By Kitso Dickson
Multiplying unregistered real estate agents are engulfing property commerce, and are sustained by an ignorant user-market, limited resources and loopholes that deny monitoring bodies a cut back on the acceleration of unwarranted ridicule.
– Fly by nights a bullish factor
– Market is distorted
– Regulator overwhelmed
Property market watchers admit these occasions are drastically re-shaping the industry’s outlook. Real Estate Advisory Council (REAC), say their shorter hands hinder plans to eject the episodes at play when quizzed by Boidus Focus. Spiralling figures of complaints concerning unregistered real estate practitioners are prompting the council to solicit support from registered real estate professionals, stakeholders and other entities to tamp down the culprits commonly known as fly-by nights.
REAC, a regulator, said it is intensifying efforts through educating the general public as well as occasionally publicizing names of registered real estate professionals in the media. “We have also decided to work closely with the law enforcement agencies to assist us in curbing this problem,” Mike Tumagole, Registrar at REAC said by mail, despite crying foul of manpower constraints. Currently seven cases are reported to the Police and the individuals are lined up for prosecution, he tells Boidus Focus.
Real Estate Institute of Botswana (REIB), a registered society of Real Estate Professionals in Botswana could not provide comprehensive records of perpetrators when reached for comment, except conceding it’s an all-day thing. Rather, the society said it takes up complaints with the incapacitated regulator.
Re-elected President of REIB, Modiredi Maruping, who was uncontested at the recent Real Estate Conference, concludes that, prevailing use of fly by nights by the market, playing down several warnings of the regulator tarnishes the real estate industry and subjects the sector to shame. “They do not have Professional Indemnity (i.e. an insurance that covers professional work) and are often not qualified or not trained to deal in land. When they make bad deals it’s the consumer who suffers badly, without recourse,” he said in an email.
“Some perpetuate corrupt deals so as to make a quick buck and are not concerned about professional reputation. As a result you come across deals where one piece of land being multiple times without passing title,” he states.
From his stand point, the public that has suffered tend to shy away from participating in future property deals as they deem estate agents to be unscrupulous. In fact, the government’s position to condone an invincible hand to regulate house prices is rather a spine for unregistered estate agents in his views. “The only way to hamper their operations is through enforcement of the legislation,” he says.
Real estate agents are governed by the Real Estate Professionals Act 2003 that prescribes a practitioner carrying out work in Botswana to have registered with the REAC. Offenders are liable to charges not exceeding P50, 000 or 3 years prison term.
Both REIB and REAC are constantly monitoring the industry landscape to ensure that, especially in the firms doing real estate, only registered persons sell, rent, manage and value property. Together they undertake radio, TV, and print media, sensitizing members of the public against using unregistered persons for their property deals or work.
Property firms themselves are fretful that real estate industry will suffer long-term irredeemable trust deficit unless more stringent measures are applied by Conveyancers, Banks, Councils, Magistrates, marketing counterparts to work with two estate bodies.
Director at Maison Properties, Nametso Maikano says REIB and REAC are wagging a steady war if the user market (corporates and individuals) increasingly persists to engage agents void of relevant qualifications of practice. “This is perhaps a time for a ‘Call to Action’ where all stakeholders involved, especially now while the market is still recovering, with banks starting to show interests and an appetite for lending,” she says in an interview with Boidus Focus.
Unless screws are toughened for practitioners to maintain physical presence, real estate professionals bet that more people are at risk of being misled by culprits, a consequence of undermining professionals within the monitored fraternity. However, end users are entitled to confirm the validity of a professional in the industry, by referring to REIB or REAC and/or asking the individual to produce proof of membership by virtue of the REIB Membership card.
But they insist fly by nights are preferable because registered professionals charge more expensive rates, baffling Maikano. She believes consumers only subject themselves to rip offs and results in the distortion of the market at large.
“Consider the sale of a 1 hectare plot in Ranaka valued at say P100, 000. A fly-by night, ungoverned entity, manages to sell this property for P150, 000 cash, an immediate 50% commission is experienced off of the sale, which is 10 times more than the average commission charged by a registered entity/qualified professional. Reality is plain and simple, 50% as opposed to an average/industry norm of 5% commission on a sale,” Maikano exemplifies.
Modiredi is the more puzzled. “If for instance you put up your house for sale at P500,000 and you ask the agent to put whatever on top for their commission, would you accept him getting P500,000 as commission if he or she eventually sold your house for P1 million?” he quizzes.
Fees for services in the real estate industry were set in 2008 under the Act. However, market watchers say property firms often charge commission anywhere ranging between 3% and 7.5% depending on the sweetheart deals behind closed doors. This is the believe by most, although it remains that properly trained real estate practitioners have a duty to advice a client so that he or she does not suffer financial losses. Most brokering firms charge the industry norm/average of 5% commission on sales, understanding that clients want a lower percentage option. The higher the valuation, the lower the commission charged.
Maikano, a University of Cape Town graduate says market distortions are triggered as pleasantries of the exorbitant profit margins sends markets haywire given that more and more people come into the market to take advantage of the profit margins. “If you have then purchased an overpriced plot and you further develop on this plot, your cost cannot accurately be captured in the valuation thus creating an unsustainable market boom.” She explained.
The premium cause of this, she says, is the unemployment rate. For the most part of a good decade, Botswana’s economy has experienced a very high increase in the unemployment rate which was the main initiating factor, she says. She adds that “these numbers were eventually absorbed by tender-prenuership, mostly into industry that the individuals have little to no experience in”.
Market distortions are feeding another worry. If 90% of values are distorted (such as the P100, 000 plus 50% commission), Maikano says, a dominos effect sets off, and figures guide financial institutions in the loans made. “These transactions are all plausible by the mere fact that these transactions involved a willing buyer and seller,” she adds.
What property experts discourage is the business of selling property without the qualification and registration to uproot horse-trading. If it is your own house or you are a marketing firm, that is different, but perhaps consider it this way, you cannot value your own house, but it is yours nonetheless. Get a qualified individual to do the work for you. You lose nothing by appointing someone equipped to do so. But rather, you gain peace of mind, more time to focus on what you actually are qualified to do and you are also less susceptible to fraud. Even pleasant enough, magnates say the integrity of real estate industry is divorced from disarray.
© 2015 – 2016, Boidus. All rights reserved.