Are Real Estate Agents Due Commission

The right of an Estate Agent to earn commission is enshrined in common law. In general, commission is due when the Estate Agent has perform a client’s mandate, regardless of the amount of time or effort it took to perform the mandate.

In South Africa, there is no limit to the amount of commission an Estate Agent can charge. In the upper end of the market, this often results in impressive earnings. These facts, combined with the public perception that an Estate Agent is often seen to do very little in comparison with the handsome rewards received, has encouraged many people to join the Estate Agency industry. At last count there were more than 72,000 Estate Agents registered in South Africa. Although, in practise, not all are actively working as Estate Agents. Many Estate Agents are active only when the property market is buoyant and go dormant when the market slows down. Nevertheless, they are qualified to act as Estate Agents and may resume activity whenever they feel, with the provision that they comply with the requirements of the Estate Agencies Affairs Act.

Giving rise to commission dispute

Before we go on, it should be noted that most property deals go through without dispute. However, this does not mean that of the deals that go through there was no reason for dispute. Simply not knowing is often a cause for valid claims not being made, mostly on the side of the client. For such cases there is nothing one can do in retrospect, since all wrongs committed by Estate Agents are automatically made right upon date of transfer. No need to repent or visit confession, all sins are just magically wiped away.

In most cases commission disputes arise simply as a result of misconception by the public as to their rights and duties when they give an Estate Agent a mandate. However, dispute also arises due to misconception of Estate Agents as to their rights and duties in performing a client’s mandate. Both types of misconception can be easily avoided if Estate Agents spend more time being “frank” about discussing commission before accepting a mandate. In practise, this does not always happen, whether because of forgetfulness, lack of diligence or because of pressure to get the mandate. Discussion surrounding commission is often relegated to a mandate form, placed in front of the client with the expectation of signing. This document merely serves to capture the basic details and rarely elaborates on definition of terms, rights or duties at length.

While it is sound business practise to record in writing the amount of commission and under what circumstances the mandate will be considered fulfilled, some mandates omit small points that are not in the Estate Agency favour or the document itself serves to cover “conditions of absence in agreement” covered by common law. For example, under common law, in the absence of an agreement to the contrary, an Estate Agent is not entitled to commission simply because, over a period of time, there has been a conscientious effort to carry out a clients mandate.

Compliance requirements

We have noted that certain common law principles govern an Estate Agent’s right to commission and that standard contracts are employed to cover such rights. We have also noted that such documents can fail to explain terms and can even be employed to protect the agent from common law principles that are not in the Estate Agents favor. Our remedy to reducing the potential for conflict is to encourage more open discussion and consultation of commission with clients by Estate Agents.

However, assuming such discussion were to take place, how is a person know whether or not an Estate Agent is due commission when they themselves do not have enough information to ask the right questions during such discussion.

In this section we cover some of the points clients should know, compliance points that are often neglected or forgotten by even the most seasoned and professional of Estate Agents.

The first thing to know is that the Estate Agency Affairs Act and the Code of Conduct both have a direct impact on an Estate Agents right to receive commission. One of the most important stipulations of the act is that an Estate Agent may only receive commissions on transactions concluded during a period for which the Estate Agent is in possession of a valid Fidelity Fund Certificate.

Second thing to know is that Estate Agents who have not complied with the prescribed training requirements are not allowed to receive commission on agreements where they have drafted or completed clauses in a sale or lease agreement.

In addition to these requirements section 8 of the [Code of Conduct] sets forth conditions under an Estate Agent shall not be entitled to commission.

The implications of these three points are often not made clear to clients. Rarely, if ever, is a client furbished with a copy, or presented, an Estate Agents Fidelity Fund Certificate or a copy of the Code of Conduct. Incidentally, the Fidelity Fund Certificate is printed with a business card sized tear-off capable of fitting into a wallet where it can be easily kept like a drivers license and presented when required. There should be no reason why a professional Estate Agent with a valid Fidelity Fund Certificate should not wish to present it.

The act goes one step further. In addition to an individual Estate Agent having to hold a valid Fidelity Fund Certificate, the Agency Company, all participating directors and any person promoting or canvasing immovable property are also required to hold a valid Fidelity Fund Certificates. In the event that an Agency does not have valid Fidelity Fund Certificate, or any of the Estate Agents or employees of the Agency, all people employed with such agency are not entitled to claim commission.

