REAL ESTATE AGENCY: The Roles of Practitioners in a Democratic Setting

REAL ESTATE AGENCY:

The Roles of Practitioners in a Democratic Setting

                                                         By

                                                 Kuye Olusegun

INTRODUCTION

Agency is a comprehensive word used to describe the relationship that arises when a person is appointed by another to act on his behalf. In this regard, agency could be said to be the relationship existing between two parties, where one party known as the principal appoints another known as agent to enter into a contractual obligation with a third party on his behalf, and act in his best interest. The Real Estate Dictionary (2004) defines agency as, “The legal relationship between a principal and his agent arising from a contract in which the principal engages the agent to perform certain acts on the principal’s behalf”. Another definition of agency is that, it is, “a relationship by which one party, usually the agent, is empowered to enter into binding transactions affecting the legal rights of another party, usually called the principal, as, for example, entering into a contract or buying or selling property in his name or on his behalf” (McGraw-Hill Dictionary of Architecture and Construction, 2003).

Furthermore, Sofowora (1999) described agency as ‘a special types of contract in which one party called the principal expressly or implied agrees that the other party called agent should act for him for the purpose of bringing him into a contractual relation with a third party’. However, the agreement between the principal and the agent can be made in writing or oral, by conduct of the parties or ratification. The agent is required to act within the limits of the authority conferred on him. The principal will only be bound to a third party by acts that are within the agent’s authority. Anything that the agent does in excess of the enabling authority will not bind the principal, unless the principal ratifies the agent’s excess acts. According to Law Encyclopedia (1998),

“The law of agency allows one person to employ another to do her or his work, sell her or his goods, and acquire property on her or his behalf as if the employer were present and acting in person. The principal may authorize the agent to perform a variety of tasks or may restrict the agent to specific functions, but regardless of the amount, or scope, of authority given to the agent, the agent represents the principal and is subject to the principal’s control. More important, the principal is liable for the consequences of acts that the agent has been directed to perform.”

REAL ESTATE AGENCY

Real estate agency essentially involves the leasing, buying and selling of an interest in land and property on behalf of another person. It is an area where formal professional qualification is held to be as imperative as possible. As a result, the quacks have grossly prostituted this area of practice.

One of the reasons why a property owner employs an agent to let out his property is that he believes the agent is more aware of the rental value and is more skilled in the field and so would be able to handle it better. Most property owners need professionals to relieve them of that duty and also, duties connected with property management. Prominent among property services are the following:

• Seeking properties for clients, such properties cover residential accommodation, office accommodation, warehouses, factories, shops and good development sites
• Merchandising new development for letting, that is preparation of tenancy layout paying particular attention to optimum income yielding factors such as the different capacity of tenants to pay rents and balanced tenants mix
• Finding purchases and reputable tenants for properties to be sold and let respectively
• Negotiating purchase price and rental value of properties of reasonable sums
• Advising on the best effective means of advertisement for properties

Despite all these functions of an Estate Agent, one is still aware that quacks are everywhere offering rent collection services and obtaining vacant possession in record time often through illegal means, including removing of roofs, playing on tenant’s superstition and so on. This emphasis lies on the need for early formalization of agency agreement and proper education on the duties of professional estate agent.

The estate agent must understand his responsibility as an agent and act accordingly with respect to the principal and third party. One of the important function of the estate manager is to hold money belonging to others therefore he is obligated to set up a special account separate from his personal account.

THE ESTATE AGENT

Real Estate Broker otherwise known as an Estate Agent is –

“any person, co-partnership, association or corporation who for a compensation, valuable consideration or commission sells or offer for sale, buys or offer to buy or negotiates the purchase, sale or offer to buy or negotiates the purchase, sale or exchange of real estate, or who leases or offers to lease or rents or offers for rent any estate or the improvements thereon for others” (Wikipedia, 2009).

