Prospective property sellers and buyers are warned to be careful when dealing with several estate agents who are marketing the same property.

Sellers need to be aware of certain risks or they could end up paying double commission, says Gerhard van der Linde, principal of Seeff Pretoria East.

Van der Linde quotes a recent Supreme Court of Appeal ruling that emphasised that buyers and sellers need to be aware that they could be liable for unexpected estate agent commission claims on property sales.

“The court upheld an appeal against a KwaZulu-Natal High Court decision where an estate agency that had introduced a buyer to a home was not entitled to the agent’s commission.”

He explains that an agent from another company had learnt the buyer was interested in the property.

She contacted them when she discovered the seller was willing to reduce the price, the sale was concluded and she was subsequently awarded the sale’s commission.

Although the first agency had no mandate to sell the house, the Supreme Court appeal overturned the decision indicating the agency had taken the buyer and her husband to the property.

If that agent had not introduced them to the property, the couple would not have known the property was on the market. The first agent was thus the effective cause of the sale and entitled to the commission.

The court stated it was notoriously difficult where there were competing agents, to determine who was the effective cause and that it may be that more than one agent was entitled to the commission. Sellers could then find themselves liable to pay commission to two agents.

“A seller appoints an agent usually under a written mandate to find a willing and able purchaser in exchange for an agreed commission,” says Van der Linde.

If there is no mandate and several agents from different companies are involved, the eventual sale agreement could contain a warranty by the purchaser that they had not been initially introduced to the property by another agent thus providing indemnity to the seller should another agent successfully claim commission, he says.

It is absolutely essential that buyers and sellers are aware of this possibility, he points out.

“Always clarify this situation with your agent/s and make sure that you are not unwittingly going to end up paying a double commission.”

He adds that a sole mandate is preferable as it protects all concerned and the mandate can be drawn up for any period of time that the seller feels will be suitable.

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Home sellers expecting too much?

Limited access to finance and the affordability of homes are hampering property sales according to South African estate agents who claim that the extensive number of available properties are making buyers more discerning.

Samuel Seeff, chairman of Seeff Properties says that buyers are currently “in the pound seats” although many sellers are still trying the get prices that were last seen in 2007 when the property market was buoyant.

He says that if sellers are still expecting to achieve the 2007 price levels then the house is likely to be on the market for a long time and the number of offers will be limited and certainly below the 2007 levels.

Berry Everitt, chief executive of Chas Everitt International Properties says the average drop in price required to achieve a sale is around 12 percent, indicating that most sellers are expecting too much for the property they have on the market.

Everitt says that because there are so many properties on the market at this point, many buyers will not even consider making an offer on a property that is over-priced and will move on to something that is more realistic.

Homes that do not attract any interest after several weeks on the market are, according to Everitt, possibly over-priced and the seller should consider dropping the price to increase interest in the property and attract offers on it.

In a newsletter produced by Pam Golding Properties, the company points out that the property market has show a 30% improvement in sales volumes for the year to date but the limited access to credit is preventing even more sales from being finalised.

“This means that, in the present market, correct pricing of properties is more critical than ever as buyers are faced with affordability issues and have a good selection of properties from which to choose,” says the newsletter.

Everitt concedes that many sellers have the view that buyers are at liberty to make any offer on a property but he says that sellers must now appreciate that most buyers are well informed when it comes to property prices and know what homes in a particular area are selling for.

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