REAL ESTATE AGENCY



REAL ESTATE AGENCY
COMPILED & SUMMARIZED BY
NWABUISI DENNIS
(DEPARTMENT OF ESTATE MANAGEMENT)
ABIA STATE UNIVERSITY UTURU

            The term Real Estate Agency is derived from the principle of estate agency. An agent can be referred as one that does something on behalf of another person who is the main individual that is supposed to perform that action. In other words, an estate agent is one who liaises between a property owner and the purchaser or interested party whose interest is found in the property or asset of the real property owner. An estate agent performs action according to the instruction that he receives from his principal. An estate agent is sometimes regarded as the middle man between the contracts of both parties. This contract can be either as a form of lease, sub-lease or even outright sale or disposal of property. It is an estate agent that brings both the buyer and the seller together; make them agree in terms and conditions for the contract to hold.
 The need for estate agency arose as a result of the migration of people from the rural areas to urban centers in search of houses; it is now the role of estate agents to guide them properly in securing homes and accommodation as the case may be. Estate agency also came to be as a result of landlords not been close to their properties so there came a need to handover these properties to a reliable person (professional) known as an estate agent who oversees the property for the landlord and also generate the necessary incomes required of such properties. In some cases these agents are regarded as caretakers of the property.






THE NEED FOR ESTATE AGENCY
·         Problems of absentee landlords: as explained above, when property owners (landlords) are not opportune to be close to their properties as a result of work or location, now gave rise to the need for estate agent to oversee things for him in his absence and give him feedback on the property.
·         Technological changes in building construction: due to technological advancement in the building industry which gave rise to the construction of sophisticated buildings and complex structures which requires a knowledgeable individual that understand these innovations known as an estate agent of professional.
·         The growth of cooperate ownership in real property: over the years, people have developed interest in the building industry and therefore form cooperate bodies and ownership of such structures which require the knowledge of an estate agent who liaises between them and the public as well both in leasing out, negotiations, loans etc.
·         Problem of urbanization: This is one of the major needs for real estate agency because of the increased number of people migrating from rural areas to urban centers; there came the need for real estate agents to help these individuals in locating buildings ready for rent or sale. They save the purchasers the stress of looking for buildings if practiced well in Nigeria unlike other developed countries like the United States of America.
·         Tax factors: the estate agent advices the landlord on the necessary taxes liable for him to pay when necessary so that he doesn’t over pay taxes. The estate agent understands the tax necessary for each building because he is a trained professional in the field.

ROLES OF AN ESTATE AGENT IN A PROPERTY MARKET
-          He provides necessary information about properties available for transactions in a property market.
-          He ensures protection of the interest of both the seller and the buyer in a property market.
-          He manages the transactions that goes between the buyer and seller of interest and also gives his professional advices to both parties.
-          Apart from exploring and exposing prospects for all classes of buildings, he also observes and monitors the activities going on in a property market.



FORMS OF ESTATE AGENCY PRACTICE
There are so many practices of estate agency;
i.                    Sole Agency: this is where an estate agent has sole instructions of the property owner to market and possibly conclude contracts and transactions on his behalf(owner)
ii.                  Joint Agency: this is a situation whereby two agents are involved in the transfer of one particular interest on behalf of the property owner.
iii.                Sub Agency: this is a situation whereby a sole agent goes further to transfer his right to perform his duty to another agent who has to be under his supervision.
iv.                 Multiple Agency: this is where so many agents are involved in the transfer of interests, this leads to competition between the agents and also urgency situations gives rise to this type of estate agency practice.
APPOINTMENT OF AN ESTATE AGENT
            This is an important stage in real estate agency in the sense that no agent is allowed to act unless there has been an agreement between him and his principal in the sense that the property owner gives him an express authority to act on his behalf, this is mostly done in writing as prescribed by the law and there must be acceptance of such appointment by the other party.
An estate agent is liable to be;
(a)   Obedient to his principal and respect his authorities
(b)   He must be loyal and humble to his principal in the sense that he is managing and foreseeing things on his behalf.
(c)    He must carry out his duty in good faith, confident and trust and avoid negligence.
(d)   He must be reasonable in judgment, prudent and skill in the field.
(e)   He must maintain proper account of the owner’s property and operate in a separate account.
(f)     He must at any point in time carry out his duties and roles.
(g)   He must be prudent in giving notices to the principal owner.
Rights of the principal are;
(a)   Rights to recover damages for want of skill.
(b)   Right to obtain accounts and records of property.
(c)    Rights to resist agent’s claim for commission if the agent has gone to act as the principal owner and not just a mere agent.
For an agent to completely practice, he must possess the title of the property and make sure that he is dealing with the real property owner, check for right of occupancy, he should also check for dimensions and real site inspection for conformity, also he is liable to check if there are restrictions on such property in any manner.