According to WordWeb Dictionary (2008), an estate agent is ‘a person who is authorised to act as an agent for the sale of land’ which means as an estate agent, he is empowered to act as an agent on behalf of a principal for the sale, lease or purchase of landed property. The success of the real estate agent also depends on his technical and managerial skills. His source of income is primarily commission or fees for performing services for clients. Other related definitions of Real Estate Broker on the Web are as follows:

Real Estate Broker or Estate Agent is –

• An individual who often owns a real estate company or is in a management position, and who is licensed to represent a buyer or a seller in a real estate transaction (Beacon Mortgage, 2007).
• An intermediary who receives a commission for arranging and facilitating the sale of a property for a buyer or a seller (Campbell R. Harvey, 2007).
• A real estate agent who is licensed by the state to represent a buyer or seller in a real estate transaction in exchange for a commission and who may be responsible for supervising real estate agents in their employ (Oklahomamortgages.net, 2007).
• A middleman or agent who buys and sells real estate for a company, firm, or individual on a commission basis. The broker does not have title to the property, but generally represents the owner (American Home Mortgage Servicing, 2007).
• A person or agent who buys and sells real estate for a company, firm, or individual on a commission basis. The broker does not have title to the property, and generally represents the owner (Dictionary.Starware.com, 2007).
• Any person, partnership, association or corporation that, for a compensation or valuable consideration, sells or offers for sale, buys or offers to buy, or negotiates the purchase, sale or exchange of real estate, or who leases or offers to lease, or rents or offers for rent any real estate or the improvement thereon for others. Such a broker must secure a state For a license to be issued to a firm, it is usually required that all active partners or officers be licensed real estate brokers (Jocohomebuilder.com, 2005).
• A person licensed to act as an agent for another person or business to negotiate a lease or purchase of a leasehold or property, respectively, for a fee (MalmoMemphis Real Estate, , 2007).

From the above definitions, estate agency could be defined as activities / functions performed by a person in the course his/her employment pursuant to the instructions received from a client/principal who wishes to dispose off, or acquire an interest in land.   So an Estate Agent is someone who acts for, and on behalf of his principal within the scope of the brief given to him in respect of transactions involving real estate transactions such as sales, purchases, letting, etc. In order to be effective in the performance of this duty, the estate agent must be someone who has the necessary educational background and professional experience including knowledge of the law, the locality, property values, ownership and sources of financing.

In a typical real estate transaction, the principal/client is someone who wants to let or sells his or her property, the principal employs the services of real estate broker or agent to be an intermediary between the principal and the third party to effect the transfer of interest in landed properties either by the creation of interest in form of lease of transfer in form of outright sale. There are cases in which the principal will be the purchaser who manages the service of an agent to help him find a property for purchase or lease. This therefore implies that the principal could be either the purchaser or the vendor. The third party is the person who the agent deals with on behalf of his principal.

An Estate Agent does not merely sell landed properties, he as well negotiate the sale, purchase and leasing of houses on behalf of clients. He/she is equally concerned with land, shops, office buildings, other commercial and industrial premises. He offers guidance as to the appropriate method of sale whether by private treaty auction or tender and his advices are in effect a catalyst for all property transactions in a specified estate office.

From the foregoing, one can vividly see that the practice of estate agency embraces a full range of services which include:

• Advising the vendor, purchaser, lessor or lessee on the state of condition of the property.
• Compiling detail description of all types of properties namely – offices, warehouses, shops, residential accommodation and industrial premises.
• Assessment analysis and comparison of values and rents of all types of real estate transactions.
• Determining the rental values of these properties generally.
• Negotiating the sale, purchase, seeking tenants and arranging leases of properties on behalf of his clients.
• Preparation and administration of leases, collection of rents, dealing with maintenance and the operation of estate accounts

Agency is a very complex aspect of the estate surveying and valuation profession hence, it demands that the Estate Surveyors and Valuers in charge have necessary background in law including the law relating to estate agency, knowledge of the property market, the principles and process of valuation, sources of finance and high degree of meticulousness.

