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Estate agents don’t always give the best advice

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Sales staff in the real estate sector do not pay particular attention to educating themselves and becoming professionals at the required level.

There are 400 registered estate agents, plus another 270 sales assistants who can be involved in property deals.

Bearing that only registered estate agents/assistants can sell the owners of a property, the agents must be well educated on the subject.

The level of knowledge of real estate agents is not what it should be, and most (I guess around 70%) know only the basics, with most key details left out.

The potential buyer/seller who places trust in them may find difficulties during and after a sale.

After 42 years of experience, numerous instructive memos, and lectures, we let a flat for six months through a salesperson who entered into a contract without two witnesses per party (should have been four in total).

The result, the contract is not valid, and to avoid problems, we did not charge our usual fee (less than 12 months lease, requires 2+2 witnesses).

On another occasion, a client (not ours) was “promised” by the agent (not us) that he could build on an agricultural plot.

The potential buyer asked us for advice, and we told him otherwise.

A deal of €300,000 fell through, and the other agent and the seller are blaming us for it.

Upon our encouragement and having visited the Planning Office, the buyer was informed that he would need a “deviation” from the zone to build (a never-ending procedure with uncertain outcomes).

Others and including developers eager to sell permanent residency visas declare that permit holders can travel in all EU countries without a visa.

This is not true. Visas for EU countries will still be required.

Estate agents registered as such can charge a sales commission of up to 3% (+VAT) on the sales price.

Yes, they can go higher, provided a written agreement between the seller and the agent exists.

If an agent is not registered, any level of commission is not acceptable (illegal) or tax-deductible by the Cyprus authorities.

These and others are simple things, and it gets more complicated.

When you start being involved in more complicated matters, you will be amazed to discover what some agents will come up with and the misinformation a buyer/seller gets.

Some agencies have staff with no salary and a 50% commission with all sales expenses charged to the sales staff.

It results in a “who cares” attitude and a large turn-around of staff with constant newcomers with little or no knowledge.

Basic knowledge for the sales staff is necessary, as is the supervisor’s.

VAT

A recent example is the matter of VAT (of 19%) when charged for land.

If, for example, a plot of land has a building on it, it may not be subject to VAT, provided the building density (based on the prevailing zones) is more than 10% than the plot/property density allows.

Did you know if it is less than 10%, then VAT is applicable?

Estate agents should make clear to the buyer whether a property has a title deed since this is of major importance (if not available and depending on the circumstances, the sellers may lose).

In the case of a comprehensive development project with common expenses, sales staff are recommended to examine the status of the project’s balance sheet and comment on the general agreement.

Does anybody bother?

If we return to the visa/passports, the parameters, as are the requirements of securing them, are changing.

For this reason, sales staff must be kept constantly updated.

These and other matters are of major importance and may be overlooked by agents. For this reason, our office has recently extended its education programme by introducing seminars on real estate details, including statutory tenancy, common expenses regulations, and insurance.

The lack of education is not a Cypriot phenomenon; it happens in all countries, including the UK.

A client of ours who bought an apartment in central London found out another person was living there under a previous sales contract (not common, mind you, and we suspect our client did not follow the due diligence procedures), whereas getting an eviction/repossession of real estate, for non-paying tenants in the UK, takes 12-24 months.

With the market moving upwards for urban properties, matters get a bit loose, and the exercise of stricter control on the sales process becomes more important.

 

By Antonis Loizou FRICS – Antonis Loizou & Associates EPE – Real Estate Valuers, Property Consultants & Estate Agents