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Why Pay an Estate Agent’s Commission?

Both buying and selling a property tends to be a complicated and expensive business, leading most people to engage the services of an estate agent.  But what precisely does an estate agent do?

Commission earned for services rendered

Estate agents need to be experts on the areas they work in, in order to establish a reasonable asking price based on the size and condition of the property as well as the going rate for properties in the region. It’s a fact that properties with unrealistic price tags tend to sit on the market for months but the trick is also not to undervalue the home – determining its value is something a good estate agent can be very helpful with.

Unlike in the UK real estate market, local agents carry the cost of marketing the property in print, online and in mail drops, at no cost to the seller. “In financial terms this means that an agent can spend thousands of Rands with no guarantee that the property will sell, or that they’ll be the ones to sell it if they don’t have a sole mandate”, explains Bruce Swain, MD of Leapfrog Property Group. Marketing the property correctly is key, but so is knowing how to sell it.

Agents are essentially sales people it’s true, but they’re sales people with a specific skill set that enables them to match the right seller with a willing buyer and then managing the process until the sale is completed. All of this takes both experience and training.

It’s a profession

Contrary to popular belief not just anyone can practice as an estate agent. “These days beginner agents need to complete a FETC: Real Estate (NQF level 4) qualification as well as a 12-month internship under the mentorship of an experienced estate agent. Additionally they must also write and pass a professional designate exam (PDE) at the end of the internship”, says Swain.

Estate agents take the risk

What many clients don’t know is that estate agents work completely on risk; they don’t earn base salaries and if they don’t sell property they don’t earn. Michelle Cohen, Principal of Leapfrog Johannesburg North East explains; “We work very long hours and usually at least 6 days a week. We assist people in making their dreams come true, or in difficult times getting themselves out of debt by finding a willing and able purchaser and negotiating a good price on the house for sale. We work at risk, no performance no salary”.

Real estate agents need to consistently provide a good service as it can take months for a property transfer to go through, enabling them to claim their commission – in the meantime agents need to keep on selling ensuring that they’ll be earning a living each month i.e. selling in January for April, in February for May and so on.  “The real estate industry is not a forgiving one and agents who don’t constantly perform don’t make it”, says Michelle. 

What’s a fair commission?

“The percentage of commission charged on residential sales varies from professional to professional as there is no set industry rate, but generally agents tend to charge between 5 and 7%, believes Swain, “that being said it would only be exceptional if someone is asking drastically more than that”. 

Working with an estate agent can make the buying and selling process considerably easier – if you’ve engaged the services of a professional with the right experience and qualifications. They’ll take the risk of marketing your property at no cost to you, will show your home and facilitate the selling process, for a price yes, but perhaps it’s a fair one?


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