Why brokers are weakest link in property dealsTuesday January 24 2023
‘When it comes to property scams, it is time to hold all professionals in the conveyancing process accountable’ --William James.
The last couple of weeks have been bad for the property sector. Day after day, the industry has been treated to reports of one scam after another with buyers losing millions of shillings to dubious off-plan property deals.
Currently, any offering in the market containing the words ‘off-plan’, whether as legit as it can be might not attract as many buyers.
From the Cytonn debacle to Gakuyo Real Estate to Lesedi Developers to Uriithi Housing Co-operative to Kamuthi, you name it, the real estate sector’s off -plan brand has been soiled.
The development has led to heated debates among those whose livelihoods stand to be greatly affected and perhaps the group of professionals who can put an end to it all— property brokers or property agency.
Industry players agree that the first process in ensuring that one is not scammed relies on identifying the two key professionals whose input is key in the in the conveyancing chain, that is a conveyancing lawyer and a broker both of whom should have a track record, a reputation and the right professional qualifications to carry out buying or selling.
“Any buyer needs to be careful to select an agent or a broker that is of repute and who will not touch any shoddy deals. Lawyers who lead the process of property transfer should also be of repute,” said Kariuki Waweru, the principal partner in Valuer Kariuki and Company, a property agency.
While lawyers are easily identifiable, identifying legit brokers on the other hand can be a challenge. The property brokerage is so fluid in terms of entry that literally anyone can be an agent or a broker.
All one needs to do is to have information of an individual sourcing a property in a certain area and find out who has such a property and is selling.
“The task of the broker is that of a matchmaker and anyone can do it,” said Joseph Wakiru, a ‘broker’ based on Nairobi’s Mombasa Road.
“It is a simple marketing job. I can be here minding my shop and boda boda business then I hear that someone is looking to buy a property. All I need to do is call a friend and ask them if they know anyone selling and that’s it.
Those in the property brokerage industry say that the ease of entry into property agency has also compounded another problem, the huge number of brokers in the transaction chain driven by the allure of making it big from hefty commissions from even a single transaction.
“In a single transaction you can have even five or more brokers. Obviously not all might be as honest and information might be changed in the process leading to scams,” said Wakiru.
Joseph Karuga, the proprietor of Manis Real Estate, a property agency reckons that everyone should be careful when dealing with off-plan projects and go the extra mile in carrying out a thorough due diligence before committing.
“In simplest of explanations, off-plan purchase involves making payments towards the acquisition of a property that is in its early stages of construction of even before construction begins,” said Karuga.
“Needless to say, it is a risky affair. The buyer is putting in their stake prior to the delivering of the goods by the seller.”
Phanice Daveta, the chief executive officer of the Estate Agents Registration Board (EARB)—the body tasked with bringing sanity in the brokerage business said that they have identified the problem of ease of entry and are working at addressing the issue.
“We are limited in what we can do when one deals with a broker who is not registered with EARB. Those are left to normal prosecution. Agents who are registered with us know that adhering to a proper code of conduct is important for the profession. Like any professional body, there are consequences whenever a member is found to have broken the laid down procedures,” said Daveta.
“We are actively encouraging property agents to register with us. Currently there is a notion that EARB is strict in admitting new property agents. We are coming up with categories for agents, caretakers, valuers in the registration process so that everyone is accommodated and meets the minimum threshold requirements for professionalism to practice in the industry.”
EARB requires that agents have at least a form four certification and at least two years’ experience working with a registered estate agency and a certificate of good conduct from the law enforcement agencies.