Full-service agents still the prime route to best home sale outcomes
Spare a thought for estate agents. It has been a long time since they were earning decent incomes in their profession.
In the boom years from 2001 to 2007, property prices in South Africa rose on average by about 15% a year - occasionally peaking at 20% a year - in line with the bullish sentiment that prevailed during that period.
Everybody was making money in those times - when it took just 40 to 60 days to sign and seal a home sale...at an average commission rate of 5,5%.
It was an extremely buoyant period for residential property. The investment flow into the market was robust, and everybody was basking in capital gain. Even estate agents were making decent money at the time - so much so that every Tom, Dick and Harriet wanted to join their ranks.
The purple patch came to an abrupt halt in 2008, when world financial markets crashed. Since then - just over a decade ago - estate agents have effectively had no increase in their income.
Instead, they have had to contend with an earnings decline in real terms, given that
- They are paid on the value of the sale price - and property price growth has persistently lagged inflation (and continues to do so)
- The US$/SA Rand exchange rate has virtually doubled from R7,8 in 2008 to over R14 now...and R16 recently
- The average time to secure and close a home sale has lengthened.
Against this background, it is quite clear that estate agents are earning less today, in real terms, than 15 years ago. Yet consumers persist in putting pressure on them to reduce their commission percentage.
It is therefore a pity that, on the face of it, young people may not be easily inspired to opt for a career in residential estate marketing.
Meanwhile, the stalwart agents who have been around for 15 years or so - and have seen and survived the tsunami-like crash in their earnings - are, in my opinion, the best available operators in the business.
Their "old school" habits of full-service delivery results in more bang for sellers' buck than can be generated by newcomer agents who arrive in the market and apply short-cut strategies.
Particularly so if the 'veterans' are willing to embrace, and apply, new technology to supplement and/or complement the deep-rooted full-service activities for which they are renowned.
Author: Ronald Ennik