In an industry with more than 72,000 agents, the public can easily be convinced to mandate the services of non-valid Estate Agents. Such persons, while operating illegally are not bound to operate under the Estate Agency Affairs Act or the Code of Conduct. As a result the Estate Agency Affairs Board, the organisation responsible for protecting the consumer, can only bring a criminal case against such persons and has no power to sanction any conduct. Whereas, if the Estate Agent is operating with a valid Fidelity Fund Certificate, failure to comply with requirements constitutes conduct deserving of sanction that may see the Estate Agents license to operate revoked.

Performance of the mandate

Terms of mandate differ, but in general terms a mandate is seen to be fulfilled when:

1. A buyer is introduced to the seller who is both legally and financially able to buy the property.

2. A binding contract of sale is concluded. It is worth noting that a contract with suspensive conditions is not binding until such time as such conditions have been met.

3. A transaction and its terms are substantially in accordance with the clients mandate.

Point 3 is interesting. The word “substantially” gives rise to a special twist. Since it means that, unless a client makes express note that commission will only be paid when the contract is concluded on “exact terms stipulated”, an agent is not required to execute a mandate to the exact letter. For example, if the client wants 500, 000 for a property and the highest offer attainable is 450, 000, the client cannot refuse to pay the full commission agreed.

A further twist of this case can evolve where an introduced buyer does not enter into a sale, but instead enters into a lease agreement. In this case, despite a lease agreement being in place, the Estate Agent is not deemed to have substantively completed the mandate and is not due commission as a different transaction to that which was mandated has resulted.

In practice we see this problem occurring all the time. An Estate Agent concludes a contract of sale at a price less that what the buyer was prepared to accept. Then the seller wishes to negotiate the commission down.

Effective Cause

Many people are under the impression that all they need do to qualify for commission is introduce a buyer and seller from wish a contract of sale is concluded. This is possibly one of the most common misconceptions shared by both Estate Agents and clients alike.

In fact an Estate Agent is required to do the above and be capable of demonstrating that he or she was the effective cause of the resulting transaction, north withstanding other factors. In reality many factors must be considered in order to demonstrate effective cause, including:

* How much effort did an agent put in. Simply giving a buyer and seller each others telephone numbers is not enough.

* The time between introduction and sale. If buyer and seller conclude a sale shortly after introduction, the argument that the Estate Agent was the effective cause is strong. However, if the sale agreement took place after a considerable period of time, the argument would be more difficult to prove.

* The extent of consultation provided by the estate agent. If through an Estate Agents consultation one or more obstacles to conclusion of the sale where removed, then the effective cause is in favor of the Estate Agent. However, if the obstacles were removed without the help of the Estate Agent, then the effective cause is most probable to lay with the buyer and seller.

* Frequency of interaction. How often did the Estate Agent communicate with the buyer and did the agent cease negotiations with the buyer at any point in time.


This article has briefly highlight a few of the main points concerning the rights and duties of Estate Agents and clients using their services. While some may see the information provided as a means to try avoid paying Estate Agents commission, the ability to do so legally is not easy. However, clients that feel they have genuinely not been served by an Estate Agent are not without recourse, if they have the information pertaining to their rights and duties as clients.

Having said this, it should be noted that Estate Agents are not paid for good intentions or hard work, only for bottom-line results. As a result it is not possible to measure an Estate Agents performance by the amount of work they put into a deal. Many Estate Agents do put a tremendous amount of work into their deals and take great pride in adhering to professional conduct. By the same token, an Estate Agent can earn considerable amounts of commission for relatively little work, but in this case runs the risk of getting nothing whatsoever if the mandate is neglected.

In closing it could be argued that the expectations and needs of clients would be better served if clients were better informed about both their own rights and duties and those of Estate Agents. However, in order for service levels to be improved, clients must also be willing to enforce their rights and not accept invalid Estate Agents or negligent service.

Real Estate Agents and Roles of an Agency

Agency is a relationship existing between two parties called principal and agent, and in the case of property, a Jamaica real estate agent has the function to create a contractual relationship between the principal and third parties.

The Creation of Agency

The power of the Jamaica property agent to act may arise in any one of five ways:

1. Express Authority

2, Apparent Authority

3. Ratification

4. Necessity

S. Presumption of wife in the case of cohabitation.

1. Express Authority

The express authority for an agent to act on behalf of a principal (otherwise called the vendor) can be made either in writing or orally. No formality is required except where the agent is appointed to execute a deed; his authority must be by way of a deed. That is, he is to be given a Power of Attorney. While being trained Jamaica realtors are sensitized of this in a special apartment guide for Jamaica.