FACTORS TO POSSESS CHALLENGES ON AN ESTATE AGENT
·         His personality: he should be smart and gentle to pose confident in his clients and to win trust. The agent must be of good character and the ability to satisfy client’s needs must be borne at heart at all times. He must be keeping good and reliable company at all times because the people you follow influence your action and gives people impression about you.
·         Moral and motivation: he needs to motivate himself and make things happen, no dulling.
·         Presentation and avoidance of mis-statement:
·         Perseverance in right direction:
·         Ability to bring buyers and sellers together quickly: he must be an exposed person who actually knows where to get his buyers and sellers through his contacts.
·         Ability to close deal as soon as the minds of the parties meet

THE RELATIONSHIP BETWEEN THE LANDLORD AND THE TENANT
This implies that a landlord and a tenant who enters an agreement has to do such in writing, carefully expressing themselves whether it is going to be a lease or a tenancy as the case may be.
THE RELATIONSHIP BETWEEN THE AGENT AND THE TENANTS
There should be a pleasant relationship between the tenants and the agent. When an agent is been discriminated by tenants then the principal or the landlord should endeavor to redress the agent or remove him as the case maybe. Therefore, an agent should be in good terms with the tenants and treat them with care because they are the source of income for the principal. An agent has the responsibility of updating tenants on latest developments in the building industry. He should avoid bringing in bad tenants to corrupt the existing ones. He should remind them of the time to renew rent early enough for the tenants to be aware.
A TENANT is one who is occupying a property that is not his but by virtue of payment of rent to the real property owner.
AN ASSIGNMENT is when a tenant disposes his interest under a lease from a landlord. But note that a tenant has no right for assignment unless on special occasions and conditions as agreed by him and the landlord, but he can sub-lease by right as well.
            In any case where a tenant makes some improvements that are removable in premises, he must make sure that such improvements must be removed before or at the day of the expiration of his lease or tenancy. If not, it is regarded as that he has waived his right and cannot later enforce it.
NOTE: It is important to note that the Landlord is responsible for all external repairs and the tenant is responsible for all internal repairs as the case may be.
A tenant can be evicted either in a total manner or a constructive manner which is a case whereby the landlord discomforts the tenant or goes contrary to the agreement by invading the privacy of the tenant knowingly or unknowingly.

CONTRACTS FOR SALE OF REAL ESTATE
According to law, any contract been carried out by parties in real estate must be in writing and endorsed by a recognized lawyer in case of litigation. Any contract carried out and not signed by a lawyer can be voidable by the law. And also parties to enter into contract must be legally capable of doing so. If the vendor is been represented by an attorney, then the power of attorney must be clearly stated with such effect clearly written and signed by the vendor himself. Then there must be clear details of the property in question, the dimension of the site and its location and neighborhood. There must be details of easements or restrictive covenants about the property, other details like electricity bills, water rates etc. if there are existing tenants on the property in question then a due notice has to be given to them to notify them that the property is for sale in the market.
            Furthermore, the term of payment is to be clearly stated in the contract agreement between the parties. In this also the vendor may decide to relieve himself of the liability or burden if the property Is on mortgage or in debt already. In a case of If the vendor is incapable of complying with the contract then he is liable to repay the purchaser his deposit.




