A tough property market and stricter qualification imperatives means that going forward, fewer, yet more professional estate agents will be available to service buyers and sellers.

This in turn is changing the dynamics of the sector dramatically and the era of the 'moms and pops' estate agency and weekend dabblers is now all but over.

So says Linda Erasmus, CEO of property group Fine & Country South Africa who notes that there is still a lingering perception that the real estate industry is a 'soft option' populated largely by individuals who 'can’t crack it' in other professions.

"Nothing could be further from the truth thanks to the recession and new legislation governing the industry amongst other factors", she says.

"The general public tends to regard the real estate industry as an easy, 'get rich quick' line of work and that estate agent's commissions are largely over-inflated.

"The fact is, property marketing is an extremely demanding occupation and the industry was particularly hard hit by the global meltdown given the lack of confidence in this market following the 'sub-prime' fall-out, general lack of financial liquidity and the fact that bank lending dried up to a large extent.

"Evidence of the economic crisis manifested in the form of a massive estate agent fallout. At the beginning of 1996, the number of South African real estate agents totalled 80 000. Today, only about 30 000 are registered."

Erasmus says that although the recession is chiefly to blame for the fallout, the fact that agents are now required to adhere to strict qualification criteria (as set down by the Estate Agency Affairs Board) has also played its part in reducing the number of agents. Up until July 2008, anyone who could afford the registration fee to enter the property industry could do so.

"Given this unregulated state of affairs and the fact that these self-made, overnight agents appeared to reap significant financial sums during the heydays preceding the economic fallout and it's no small wonder that the industry is viewed with such incredulity.

"Its clear that there were simply too many estate agents capitalising in what was a unique market and standards suffered. Today's market is very different and estate agents have had to up their game considerably to remain viable.

"The industry is consolidating and there will be fewer agencies each populated by seasoned property professionals going forward. It's a scenario that will be embraced by the good and abandoned by the bad and ultimately consumers will be the winners. "

(Crosshead) A whole new ball game
At present only 15 000 houses a month are being sold in SA. Therefore, given that there are approximately 30 000 registered agents this theoretically means that an agent is selling a home every second month.

"Estate agents also have to contend with a number of other factors. They have to be familiar with local property market trends and statistics, take into consideration each buyers budget constraints, personal taste and requirements, be au fait with legal best practice and policies and realistically value a property, a skill in itself.

"They also have to advise the seller on strategies as to how to sell their house quickly without offending them, source suitable buyers, build up a buyers list, network, advertise, list the property, prepare all of the marketing material, negotiate fair deals and ferry around clients to properties. All of which is done at their own cost.

"Agents also have to parry other property hungry estate agents, deal with warring couples and are routinely snubbed by clients who don't arrive for meetings or decide not to buy or sell after being chaperoned for months. Estate agents also have to deal with touchy sellers who refuse to budge on their selling price, are called upon 24/7 and work seven days a week."

All this aside, even when a house is 'sold' Erasmus says a large number of sales still fall through because bond applications only occur after the house is sold. At present, approximately 60% of all bonds are being declined: therefore agents end up selling the house twice. Even when an agent does conclude a deal, payment is only received three to six months afterwards.

Furthermore, assuming a 50/50 split with the agency on a commission of 7% which comes to approximately R40 000 on the average R1m house this means that an agent is earning approximately R20 000 a month before expenses.

Agencies also have to cover their own costs from their portion of the commission. Those who get this balance right make a profit of 10% after costs if they're lucky says Erasmus.

"In short, those who choose to do business with qualified estate agents can do so safe in the knowledge that they are dealing with someone who is hard-working and will look after their interests. Laid-back, band-wagon type estate agents simply haven't and won't survive in this industry anymore says Erasmus.