Why do we need estate agents?
I had a presentation on home inspections this week to a group of estate agents who were very skeptical. These tough agents had previously been exposed to a home inspector from a rival company who had presented the case for home inspections to the local institute of estate agents.
Apparently this guy messed it up big time. He wasn’t confident. He didn’t know what to say, couldn’t answer questions about the industry and his accreditation. The net result was he was considered a joke, did himself a disservice and the industry as well.
I however was very confident, cocky even, as I know that we home inspectors at HouseCheck hold the moral high ground. So I started by anchoring the discussion around the fact that the South African property industry was not nearly as good as it was three years ago. They all agreed.
I then reminded these estate agents that Facebook wasn’t around seven years ago and that over 850 million people were now using Facebook. I pointed that the way we pass on information has changed. In the old days we used to teach frontline staff that if they upset clients they would tell between five and 11 people but now dissatisfied clients post it on Facebook where their 150 friends can read it and there is a possibility that some of those friends would share this bad publicity with their friends.
In fact the power of social media was highlighted last year when two dictatorships were toppled as a result of the ability to communicate on social media.
So how does that affect estate agents I asked? Well in the first place, I said, we should ask ourselves the question: Why do we need estate agents at all?
After all buyers can easily find property online and they can also get a very good idea of the optimal selling price of the property by buying a comparative price analysis online for R65. So really why would buyers need estate agents at all?
Of course these agents quickly defended themselves and came up with a host of reasons to justify their existence.
I agreed with them but then added: “The real reason people use estate agents is that they are nervous when buying a property because it has a huge price tag and they TRUST you enough to hold their hand. They trust you to link them to sellers, they trust you to help them sign the offer to purchase and they trust you to set all the processes in motion to get the bond and to register the sale.”
There was agreement.
Then I asked them: “So how do you reward these trusting buyers?” They looked attentively as I said: “You reward them by breaking their trust. You ask them to sign away their rights by telling them to sign the voetstoots clause.
“Essentially”, I said “you abuse your position of power.
They looked shocked and vehemently denied it. I let them go on trying to justify what they have just said and then firmly said: “You cannot morally justify breaking that trust. The moment you ask someone to sign the voetstoots clause you are asking them to sign their rights away. It doesn’t matter that you ask the seller in front of the buyer to reveal all that is wrong with the property. The seller isn’t qualified to give that opinion, he hasn’t been in the roof cavity, he hasn’t inspected the geyser.”
Whilst they were squirming I changed tack and said. “A home inspection is not a deal killer. It’s a deal maker.”
I pointed out that a buyer seeing a crack in the wall was a deal killer. It may only cost R3000 to fix that crack or less but that would weigh more on a buyers mind than the fact that he has to replace a kitchen which could cost him R80 000.
I told these agents: “A full disclosure of the condition of a property via an impartial home inspection is the only way to go.” Without home inspections, sooner or later the credibility of the estate agent who asks buyers to sign their rights away is going to come into question.
So I asked: “How do they want to be perceived in the market?”
I then answered all their questions about accreditation factually and as accurately as I could. I reinforced the fact that HouseCheck routinely supplied the estate agent with a copy of the report and I gave them a sample report as a case study of why they need a home inspection report. I told them that with HouseCheck they get the report within one working day. I told them all our reports are double checked by a property professional. I told them that we are the best available and finally I answered the question that the one agent had been dying to ask.
“Yes”, I said, “after commissioning a HouseCheck report the estate agent absolves themselves of all liability of come-back regarding the condition of the property (as pointed out in the recent Carte Blanche TV programme).
My ten minute presentation turned into an hour’s discussion. The principal concluded the meeting by saying here’s someone we can finally trust. They wanted brochures and they were going to try to get all their sellers to do inspections… Let’s see how it pans out.
However, the bottom line for all estate agents is that sooner or later buyers are going to ask themselves the question: “Why do we need an estate agent anyway”. Only those agents who build their credibility as experienced “honest brokers” who are able to fairly represent both sellers and buyers will survive into a consumer-driven future.
The only way for an estate agent to be an “honest broker” is to never allow a voetstoots clause into an agreement unless this clause goes hand-in-hand with a professional property inspection report. That way seller, buyer and estate agents are protected from post-sale come-backs and can also sleep easy at night with a clear conscience.