PROMOTION AND ADVERTISING IN REAL ESTATE AGENCY
            Promotions include those activities that are carried out by agents to provide informations about properties under their care that can lead to sale of their products and services. Advertising is one of the major means of circulating information to the final consumer or purchaser or the target audience, which also requires skill to carry out advertising functions.
Advertisements must be able to achieve the following;
·         It must catch the eye of the audience
·         It must arouse interest of the audience
·         It must arouse the desire to go for such property.
RULES OF ADVERTISING
Ø  Always address your advert to some human instinct that must appeal the target audience which must convey the pride of ownership, security, parental appeal, saving impulse, prestige, comfort instinct, investment and speculation.
Ø  Always frame an advert form the buyers perspective bearing what type of buyer the agent have in mind as a potential buyer.
Ø  Study your competitors advertisements, find out why the adverts appeals the buyers and try to make your own good enough to compete.
Ø  Avoid necessary use of colors unless it is appealing to the eye of the audience, preferred colors are black background and white write up.
Ø  Advertisements should be honest and precise.
Ø  Adverts should not be bogus and too ambiguous for the audience to understand them
Ø   Never permit an advert to run indefinitely, i.e. try to iterate the adverts either by design or structure to catch the desire of the audience.
Ø  Select a good position for adverts so that the audience can always have a good view of it.
Ø  Using good headlines would help in making a purchaser develop interest like “why pay rent if you can own your own house” this is quite a good strategy.
Ø  Use a careful designed symbol as trademarks and identification that is flashy, colorful or of unusual design to the audience as contact address which may arouse the reader of such advert.



CLASSESS OF ADVERTISING IN REAL ESTATE AGENCY
I.                    General Advertising: It is aimed at placing the advertisers name and business before the public mainly found in estate journals.
II.                  Institutional Advertising: It is done by institutional boards and firms because individuals have confidents in such organizations that have modes of conducts and they feel safe also in doing business with them.
III.                Specific Advertising: Its objective or goal is usually specified whether the property is out for sale or lease or mortgage. It’s specific in nature always.

FORMS OF ADVERTISEMENTS IN ESTATE AGENCY
v  PUBLICATIONS: this means the use of printed media or means of communicating to the audience:
o   Newspaper: very effective but has its own disadvantages also. Illiterates that can’t read find it difficult but its advantages is that it covers a wide range of places and locations.
o   Journals: these are other types of publication used for advertising in real estate agency which are mostly produced by firms and organizations. They also have details of properties in question just like the newspaper.
o   Magazines: this is another type of publication but it’s more expensive than the newspaper itself, colorful in nature. It’s just like the journal itself.
v  OUTDOOR ADVERTS: this kind of adverts require the use of either sign post of post boards for advertisements, somehow it is less expensive than the publications itself but one thing there is the location of the post so that the target audience can see it.
v  MEDIA/INTERNET: this is the use of mass media in reaching out to the target audience in the sense that media like the radio, television, internet etc can be used as a means of advertising in this field. This kind of advert covers a wide range but at the same time it’s expensive in nature.
v  DIRECT CONTACT OR MAILING: this is a situation whereby the agent either goes directly to his target audience to engage in discussion about properties or he does so using a letter of introduction. Here also, careful presentation is required to convince the buyer. He can also use handbills or even office meetings at his office.



