Last week the Estate Agency Affairs Board released figures which alluded to the fact that there may be as many as 50,000 estate agents operating illegally in South Africa, comparing agent numbers 10 years ago to today.
An article in Business Day and reproduced on BizCommunity wrote: “The board, which governs the industry, has introduced a mandatory counter-fraud measure for all registered estate agents to distinguish the genuine operators from the fakes – an electronic certificate that is constantly updated.
“The board said rogue agents who did not have a fidelity fund certificate – a valid licence to operate – were not entitled to receive any remuneration for their services when renting or selling property.
“According to the board, there were about 80,000 registered estate agents 10 years ago. Today that figure sits at about 30,000.”
The EAAB’s spokesperson, Margie Campbell was quoted as saying, “That puts the number of agents potentially operating illegally in SA [at] 50,000”, noting that all registered estate agents were now compelled to display their EAAB PrivySeals “as a means of countering qualification fraud and protecting the public and legitimate estate agents”.
“If your estate agent doesn’t have an EAAB PrivySeal, they have very likely not been issued with a valid fidelity fund certificate by the EAAB. In terms of the Estate Agency Affairs Act, unregistered estate agents are not entitled to any remuneration for estate agency services rendered,” Campbell was quoted as saying.
The article wrote: “More than 19,000 EAAB PrivySeals have been issued to compliant estate agents. EAAB PrivySeals must be displayed by all registered estate agents in their email signature, their online and social media profiles, alongside property listings and in all marketing material.
“If your estate agent isn’t showing their EAAB PrivySeal in their email, ask to see it or look for another estate agent, because if they aren’t proudly displaying this certification, they could be operating under the radar.”
We asked Christo Weilbach, board member of the EAAB, to clarify. The assertion that there are 50,000 illegal estate agents operating in South Africa is highly unlikely.
“The following is purely my own point of view and in no way represents that of the Estate Agency Affairs Board. With reference to the article I suspect that one of two things happened: Either the journalist misunderstood and reproduced the information incorrectly, or Margie Campbell’s explanation was not completely clear. I suspect that the total of 80,000 was actually for 2003 and not for 2008.
The figures quoted for current and for 2003 registrations are rounded. The mistake made was that current figures were then deducted from those of 2003 and the assumption made that the difference represents the unregistered agents in South Africa today.
The truth is that 2003 was what we called a “boom” year in the industry – worldwide. Everything that came onto the market was sold. Banks financed at 108% of asking price and house prices were doubling within 6 months in certain areas. This fuelled the market for more properties to be sold and as a result more people entered the property market as agents. There were also no NQF requirements, so a person could really start selling houses within a week of registration.
When the worldwide property market went through a slump and even “crashed” in some countries, most of these agents were battling to survive and left the industry. Hence the much lower number of estate agents today.
Because PrivySeal is separate to the Fidelity Fund Certificate (FFC) and estate agents must activate their own PrivySeal Certificates, only about 23,000 agents are registered with PrivySeal. Of these, about 4,000 estate agents have been found to be non-compliant with the EAAB and do not show as registered on the PrivySeal system. Hopefully with time, estate agents will start to understand the power of proving registration and more might start registering with PrivySeal. To date there have been 37,000 FFCs issued for 2018. In 2008 there were 49,000 estate agents and 11,000 firms (60,000 – 37,000 = 23,000).
So if all the above is taken into consideration, as well as the figures from 2003, 2008 and now, it is clear that there can’t be 50,000 unregistered agents and that the quoted figure was, in my opinion, a misunderstanding.
Based on the Estate Agency Affairs Act it is correct and fair to refer to estate agents who are lax in renewing their FFCs as being “illegal”. Should such an estate agent have a commission claim or a customer who refuses to pay commission to the agent, said agent will have no legal recourse to claim commission, because that agent is not in possession of a valid FFC.
Recently the EAAB had an IT issue that resulted in estate agents and agencies having difficulty in renewing their FFCs and this problem was made even bigger with the last-minute rush by everyone to try and renew their FFCs in the last week before 31 October. This issue is being addressed and agents should remember that they will also make it easier for themselves by renewing their FFCs a few weeks before the annual deadline.
The fact remains that there are still a lot of unregistered estate agents and I would not even try to estimate a number. The registered estate agents can help to resolve this problem by reporting these unregistered estate agents to the EAAB and by submitting as much evidence as possible against them. And by educating buyers and sellers on the dangers of dealing with these unregistered agents, it could become a further uphill battle for the unregistered agents.