Kick-back policies in estates hamper free market forces | Legal Articles


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Kick-back policies in estates hamper free market forces

When buying or selling a property in a gated residential estate, it is worth considering the facts about a free market environment. 

For instance, if you consider the kick-back policies a few secured estates have in place around the northern suburbs of Johannesburg and in Sandton, it is obvious to see that this market is not exactly free. 

Gated estates - Conveyancing attorneys Cape Town

Estate agent commission deductions 

There are instances where the management companies of upmarket estates deduct a percentage of the value of a property automatically (usually from the estate agent's commission).

Should the estate agent or the agency he or she works for not be listed on the estates panel of real estate agencies, then a minimum of 20% of their commission would be deducted from the sale of a home.

Highly skilled real estate agents get the best prices

Home sellers hoping to get the best possible sale price should make use of the services of highly skilled real estate agents. Such agents are able to achieve these results despite the highly competitive market. 

The fact that these prices can be achieved is the basis for a free market environment, however, in cases where the Home Owners’ Association of an estate are cash flow-hungry then the situation changes. 

HOA Accreditation Process leaves sellers worse off

Top agents have been put off from working with estates due to HOA’s charging accreditation fees in the past, in order for them to have the so-called privilege of marketing homes on their estates. 

They also reduced the commission of estate agents by 20% which only served to discourage them further. 

HOA’s have limited the choices available to their clients by taking this greedy approach. 

And since the top performing estate agents are not interested in having dealings with them, the sale of homes in estates has fallen to agents who aren’t so skillful. 

And due to the amount of properties that need to be sold in estates, the quality of the service provided by such agents is lost over time. The result is that the best price a seller can achieve for their property is often not obtained. 

In short, the entire accreditation process leaves sellers worse off and limits their opportunity at getting the best value for their property. We can only hope that this system is abolished one day.

Van Deventer & Van Deventer Incorporated - conveyancers Cape Town & Johannesburg

We support a market where property sellers and buyers can benefit from the skills of qualified and experienced estate agents. Contact us if we can assist you with any property related queries.


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