STAGES INVOLVED IN ESTATE AGENCY
Ø  LISTING: this is a stage whereby the estate agent has to have a complete proof of ownership from this principal, he also demands for certificate of occupancy of property to avoid misconducts and mishaps during contract with the prospected buyer. He has to make sure that the property is free and ready for sale or lease and to let as well. Then he goes further to fix a date with the principal to carry out inspection of the property, check if the property has existing tenants, whether there are existing bills like electricity bills, water rates. Careful inspection has to be carried out in this stage because it is the blue print for the contract to begin proper. It is also at this stage that the agent agrees with his principal on the rent reserved.
Ø  PROSPECTING: this is the second stage that the agent now has to go and scout for prospective buyers of such properties under his portfolio. He does this by using various advertising techniques and media in reaching to his target audience. Whenever the property market is slow, then he has to go and search for buyers that’s what makes him competent amongst other quacks. Careful prospecting should be carried out to avoid scouting for bad tenants if the property is to be used for lease or to let.
Ø  NEGOTIATION: this is followed up after prospecting of buyers has taken place. Then the agent now invites the prospected buyer for a meeting. It is in this meeting that negotiations now will begin proper. The agent has to have a good negotiation skill and also he should be careful as not to disclose all secrets about a property to the buyer because the deal has not been sealed yet.
Ø  PRESENTATION: This is mostly done in writing by the agent to the prospected buyer, stating in brief informations that will enable the buyer to have a clear picture of the property in question. At this stage the agent has ascertained the financial capability of the buyer to know the terms to use.
Ø  CLOSING, PAYMENTS AND FINAL SETTLEMENT WITH CLIENTS: this is the final stage of the contract where an agreement has been reached by both parties. It’s now time for payment. This is also the stage where the professional skill of the agent is tested in the sense that money issues cause problems between people. The agent has the money be deposited to him directly to his principal’s account who he is acting on his behalf. If there was an outright sale of property, then the agent now has to immediately re-structure the title of the property to the buyer and then ensure that the agreed commissions are paid. Finally, the agent writes to his principal, thanking him for allowing him do business for him.


COMMUNICATION SKILL IN ESTATE AGENCY
This is a very important skill that an estate agent has to acquire. Statistics has shown that 90% of estate agents profession is mainly communication with clients and principal. This can be done using so many means and mediums as explained below;
(a)   Telephone: this is the most common means of communication since the invention of the GSM. This makes it easy for the agent to cover a wider area within minutes.
a.       Advertisement calls: These kinds of calls come from buyers and interested audience either as a result of adverts that they must have seen somewhere. The agent now has to engage such buyer in a preliminary meeting.
b.      Sign calls: these are calls that come also from housing consumers as a result of bill boards or sign posts of “to sale or to let”.
c.       Referral calls: this is a kind of call that comes from a buyer that has been referred to you the agent s a result of your previous job well done.
(b)   Letters: these are written materials from either the agent to his client or principal. It can be done to introduce an agent to a community or a location. Letters can also be used for prospecting as well; it can also be used to reach out of town clients. Letters are used by agents to thank their clients and principals for enabling him do business with them.
(c)    Person to person contact: this is another communication skill that requires much more composure for the agent in the sense that not just the personality is been looked into but also the dressing and confidence of the agent is tested. Four stages are involved in this stage;
                                                              i.      The agent has to carefully listen to the client
                                                            ii.      He has to think ahead of the client
                                                          iii.      He has to rationalize the statements been made by the client and also he has to read in between the lines.
                                                           iv.      He has to summarize the client’s briefings and tries to understand exactly what the client is trying to say.
(d)   Body Language: this is also another vital communication skill that requires a great deal of focus and concentration by the agent to enable him know when to close a deal or whether to continue. He has to carefully watch the client or how he reacts to the discussion about a property. No matter how cunning one may be, the subconscious state of human beings tends to show the way one feels about a deal.



PROBLEMS OF ESTATE AGENCY
1.      Agency laws in Nigeria:
2.      Estate agency practice in Nigeria – unbridled profession:
3.      Selection of tenants:
4.      Dangerous tenants:
5.      Versatility:
6.      Types of Houses:
7.      When the owners changes his mind:
8.      Quackery in Agency:
9.      Hazards of estate agency:

Comments

Popular posts from this blog

INTRODUCTION TO ESTATE MANAGEMENT

IMPORTANCE OF COMPUTERS IN ESTATE MANAGEMENT

METHODS OF VALUATION