2. Apparent Authority

This arises where the principal represents to a third party that the agent is authorized to act on his behalf, intending that the representation be acted upon and is acted upon by the third party. The principal is bound by the agreement entered into by the agent. This is common place for most Jamaica home rentals.

3. Ratification

Where the agent has no authority to contract on behalf of the principal or exceeds such authority the contract is not binding on the principal. The principal may however afterward confirm and adopt the contract so made. This is known as ratification.

For Ratification to take place the following conditions must be present:

a) The agent must have contracted expressly as agent for a named principal.

b) The principal must have been in actual existence at the time of making the contract. He cannot there pore bind a company which was not formed at the time of making the contract,

c) The contract should be capable of ratification. Thus a void contract cannot be ratified.

d) The principal must at the time of the ratification have full knowledge of the material facts.

e) Ratification must be of the whole contract.

Ratification is retrospective in its operation, that is, the parties are put in the position they would have been in if the agent had when the contract was made, the authority he purported to have had. This is possibly the most fundamental with respect to knowledge of the Jamaica real estate market. Most investors are made aware of ratification in a guide to investing in Jamaica property.

4. Agency of Necessity

This arises by operation of law and occurs where one person is entrusted with another’s property and due to some emergency it becomes necessary to do something to preserve that property. Although the person entrusted with the property has no express authority to do the act necessary to preserve it, because of the necessity, the authority is presumed.

Before the Agency of Necessity arises three conditions must be satisfied;

a) It must be impossible to get the principals’ instructions.

b) As a necessity, commercial value must be the catalyst for the creation of the agency

c) The agent of necessity must act in the interests of all parties concerned.

5. Agency of Cohabitation

At common law where a husband and wife are living together, the wife is presumed to have her husband’s authority to pledge his credit for necessaries judged according to his style and standard of living. Though not a legal representation of the principal, this happens more often than not in the divestment of Jamaica homes for sale.

The presumption of Agency arises from cohabitation and not from marriage. It has been held to apply equally in the case of a woman living with a man as his mistress; the presumption can be rebutted if the husband proves:

a) he expressly forbade his wife to pledge his credit;

b) he expressly warned the supplier not to supply his wife with goods on credit:

c) his wife was already sufficiently supplied with goods of the kind in question;

d) his wife was supplied with a sufficient allowance or sufficient means for the purpose of buying such as goods without pledging the husbands credit,

e) The order though for necessaries, was excessive in extent or having regard to the husband’s income, extravagant.

Where the husband has been in the habit of paying his wife’s bill with a particular supplier, his wife’s agency will be presumed and he can only escape liability by expressly informing the supplier that his wife’s authority is revoked.

Main Differences Between Specialist Lettings Agencies and Estate Agents

If you are looking to let out your home then you have three main options available to you. The first is that you can let your home privately, you could also use an estate agent or you could use a specialist lettings agency. Typically it can be too much hassle letting your home out privately. It causes a lot of worry and unnecessary problems. So for many people the ideal option is to get professional help. But how do you choose between an estate agent and a specialist lettings agency?

Understanding your options

The obvious choice for many landlords is usually an estate agent. They are well known and they are generally respected. However, when it comes to lettings estate agents may not always be the ideal choice.

Think about the role of the estate agent. They are there mainly to buy and sell homes. They do not specialise in lettings. Letting sis just a small part of the services that they offer and so this can cause potential problems for landlords.

Viewings are not always arranged and interviews are not always overly thorough either. So when you give them control over letting your home they may not always find the best tenants to suit your property. It has also been said that estate agents are not always overly professional with landlords either. So the quality of service is not always what you would expect it to be. Their focus is primarily on sales and so you may want to instead consider a specialist lettings agency.

Specialist lettings agencies are there purely for lettings. They know the market better than anybody and they strive to bring you the best tenants. They will give you 100% dedication and the service you receive is usually second to none. You will have a consultation to specify what type of tenants you are looking for and the agency will advise you of appropriate rent arrangements. They will interview potential tenants and ensure that you get the right ones for your property. They can be the best choice if you want fast results and a service dedicated to your needs.

Overall there are many things that you need to consider before you let out your property. Deciding who will help you to let out your home is one of the most important decisions that you will need to make. Whilst estate agents do have a high profile, they do mainly put all of their attention into selling houses. So it may be a much better option to go with a specialist lettings agency instead.

How to Find the Best Real Estate Agents

There are many players in the world of residential real estate such as appraisers, home inspectors, property managers, contractors, bankers, mortgage loan offices, government agencies etc. But the workhorses of the typical real estate transaction depends on those people that act as coordinators in the entire process- yes, they are real estate brokers. But in the midst of the agents, how should you find the best one? You can find him easily. All you need are traits which will help you to understand the efficiency of the agent.

