Commission is the percentage charged by an estate agent or property negotiator to either sell your property or manage it, in the case of rentals.
An estate agent's job is really to introduce a buyer to your property, in the case of sales, who is willing to buy the property. By law, this is all that is required of an agent to be entitled to their commission. However, a good estate agent will ensure that both parties are happy with the deal and follow the sale right through to the eventual transfer of title to the new owner. Some agents want their commission as soon as an agreement is signed, or at the very latest when the purchase price has been paid.
In my experience, paying the commission on signing is foolish as the sale may still fall through, and most people don't have the money upfront without first being paid for their property. The second option which is paying the commission once the full purchase price is paid, is generally the preferred scenario for most agents. However, I feel this is ethically too soon to accept payment of the commission because the negotiators lose interest in the sale and won't check up on the transfer of title.
The best time to receive payment of commission is when title is transferred to the buyer. There is no law to enforce this, as commission is due on introduction, by law. But, a good estate agent should never be chasing their commissions, they should complete the sale to the very end, and when all parties are satisfied, then they should have their commission.
Now, there are two different types of mandates in Zimbabwe which you can give an agent. An open mandate allows more than one agent to sell your property. Whichever agent introduces the property to the buyer, that is the agent who is entitled to commission. Open mandates are quite tricky, as a non mandated agent may approach you to sell the house, and although you have not asked them to sell your property, you may think it is ok to let them. Your mandated agents can all demand commission if a non mandated agent sells your house. So a word of warning, only let those, who you have mandated, sell your property. You don't want to be paying double commissions or have to deal with quibbling agents.
The second type of mandate is a sole mandate. This means you have given one agent the mandate to sell your property. When that agent introduces the buyer, they are entitled to commission. When you decide to pay the commission as discussed above, is an issue you need to negotiate with your agent.
There is a big difference between a sole agency and sole selling rights. Sole selling rights are not very common in Zimbabwe. Sole selling rights entitles the agent to be the only person allowed to sell the property. This will also prevent the owner from selling the property himself. Basically, an agent with sole selling rights will be entitled to commission when the property is sold, regardless of whether that agent introduced the buyer. My advice is to avoid this type of mandate completely.
According to the estate agents' governing bodies the recommended commission structure is 5% plus 15% VAT on sales. 15% plus 15% VAT on residential rentals and 10% plus 15% VAT on Commercial and Industrial rentals.
You may charge 3% plus VAT on sales but nothing lower. You may charge as high a commission as you like, say 7,5%, but you must have a written acknowledgement from the seller stating they are aware that they are being charged above the recommended scale of fees.
Commission is costly, so make sure you have chosen a reputable agent who will put your interests above their own. Don't be bullied into paying commission early, but on the flip side, remember you are obliged to pay commission if your agent has introduced a buyer. If both sides are honourable, the business transactions will go smoothly.
Visit my website www.pageproperties.co.zw or leave a comment here and I will be sure to reply to you!
Wednesday 25 January 2012
Thursday 19 January 2012
Our Fiduciary Duty to YOU the public...
Our what? Exactly! Who even understands big words like that? Not many, but it is my job to understand, and explain it to you so that you know what is expected of someone who presents themselves to you as an Estate Agent.
Estate Agents in Zimbabwe are controlled by a very strict set of conduct rules that most of the public are completely unaware of.
When one becomes registered as an Estate Agent in Zimbabwe, they have had to have had at least 3 years practical experience in the industry and pass a rigorous set of exams. The most important of which is Estate Agency Practice. This covers all the legal aspects of property sales and rentals, as well as an Estate Agent's Duty to the Public.
I have listed below, in English, not legalese, what you not only can expect, but must demand from your Estate Agent:
1. An agent must put the interests of his client above his own at all times, and must treat the business dealings of his clients as well as he would treat his own, if not better. This means that you can and should demand confidentiality at all times from your agent. He should never try to purchase or lease your property himself, without having first made it very clear to you of his personal interest.
Any Estate Agent is obliged to offer you advice and professional knowledge about the industry, regardless of whether you employ his services. (Much like a doctor is obliged to save lives even if they are not his patients!)
2. Agents should not defame other agents, or treat them in a manner that is inconsistent with fairness, courtesy and professionalism.
3. Agents should not tout, i.e. should not try to canvass for business by door to door calling. They should not approach you if your house is on the market and ask to sell it. So many people don't realize this and an agent will call them and say, "I have a buyer for your house, please can I bring them around?" If the property is with another agent then you should tell the caller, that they must go through your appointed agent. Sellers can get themselves into all sorts of trouble when allowing a non mandated agent to sell their property as they will be liable for the mandated agent's commission, even if that agent did not sell the property.
4. Agents should not pose as buyers to illicit information from sellers or other agents.
5. Money held in an agent's trust account does not belong to the agent, and under NO circumstances is that agent allowed to use the money for the running of his business or personal expenses, (not even bank charges!) The agent should not move any money in the trust account out of the account without the written permission of the owner of that money. The number of cases that exist of agents "borrowing" money from the trust account and never repaying it, is quite frightening.
The deposit paid for a rental property belongs to the tenant until the end of the lease, and at such time the money will either be returned to the tenant or used to repair the property and pay outstanding bills.
At any stage that you have money in an Estate Agent's trust account, you can and probably should ask to see a statement. All rental properties should have a monthly statement of their account forwarded to the owner and tenant, if the tenant requests it.
If at any stage, you feel an agent is not fulfilling these obligations, you can report them to the Estate Agents Council, and the matter will be taken up by them. If you have been unfortunate enough to lose money from an Estate Agent's Trust Account, the Estate Agents Council has a Compensation Fund, which all agents have to pay money to each year, so that the public can be reimbursed for their losses. Bet you didn't know that...I am letting out all the secrets today, aren't I?
But remember, you have the right to expect the best from the person you are entrusting with your most valuable possessions, so don't settle for less...
Visit my website for more on property www.pageproperties.co.zw
Estate Agents in Zimbabwe are controlled by a very strict set of conduct rules that most of the public are completely unaware of.
When one becomes registered as an Estate Agent in Zimbabwe, they have had to have had at least 3 years practical experience in the industry and pass a rigorous set of exams. The most important of which is Estate Agency Practice. This covers all the legal aspects of property sales and rentals, as well as an Estate Agent's Duty to the Public.
I have listed below, in English, not legalese, what you not only can expect, but must demand from your Estate Agent:
1. An agent must put the interests of his client above his own at all times, and must treat the business dealings of his clients as well as he would treat his own, if not better. This means that you can and should demand confidentiality at all times from your agent. He should never try to purchase or lease your property himself, without having first made it very clear to you of his personal interest.
Any Estate Agent is obliged to offer you advice and professional knowledge about the industry, regardless of whether you employ his services. (Much like a doctor is obliged to save lives even if they are not his patients!)
2. Agents should not defame other agents, or treat them in a manner that is inconsistent with fairness, courtesy and professionalism.
3. Agents should not tout, i.e. should not try to canvass for business by door to door calling. They should not approach you if your house is on the market and ask to sell it. So many people don't realize this and an agent will call them and say, "I have a buyer for your house, please can I bring them around?" If the property is with another agent then you should tell the caller, that they must go through your appointed agent. Sellers can get themselves into all sorts of trouble when allowing a non mandated agent to sell their property as they will be liable for the mandated agent's commission, even if that agent did not sell the property.
4. Agents should not pose as buyers to illicit information from sellers or other agents.
5. Money held in an agent's trust account does not belong to the agent, and under NO circumstances is that agent allowed to use the money for the running of his business or personal expenses, (not even bank charges!) The agent should not move any money in the trust account out of the account without the written permission of the owner of that money. The number of cases that exist of agents "borrowing" money from the trust account and never repaying it, is quite frightening.
The deposit paid for a rental property belongs to the tenant until the end of the lease, and at such time the money will either be returned to the tenant or used to repair the property and pay outstanding bills.
At any stage that you have money in an Estate Agent's trust account, you can and probably should ask to see a statement. All rental properties should have a monthly statement of their account forwarded to the owner and tenant, if the tenant requests it.
If at any stage, you feel an agent is not fulfilling these obligations, you can report them to the Estate Agents Council, and the matter will be taken up by them. If you have been unfortunate enough to lose money from an Estate Agent's Trust Account, the Estate Agents Council has a Compensation Fund, which all agents have to pay money to each year, so that the public can be reimbursed for their losses. Bet you didn't know that...I am letting out all the secrets today, aren't I?
But remember, you have the right to expect the best from the person you are entrusting with your most valuable possessions, so don't settle for less...
Visit my website for more on property www.pageproperties.co.zw
Wednesday 11 January 2012
Some advice for tenants...just to be fair!