CREATION OF ESTATE AGENCY

The relationship of agency in estate management practice can be created in a variety of ways and manners. It must be noted that the primary element of creation is conferment of authority to “Act”. These include:

• Express agency: Agency created expressly means that a verbal (oral) or written agreement has been made between a principal (owner) and the Estate Agent. This is carried out with little or no formality, however for matter of convenience and avoidance of future dispute, the arrangement is best made in a written form.
• Implied agency: This type of agency is the type made or implied by The agency relationship here is one entered into by the party(s) principal (owner) and the Estate Agent is signed and sealed at law to undertake some action on behalf of the instructing principal.
• Agency by ratification: This type of agency or relationship occurs when an agency exercise certain authority on behalf of a specified principal without his prior consent but such action led to the consequent confirmation of the existence of an agency by the (Landlord) principal. A good example of an agency created by ratification can be made of a property yet to be completed or newly vacated premises the sourcing of a good tenant into such, if consented to by the principal after the securing of the
• Agency created by estoppel: This sort of agency can simply be referred to as an agency created out of mutual benefit or estoppel. In order words, since a principal has a beneficial relationship with a supposed Estate Agent that is initial benefit is estoppeled from
• Agency by necessity: Another means by which an agency relationship can be created in the estate management practice is when an agent acted beyond his conferred authority in executing or in performing some actions. Nonetheless, such actions must be necessitated by circumstances or emergency and must equally beneficial to his client.

The common reason why principal engaged the services of an Estate Agent most times derived from the need of the principal to secure higher rental from their property. More so, they generally believed that Estate Agents are equipped with the skill of good tenant selection and consequently a better rental. It is not as if the (Landlord) principal cannot collect high rents themselves but most equally want to be free of the problems associated with property management cum agency.

TYPES OF REAL ESTATE AGENCY

There are different types of real estate agency. The type of agency which a principal adopt depends on the type of property and the form which disposal of the subject property will take. The under listed are the various types of agency.

Sole Agency: This is where an agent is appointed exclusively by the principal to act on his behalf in a property transaction for a commission which is a percentage of the total amount realized from the transaction. This occurs in a situation whereby a single firm is solely briefed or authorized to let purchase or sell a property. Sole agency brings about a closer relationship between the owner and the agent. It makes the agent to put in more time energy and resources in promoting and ensuring the sale of the property at the best possible price. In such a situation, the letter of instruction must clearly state that the firm is a sole Agent. Being a sole Agent does not mean that reliable information or report cannot be sought from other firms.

Joint Agency: A situation may also arise whereby the sale letting or purchase of a property could be given to a number of firms to work under one umbrella, where such occasions arises it is referred to as joint agency. This occurs when two or more agents are briefed by a principal to act jointly on his behalf in carrying out a property transaction. The agents briefed are known to each other or one another in cases where they are more than two. In that case, even though an overall coordinator may be appointed among the participants, no estate firm is superior to the other under this arrangement. They all have the same right and power. Remuneration also needs to be shared equally. This type of agency is mostly common in the letting of commercial properties where large coverage is required. The commission realized from the property transaction is shared between the agents at a percentage regardless of who carried out the transaction.

Multiple Agency: This explains a situation whereby a landlord (principal) extend his brief to as many surveyors as he wishes with the notion that whosoever secures a purchaser or tenant collects the commission. These agents are instructed with a view of reaching a wider market and obtaining a quicker sale and a better price. The agents are approached individually. In most cases, the principal does not reveal other agents. They may however get to know one another by display of their letting boards on the property in question. In this type of agency, each agent is independent and the agent who carryout the transaction takes the commission. However, many agents do not put their all into advertising the property considering that the chances of carrying out the transaction diminishes and the risks of incurring abortive work costs increase due to multiple agency.

Sub Agency: This is a situation where by an agent deem it fit to appoint another agent which act as the sub agent to participate in marketing of a property which the agent have been instructed to transact. However, the appointment of a sub agent is geared towards achieving a quicker sale. Both parties usually agree on a fee-sharing ratio which is usually the guiding rule.

