select
|

Estate agents cut commissions because of economy

While predictions are not all doom and gloom, it is widely accepted that properties are taking longer to dispose of and that homeowners are holding onto their assets for now, hoping to get a greater return on their investment when the market improves.

The Institute for Estate Agents of South Africa (IEASA) discourages agents from lowering their commission, adding however that the market does affect negotiations around this payment.

The average industry commission ranges between 4 and 8%, but Moneyweb has learnt that some agents are prepared to drop way below this, sometimes settling for as little as 2 or 3%.

It must be stressed that this applies mainly to the smaller players in the industry. Giants like Seeff, Lew Geffen and Re/Max among others, usually stick to their prescribed rates, depending on the relevant market segment.

Seeff’s national marketing manager, Ted Frazer, says if one looks at the real estate industry - residential or commercial - it is made up of a significant number of small independent players who compete strongly on price in terms of their commission.

The heavyweights mentioned above offer a much bigger infrastructure to sellers and have a significant marketing platform. This costs money. But because clients know that these are bigger players, they are not averse to footing the commission bill.
The larger estate agencies also attract a much broader base of buyers and are able to zone in on the right buyers for a particular property.

Frazer says smaller operators are struggling in a tough market and competing with the bigger players, prompting them in some instances to cut their commission.

Estate agent Arthur Venter of Property Circle in Ramsgate on the KwaZulu-Natal South Coast is adamant he will not compromise on commission. “I don’t believe in it. Average stats show that an estate agent earns about R2 500 a month,” he says.

Agents therefore rely heavily on commission to supplement their income. Venter says he discusses his commission with clients upfront and sticks to his guns when it comes to payment.

His view concurs with that of IEASA which says professional and qualified estate agents put in long hours, provide sound advice and deserve their commission without having to compromise.

Nevertheless, some agents told Moneyweb that they need to settle for less than the specified commission in order to make the sale. At the same time, buyers and sellers also know that it is a tough market and will shop around for the lowest commission.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK