Have you noticed in the media what has happened to some property investment companies and syndication schemes in the present economical times? ..............Why? These businesses went bankrupt because the companies held no equity in their developments themselves. They typically sourced capital from investors to apply it to property developments and even bonded the remaining balance of their assets to the banks. When the economy was showing strong growth, these companies made very nice profits for themselves from the equity of their investors. When the economy turned down, the equity in these property investments were diminished and the first to loose their capital were the investors.

When you invest in your own property, you are in control of your investment. Your equity (capital Investment) is in your own property and the surety (property title) is registered in your own name. You cannot loose because you are part of an investment scheme where the fund or syndication has lost its equity.


How many people do you know who are wealthy from having invested in annuities or cash deposits?
and then.......... How many wealthy people do you know that don't own property?

There was a time when agencies charged 10% commission. As agencies were constantly recruiting new agents to increase their market share, competition in the industry was created from within. As more agents were competing for the same stock, one of the issues that occurred was commission rates that were being discounted to obtain listings. Another issue was that agents listed property deliberately over market value just to obtain the mandates.
About 6 years ago, commissions were at 7.5% when the IEAA tried to fix this rate for their members, while 5% is pretty much the norm at present. Some privateers advertise ridiculously low commissions, but they don't remain in the market for long and they never create the possibility of a budget to go big. Every business has operational costs to cover and employees have to make a living from the business. The lower the commission rate, the more strenuous it becomes for a business to survive especially in the present economical times and when lower priced property is moved.

In order to compensate for low earnings from low priced properties, one might consider to apply a minimum commission of R25000 to R30 000 per transaction, irrespective of price for all properties sold below R600 000. (It is the same work to sell a property for R300 000 than it is to sell for R900 000). By properly explaining this principal to both sellers and purchasers, you should not find any resistance in applying it. This principal ensures that the agency can maintain your businesses' profitability and that you do not suffer an imbalance between income and operational cost.

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Due to recent changes and interpretations of the following legislation:
DEBT COLLECTORS ACT, 1998 (ACT 114 OF 1998)
as amended by the Judicial Matters Amendment Act , 2005(Act 22 of 2005)
and the Judicial Matters Amendment Act, 2008(Act 66 of 2008) 
everyone who is rendering a debt collectors function, have to be registered with The Council for Debt Collectors. Overdue payments of leases (not paid by the 1st of a month) are viewed as debt and collecting such from tenants falls within the scope of debt collecting.
Estate Agents are not Debt Collectors. We at InCommercial Property Services found a solution to this by signing up with the credit bureau Tenant Profile Network (TPN), who is also registered as Debt Collectors. They render the service of Debt Collecting on behalf of their subscribers in the Estate Agency industry. Any requests for late payments are done through TPN instead as from our estate agency offices. TPN do however also list payment patterns of tenants to their credit profile. For this reason, the future payment pattern of rent payments will have a direct effect on the tenants rating at the credit bureaus. View www.tpn.co.za

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