Before you ask, no I did not die, nor did I go to hospital or even on holiday...I just have not had anything of value to add to your cluttered minds, and as the old saying goes, " Rather keep you mouth shut and let others think you are stupid, than open it and remove all doubt!"
Anyway, I finally have something of value to discuss today...well, I think it's important anyway. Several of my friends are tenants, either in business premises or residential properties. As you can imagine, they always have loads of questions for me, most very mundane and not worth going into here. But one particular question has come up several times and I was concerned at the lack of knowledge of the public, and because of this ignorance how they are being ripped off by my nemeses, the unscrupulous estate agents in Zimbabwe.
The question is...Is it right that the estate agent is charging VAT on top of the rental price stated on the lease agreement? Ok, so go and have a look at your lease. If it says x amount per month excluding VAT then, yes you need to pay VAT on top. But this scenario is very unusual as all prices in Zimbabwe are generally quoted including VAT. If the lease does not state whether the VAT is included or excluded, then it is assumed to be included, again, as this is the standard procedure for prices in Zimbabwe.
If you are being asked to pay for VAT on top of the rental and it does not clearly state the VAT is excluded from the price on your lease, then the simplest thing to do is to refuse to pay it. The estate agent trying to pull a fast one on you, is hoping to get more rent for his landlord, and more commission in his pocket.
Here are the things which you are, by statutory law expected to pay as a tenant:
1. Phone Bills
2. Electricity
3. Water Bills
4. Garden and pool maintenance
5. House cleaning
6. Insurance of household contents
More often nowadays, the tenant will also be responsible for the rates or levies on the rented property. This is perfectly acceptable, provided that this clause is in your lease. If it is not, then you are within your rights to ask the landlord to pay the rates and/or levies.
The landlord should pay for all structural defects and defects in fittings, like pool pumps, borehole motors, geysers, as well as insurance of the property and buildings. However, if you have signed a full insurance, repairs and maintenance lease (otherwise known as FRI lease) then you will be responsible for all costs associated with the property. If you do have such a lease, then your rental should be below the going market rate for a similar property as the one you are leasing.
Don't get caught by estate agents preying on you ignorance. Always have someone in the know check over your lease BEFORE you sign it. You can also insist on the rental price being inclusive of VAT so that there are no hidden expenses.
Visit my website http://www.pageproperties.co.zw for a look at the properties on offer. You can also leave me a message and I will be sure to get back to you.
Anyway, I finally have something of value to discuss today...well, I think it's important anyway. Several of my friends are tenants, either in business premises or residential properties. As you can imagine, they always have loads of questions for me, most very mundane and not worth going into here. But one particular question has come up several times and I was concerned at the lack of knowledge of the public, and because of this ignorance how they are being ripped off by my nemeses, the unscrupulous estate agents in Zimbabwe.
The question is...Is it right that the estate agent is charging VAT on top of the rental price stated on the lease agreement? Ok, so go and have a look at your lease. If it says x amount per month excluding VAT then, yes you need to pay VAT on top. But this scenario is very unusual as all prices in Zimbabwe are generally quoted including VAT. If the lease does not state whether the VAT is included or excluded, then it is assumed to be included, again, as this is the standard procedure for prices in Zimbabwe.If you are being asked to pay for VAT on top of the rental and it does not clearly state the VAT is excluded from the price on your lease, then the simplest thing to do is to refuse to pay it. The estate agent trying to pull a fast one on you, is hoping to get more rent for his landlord, and more commission in his pocket.
Here are the things which you are, by statutory law expected to pay as a tenant:
1. Phone Bills
2. Electricity
3. Water Bills
4. Garden and pool maintenance
5. House cleaning
6. Insurance of household contents
More often nowadays, the tenant will also be responsible for the rates or levies on the rented property. This is perfectly acceptable, provided that this clause is in your lease. If it is not, then you are within your rights to ask the landlord to pay the rates and/or levies.
The landlord should pay for all structural defects and defects in fittings, like pool pumps, borehole motors, geysers, as well as insurance of the property and buildings. However, if you have signed a full insurance, repairs and maintenance lease (otherwise known as FRI lease) then you will be responsible for all costs associated with the property. If you do have such a lease, then your rental should be below the going market rate for a similar property as the one you are leasing.
Don't get caught by estate agents preying on you ignorance. Always have someone in the know check over your lease BEFORE you sign it. You can also insist on the rental price being inclusive of VAT so that there are no hidden expenses.
Visit my website http://www.pageproperties.co.zw for a look at the properties on offer. You can also leave me a message and I will be sure to get back to you.
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