An ideal real estate broker is similar to a conductor of symphony in nature. Both coordinate with different players to turn an imaginative transaction into reality. The role of the agent changes at the different stages of this process. Sometimes, he acts as salesperson; sometimes buyer’s advocate; often as analyst, business manager, negotiator, consultant, marketer etc. Apart from these, they play many other roles to ease the task of their clients. Whenever you are searching for an efficient agent, you should observe whether he has these ten traits or skills (discussed below) or not.


The best agents will always keep themselves up-to-date on the latest market trends and strategies. The local market will help him to give a better service to your clients.

Network connections:

Successful real estate agents have a wide network of contacts within the market they serve. These connections must include other real estate agents in their locality or neighbourhood, brokers, potential buyers and sellers, appraisers, home inspectors, mortgage loan officers etc. An efficient broker will always keep educating himself throughout his career.

Local housing market:

An established agent always appreciate and utilizes the nuances that make a specific community’s hosting market and pricing strategies as well. His focus should always stay on local real estate market which allows him to establish his differences from his competitors.

Detail information:

A good broker should always pay close attention to each detail of your property. He should conduct his research on the property in an organized manner gathering all the important information and communicating with several sources.

Engaging personality:

The agent should have a pleasing personality which can convince the both parties. At first, it is the personality which you would notice about him at your first meeting.

Interest in houses & architecture:

The agent should have interest in this field of real estate. When you will be talking to him, you can find the reflection of his interest in his conversation. Interest leads one to knowledge. So, an immensely interested person will have knowledge in his favor.

Hustle and tenacity:

As a top producing real estate broker , one should have a great work ethic. The agents must possess tenacity to pursue every lead and of course the hustle to aggressively market your properties to give you profits. It requires not only time. It also requires smart work, putting in the right amount of time and arranging everything wisely.

Honesty & integrity:

Honesty and integrity are required in every profession. Real estate is not an exception obviously. Honesty helps to be well known and demandable in the market. Clients come seeing the background which also includes honesty and ethics.

Self-motivated entrepreneur:

A positive and motivated person is the best one who can engage people in a property. People love to deal with motivated agents. If your agent has this quality, he will be able to make each party happy and satisfied. So, this is also important thing which you should try to point out in the nature of your broker before assigning him.

Problem solver mindset:

Each client prefers to receive some creative solutions or ideas regarding their cases. Good real estate agents know how to showcase a property in order to make it marketable and demanding in the market.

These are the primary skills which you should notice in your real estate brokers. One person may not have all the skills. But he should possess at least the basic skills such as knowledge about current market, analytical power to research the market and assume the future situations and of course loyalty.

Duties of the REO Agents and Why Do Banks Need Them?

Listing a property for sale and searching and selecting the qualified buyers for this property are the responsibilities of a real estate agent or broker but the responsibilities of REO agents are more from those of the brokers. The real estate agents sometimes jump to sell the REO properties also because these properties are profit earning opportunities for the agents. The agents must not start trying their luck in REO properties before they actually know the duties of a REO agent and the difference between them and the REO agents. The agents must not be only skilled in selling but they must also have the good knowledge of the real estate market of local area.

Duties of the agents

The real estate owned properties cannot give any profit to the agents before they actually do not know what they must do to sell these properties. The major duties of an agent willing to sell the real estate owned properties are listed below.

The agent is responsible to schedule the trash outs and clean the foreclosed property.

If there are any utilities during the listing then the agent has to pay for the utilities.

The agent is also responsible for the tasks like lawn maintenance and snow removal.

The agent is also responsible to negotiate the contract between the buyers and the sellers. This negotiation includes the sale terms and the dates of payment and agreement signing.

Why the lender or banks need agents?

The agents must understand what the lenders or the banks need from them. The valuable knowledge of the agents will not only help to sell the properties quickly and minimize the losses of the bank but will also reduce the dependence of the lender or the bank on other parties such as appraisers and house management companies.

What the banks will do in absence of the knowledgeable agents?

If the banks do not get an agent who know the responsibilities and whose knowledge is good enough to sell the property, the banks will hire the appraisers to know the value of the home that they want to put on sale. The banks will also need the services of a house management company to maintain the house while it is listed for sale in the market.

So to save the expenses in hiring the appraisers and house management companies, the banks or lenders need the services of good REO agents.