Would you invest millions of Rands with an unlicensed investment broker? It’s highly unlikely that you’d take the chance. And yet some consumers work with estate agents without first ensuring they are licensed with the Estate Agency Affairs Board. In most cases your fixed property is the single biggest investment you have. Would you really risk it with an unlicensed agent?
The Estate Agency Affairs board licenses estate agencies and individual estate agents every year. It is illegal to trade without a Fidelity Fund Certificate (FFC) issued for the current year. If an agent or agency is denied a Fidelity Fund Certificate by the Estate Agency Affairs Board (EAAB), it is often for good reason.
Before you list your property for sale it would be prudent to ask the agent for a copy of their personal FFC, and that of the company they work for. If they’re not licensed for the current year then you should not be doing business with them at it’s illegal.
What are the risks? For one, you are not covered by the EAAB Fidelity Fund – which insures you should a licensed estate agent run off with your trust money. The EAAB also has strong powers to deal with estate agents who engage in unethical conduct. If you fail to ensure that your agent and agency are licensed then you lose that protection.
Unethical conduct by unlicensed agents can cost you dearly. Dishonest business practices and fraud have sadly cost careless consumers significantly.
The same is true of property rentals. Only a licensed agent and agency are allowed to engage in property rentals. Estate agents usually hold the rental deposits in trust. If they are not licensed then you have no protection if they disappear with your money.
Fortunately the real estate industry over the past 10 to 15 years has done much to improve their levels of professionalism. Incidents of fraud are the exception, not the rule. But there are still unlicensed agents in the marketplace who are waiting to pounce on the unwary victim.
If you encounter anyone who purports to be an estate agent but does not have a current and valid FFC for themselves and their company, or they are party to irregular transactions, then you are encouraged to report this to the EAAB by calling the Whistleblower Hotline – 0800 223 2250800 223 225. You are able to remain anonymous should you so wish.
On the positive, you do benefit from the protection offered when you do work with a licensed estate agent. Not only should you benefit from the Estate Agents Code of Conduct, but ethical and licensed estate agents should be able to provide you a valuable service, thereby justifying their fee.
Bear in mind that when you deal with a private seller or private landlord you do not receive the same protection. Monies held by them are not covered by an FFC. So when dealing privately, ensure all trust monies are held in an attorneys trust account, where you also receive the same protection.
Principal of Harcourts Platinum, and Director of Harcourts South Africa
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