, given the current circumstances, it's no surprise that many new faces are popping up on the property pages.
By law, Estate Agent principals and their brokers must be registered with the EAAB, and be compliant with the laws and regulations governing the property sector. This includes full status Fidelity Fund Certification, renewable annually, and ongoing professional development and qualifications. Practitioners must have a thorough knowledge of legislation covered in various Acts, such as FICA, the Property Practitioners Bill, the National Credit Act, Sectional Title, Consumer Protection, and Alienation of Land Acts. And, because Real Estate is one of the favored conduits for money laundering, and funding of international terrorism, brokers need to be aware of the laws in place to prevent these activities. Failure to comply can result in withdrawal of Fidelity Certificates, large fines and lengthy prison sentences for brokers found guilty of transgression.
The new Property Practitioners Bill prohibits transferring attorneys from paying commission fees to Agents who do not have a current Fidelity Fund Certificate. The bill will also protect buyers from financial loss caused by patent defects. There is not much protection against loss because of fraud though.
A recent case, in which a widow was defrauded by a dishonest estate agent, is a strong indication of the need for buyer/seller beware. In this particular case the buyer thought she was transferring her payments to a transferring attorney, but the account details given to her were for the agent's personal account.
While the EAAB Fidelity Fund Certificate supposedly protects people from dishonest, or fake, Agents, there appear to be some grey areas here. Firstly, the buyer had not actually signed any paperwork, so had not actually bought the property she was in love with. The Agent promised that she could get the property for her at a huge discount, provided she made the payments promptly. The buyer trusted the Agent implicitly and did not verify the account details. Verification would have been a simple process, of matching the name, ID or company registration number, and bank details, at a small cost of about R2, when registering the account for payment.
Obviously, if it's too good to be true, it's too good to be true, and the buyer was naïve, to say the least.
The dodgy Agent was found guilty of fraud, and will be spending Christmas plus a few more years in jail, but that still leaves the widow broke and homeless. It's heartbreaking, but "Ignorantia juris non excusat or ignorantia legis neminem excusat," legalese for "ignorance of the law excuses no one."
Government and the EAAB have been at pains to protect the industry, its brokers, as well as buyers and sellers. Regulations place responsibility on brokers to know their customers, with checks and balances in place to ensure that clients are qualified and that no laws are broken in transactions.
The onus is on the seller and buyer, in turn, to know their brokers!
"We're all for competition ..." says Tristan Rasmussen, MD of Rasmussen Properties. "Of course, we would prefer to be recognized as the Go-To industrial property experts in KZN, but competition keeps us on our toes and ensures that we consistently improve our expertise and customer service levels. But one bad egg muddies the water for everyone and we need to join forces to ensure that only the best survive to sell another property!"
Qualifying your Industrial Property Broker:
- Confirm that the broker is legit. The brokerage website will be a good indication of professionalism. A Google search is helpful. And sellers can check if property companies are registered with the EAAB
- Ask for copies of both broker and principal's current Fidelity Fund Certificates.
- Check up on track record. Do some research on the company and the broker you're working with. You're better off with a broker who has a good track record and reputation, than with a new kid on the block.
- Check the level of specialization. Industrial Property, especially, requires brokers with a high level of expertise. A good Industrial Property broker will ask the right questions and will be knowledgeable about zoning, hazardous materials, warehouse and gantry specs, power amp, load bearing specs, yard usage, pallet racking, and more.
- A professional broker will give you good advice - don't go with the yes man, who will promise an inflated price just to get the mandate.
- Listening skills - does the broker "hear" you and comprehend your needs?
- Do not part with any money until contracts are in place, and when registering accounts for payment, get the company registration details and verify the account details with the bank.
- Gut feel. You know that uncomfortable feeling when somebody puts too much pressure on you, talks too much, doesn't make eye contact... that's your gut feel. Trust it.