Professionalisation of the Estate Agency industry (The Bugle)

Last week I wrote the first exam in over twenty years since leaving University. It was stressful. I remember my UCT student days fondly but for some reason cannot remember the exam part as much. It was the Professional Designation Exam for the National Certificate Real Estate (Level 5) qualification that all principal estate agents are required to complete. Every estate agent in South Africa is required to complete the level 4 equivalent. The changing face of the estate agency business is something you may have noticed or come across recently if you have been a buyer or seller. The required education standards are raising the bar for entry into the industry and going a long way to ensure the on-going professionalisation of the estate agency business. This is a good thing. The value I took from having to study two very thick lever arch files of information in preparation for the exam, was a substantially better knowledge of the legal framework and enormous bulk of existing legislation regulating the property market. The Estate Agent’s Code of Conduct featured prominently in this exam and the insights you get while studying every aspect of this ethical code makes for a better agent. Higher levels of knowledge and the requirement for continuous professional development for estate agents, is going to be very good news for buyers and sellers, tenants and landlords.

The property market boom times of 2003 to 2007 saw the industry swell to approximately 90,000 registered estate agents within South Africa. Although the real economic crunch did not hit us until 2008, it was during 2007 that the impact of the National Credit Act was felt for the first time. The National Credit Act 34 of 2005 was passed by Parliament on 10^th March 2006 and the main provisions of the Act came into effect on 1^st June 2007. This comprehensive piece of legislation regulates the granting of credit to consumers. Its purpose is to protect consumers and regulate credit providers. The Act regulates consumer credit, promotes responsible credit granting and prohibits reckless granting of credit. The impact of this legislation meant that the credit extension policies of financial service providers, including providers of mortgage bonds to the property market, changed overnight. The result was that there was a dramatic drop-off in mortgage bond extensions and the number of transfers registered in South Africa went from 44,000 per month to around 22,000 per month. The effects were felt throughout the industry. The number of registered estate agents declined by over two thirds to well below 30,000 today. With a two-thirds fewer estate agents in the market and half the transactions, the average estate agent today is actually better off and a whole lot more educated. The required education standards have created a barrier to entry for aspirant agents both in terms of time and cost. Part-timers will disappear from the industry and be replaced by committed and motivated individuals who are serious about making real estate their profession. My own two decade journey within the property market has lead me to understand that the more you learn, the more you realize how much more there is to know.

(Author: Andreas Wassenaar, Published in The Bugle, 20 Nov 2013)