Bill Rawson, Chairman of the Rawson Property Group, has drawn attention to the fact that the Estate Agency Affairs Board, which at present still has complete control over the estate agency sector, is now proposing that all property companies have their full accounts audited by independent qualified chartered accountants.
This follows on from the ‘necessary and very welcome’ ruling that all estate agency trust accounts should be vetted by independent auditors.
Although he supports the idea in principle that all property traders’ financial transactions be monitored, Rawson says that the additional cost is likely to be crippling to smaller firms, some of which in the current conditions are only managing some half a dozen sales per annum. One or two are managing even less, he says.
Chartered accounts are obliged to charge high fees because their work requires great care, meticulousness and intensive investigation.
“Every time they sign off on a set of accounts, their accounts are on the line,” he said, “and if they make any mistakes, they can be held culpable. This is, therefore, highly resourceful work for which high fees are justifiable.”
Nevertheless, says Rawson, those fees are beyond what many small firms can afford. If this ruling goes through in its present form, it will force many small property traders out of business.
The latest EAAB ruling is part of a whole movement to regulate estate agencies thoroughly and while this is no doubt necessary, it will re-enforce the current trend which, in his view, is creating near-monopolistic conditions in which only the biggest and best resourced firms will survive.
“As Chairman of the 4th biggest estate agency group in South Africa,” said Rawson, “it might be assumed that I would welcome this – but I do not. The small, often family-based agencies have a vital role to play in giving dedicated service to specific areas. In the less affluent areas they are particularly important to the future of the industry as a whole and the local residents. We have, therefore, to keep the barriers to entry as low as possible.”
“Right now, what we are seeing is that the cost of property marketing, signage, I.T. communications, advertising and branding in all its forms are rising so fast that the smaller firms are no longer able to compete - and increasingly come to groups like Rawson to join as franchisees,” says Rawson, “the result of this is that, our group and others are growing exponentially but this does not mean that we would like to see the demise of small firms throughout the country - we certainly do not want that.”
A further result of these high costs, added Rawson, is that agents will be forced to raise commissions. Already, he says, the industry is seeing commissions of 7-8% in specific cases where more effort is required and this trend will become more pronounced in the year ahead. This, he said, is logical because the new NQF4, NQF5 and other mandatory educational requirements are stringent and call for considerable dedication on the part of agents, some of whom have to spend as much as 1500 hours studying to attain the required standards.
