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Selling Property in a Gated Community

Anyone who’s viewed property in a gated community or residential estate will likely have noticed that only a few select agents advertise within the area. This is because many Homeowners’ Associations (HOAs) request that estate agents pay accreditation fees in turn for exclusive marketing rights.
 
What’s good for the goose...
 
From a HOA standpoint this request has two benefits: limiting the number of agents advertising in the area and bringing additional funds into the coffers. One argument is that a small number of well known agents selling in the area decreases safety risks as fewer security cards are issued and there are no unknown faces. From an agent standpoint the arrangement works well as it decreases the competition for new properties as well as making them the go to guys when it comes to buying or renting within the estate.  
 
“If you as an agent have managed to secure a relationship with a HOA there are certainly tremendous benefits, even if they do come at a cost,” says Bruce Swain, MD of Leapfrog Property Group, “the problems arise when the fee requested is very high, or of course if you’re not one of the agents on the HOAs approved list”. Another issue concerns the sellers themselves who might want to engage the services of an ‘outside’ agent but feel that their choices have been limited by this agreement between specific agents and the HOA.
 
The view of the Estate Agency Affairs Board
 
This practice was recently placed under the spotlight when the EAAB (Estate Agency Affairs Board) issued a compliance note that outlawed the practice. Upon further review they have amended the compliance note stating that “marketing agreements between HOAs and estate agencies will be lawful if the fees paid constitute a reasonable recovery for services rendered by the HOA. This can, for example, include the supply of security access cards, supply/erection of advertising boards, supply of maps/directions to properties and the like”.
 
The note also emphasised that the ultimate choice of estate agent should remain with the individual seller, not the HOA and that steps would be taken against agents in contravention of the ethical rules of the profession.
 
The seller’s prerogative
 
While the new guidelines established by the EAAB serves to create a fairer, more equitable arrangement between HOAs and estate agents Swain believes that the biggest message is to prospective sellers; “At the end of the day no one has the right to tell a seller whom he should contract to sell his property – regardless of any agreements between the HOA and agents, the final choice should remain with the seller.”


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