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:



Source link