The South African property market is gaining momentum once again, after a lacklustre performance over the past four years, with all sectors experiencing upward movement.
“The lower end of the residential market, where properties are priced under R1,5 million, is currently the least buoyant due to restrictions on bonds,” says Lew Geffen, founder of Lew Geffen Sotheby’s International Realty. “Banks are hesitant to lend against properties under current financial conditions. If investors have access to the necessary finance, however, there are excellent opportunities for them at this end of the market as well as at the very top end, where there is less competition for big ticket properties.”
Bryan Biehler, director of Huizemark Franchising Group, agrees that the property sector is in a growth phase, albeit slow. “We will continue to need housing, especially closer to commercial hubs. There is a great need for affordable housing in high density developments, like clusters and sectional titles, rather than individual homes.”
New industry regulations are posing a challenge, says Geffen. “One of the biggest perks of becoming a real estate agent has always been how quickly you could get to work and start earning. Under current regulations though, an estate agent must serve a 12-month apprenticeship during which time they might not make any money.
They also need to subsidise their own tools of the trade — a car, a laptop and a smartphone — and this excludes many people from the business.
Biehler says legislation is constantly changing when it comes to educational requirements and the property transactional bill. “One of the biggest challenges for franchisees and all agents in this sector is that it’s more difficult than ever for buyers to obtain mortgage bond finance.”
“The banks are reluctant to award bonds and their lending criteria are extremely stringent,” adds Bill Rawson, founder of Rawson Properties.
“With the price of essentials increasing fast, people are finding it very difficult to save money for a deposit on a home. Another challenge is the current shortage of high demand stock. There are simply not enough well valued homes for sale and for rent in many of the high demand areas.”
During the recession the real estate sector shrunk dramatically. “Where there used to be 85 000 agents registered in the country, there are now 40 000,” says Geffen.
“Many smaller South African agencies have been absorbed by larger agencies that couldn’t weather the tough economic climate without the backing and infrastructure of a larger agency. There have been no new competitors in our market but, due to consolidation, there has been a shift in who the competitors are.”
A major achievement for Lew Geffen Sotheby’s International Realty was bringing the Atlantic Seaboard operation alive over the past 12 months. “It was one of our top performers in 2012 and sold a record number of high-end residential properties in April,” says Geffen.
The Sotheby’s International Realty global network now encompasses more than 600 offices and almost 13 000 sales associates in 47 countries and territories worldwide, having grown by almost 7% in the past year despite difficult real estate conditions in many markets. The group’s year-on-year turnover for the 2012 financial year was up 24%. “In South Africa, Lew Geffen Sotheby’s International Realty also continues to expand with new franchises recently opened to serve home buyers and sellers in the Ballito, Vaal, Blouberg and West Coast areas.
“The property market is experiencing an upturn and the outlook for Lew Geffen Sotheby’s International Realty over the next 12 months is very positive,” he adds. “Increasing numbers of South Africans want to be their own bosses. They want the flexibility and the good income that being a realtor offers, and I expect the numbers of agents registered with us to begin growing dramatically over the next 12 months. More existing agents are likely to become franchisees too.”
Rawson Properties set some ambitious goals for the business in 2009 and 2010. “Our aim was to have the largest national footprint of all South African estate agencies by the end of 2015, and to achieve 40% turnover growth per annum. By the end of 2012, we had grown by 36,75% year-on-year and had established 51 new franchises. We now have 200. We have also broken into new areas and have recently expanded into KwaZulu Natal.”
Huizemark too has achieved excellent figures in the past two years, with 23% per annum growth in turnover, and healthy growth in the number of franchises all over the country. In addition, says Biehler, its agents and principles comply with the new educational requirements.
“We’re expecting continued growth and are excited about the future,” he says. “We are breaking into new territories and we’re confident about the country and the opportunities it offers. Some of the hot spots for new franchises are areas like Lepalale, Sekunda, the West Rand, the East Rand and Kimberley.”
A career in real estate
A new entrant to the industry is required to achieve the Further Education and Training Certificate (FETC): Real Estate (NQF level 4), to complete a 12-month internship under the mentorship of an experienced estate agent, and to write and pass a professional designate exam (PDE) at the end of the internship.
A career in real estate is not about making a quick buck, but a lifelong commitment and passion for property and people. Balancing the needs of buyers and sellers is not easy. Showing homes to buyers needs to be on their schedule if you want to keep them happy and eventually sell them something.
With sellers, attending inspections, showings, closing meetings and more can make it difficult to maintain a regular schedule, so a flexible approach is key.
The ideal franchisee
The ideal franchisee has a strong entrepreneurial spirit, says Geffen. “They have business and life experience. Combining these characteristics with the network and expertise of the Lew Geffen Sotheby’s International Realty brand will kick-start your real estate business.”
Biehler says Huizemark seeks experienced young property professionals with a passion for property and people, unrelenting enthusiasm and a determination to succeed.
“We look for what we call ‘possibility-thinkers’,” he adds. “They also need to buy into our brand and the Huizemark way of doing business, where integrity is at the top of the list.”
Rawson agrees that the number one requirement his team looks for in a franchisee is integrity. “We look for people who can be relied on to be honest at all times. They should also have business acumen and a 24/7 work ethic. They must be outgoing and enjoy working with people.
“Many of our new franchisees are ‘converts’ from independent agencies who want to be part of a major, well branded group. Others are ambitious, qualified estate agents from real estate companies who want to run their own businesses.”
Rawson says rookies are not excluded. “We mentor newcomers in their first year and help them get the necessary NQF4 and NQF5 qualifications. A certain amount of previous business or real estate experience is valuable, but the systems and training supplied by us will enable any franchisee who is willing to work hard, to be successful and develop the business rapidly in the first two years.”
If you have a keen interest in property, but not in being an agent, a home inspection franchise is a smart option. Professional home inspection is a growing industry. Eric Bell, CEO of Inspect-A-Home, sheds some light on why.
What are the biggest challenges in your business?
It’s about getting the general public to understand that every house sold has defects and that sellers do not disclose these, which makes a detailed home inspection vital.
Have new competitors affected your business?
New companies try to copy us, but they soon learn it’s not so easy and many disappear quickly. We are happy to have valid competition as that is healthy.
Can you list some of the biggest achievements of the company?
Inspect-A-Home is by far the largest inspection company with nearly 30 franchises countrywide. I have also been appointed as chief executive of InterNACHI SA (InterNACHI is the International Association of Certified Home Inspectors in the USA), and I oversee all inspectors and inspection companies that want to become InterNACHI registered.
What is the outlook for your franchise over the next year?
We expect serious growth as there are exciting developments taking place which will change the home inspection industry. By 2014 we hope to have 50 franchises throughout southern Africa.
Who is your ideal franchisee?
The key to success is to always be enthusiastic about what you do when dealing with your clients as they will be impressed by your devotion to your company. Running your own business requires serious dedication and even when things go wrong, you must always remain optimistic and stay on top of the situation.