QUALITIES OF AN ESTATE AGENT

The Agent must academically and professionally qualified and must be able to demonstrate the following attributes:

• A proven track record of managing a complex property portfolio, staff and budgets
• A thorough understanding of general management techniques in a large and complex organisation; able to contribute to the organisations corporate planning
• Strength and quality of leadership and the personal skills required to develop and lead an effective and well-motivated, multi-disciplinary and multi-task estates and facilities
• A sound understanding of the legal and financial aspects of major property projects and transactions
• Wide experience both in the preparation and control of development programmes, building and engineering projects and in managing facility operations and maintenance services
• High level strategic planning and organisational skills, including forward planning and forcasting
• The ability to respond appropriately to his clients requests, requirements and expectations.

The Estate Agent must:

• be able to properly represent his client and render adequate service to him/her.
• be knowledgeable of the property value within his locality at all times.
• be able to correlate the need of the prospective tenant to the available property.
• be aware of state and local statute and regulations and have enough knowledge of the law so as to handle the interest of the principal and tenant properly, so as to avoid jeopardy to them or to himself/herself.
• posses the willingness for hard work
• possess good human relationship e. ability to get along with people.

FUNCTIONS OF THE REAL ESTATE BROKER / ESTATE AGENT

The operational procedures employed by Estate Agent in carrying out their duties vary from firm to firm. What obtain in particular firm depends on whatever innovations practicing professionals have made or can introduce to make the e job satisfactory and differentiate them from the others and quacks.

Generally the specific functions of an Estate Agent examined from two distinct perspectives. His/her function can be viewed by his duties in law and in his daily delivery of his professional services. The former is briefly discussed below while the latter is simply enumerated and analysed. However, professional have common grounds in modus operandi of agency assignments. His/her day-to-day functions include:

• Attending to Client: This is the most prominent function of an Agent. It involves taking request and/or instructions that could be done through interview or questionnaires to be completed by the client depending on the circumstance of each case. For instance, an interview is enough in the case involving sale/purchase of property, while a questionnaire will be more appropriate in letting cases.
• Securing accommodation and or property for clients in line with their request. The Estate Agent negotiates the terms and ensures that his client’s interests are well protected.
• Selection of Tenants: This is one of the most important decisions of an Estate Agent. They have to choose the prospective tenant that has the ability and willingness to meet the terms of lease (especially payment of rent) and also to select from prospective tenant the one that will be most suitable for the type of use the property is to be subjected to.
• Negotiation of Terms:    Estate Agent also act in the negotiation of term for and on behalf of his client, which includes:

                        (a) Amount of rent payable

                        (b) Duration of Term of lease and possible renewal

                        (c) Define tenant/landlord repairs

• The Estate Agent also acts as an image maker for his company through his day-to-day contact with people of diverse social status. It is therefore his duty to portray well his ideals and those of the institution he represent by carrying out his functions with transparent honesty.

DUTIES/OBLIGATIONS BETWEEN THE PRINCIPAL (CLIENT) AND AGENT

The obligation between Principal and Agent are as follows:

a)        Duties of an Estate Agent

Law Encyclopedia (1998) stated that agency relationship require that the parties concerned acted in absolute trust, that is there must exists a fiduciary relationship between the principal and the agent for the benefit of the principal. This therefore requires that:

“The Agent exercises a duty of loyalty to the principal and to use reasonable care to serve and protect the interests of the principal. An agent who acts in his or her own interest violates the fiduciary duty and will be financially liable to the principal for any losses the principal incurs because of that breach of the fiduciary duty. For example, an agent who accepts a bribe to purchase only the goods from a particular seller breaches his fiduciary duty by taking the money, since it is the agent’s duty to work only for the best interests of the principal.”

In this regard, it behooves that the agent has the duty:

•  To follow the principal’s instruction as long as they are legal
•    To exercise skill and diligence in the course of discharging his duties.
•    Not to delegate authority “Delegatus non potest delegare”. This therefore means that he must carry out his client’s instructions personally.
•    To render regular account.
•    Not to make undisclosed profit/commission from the transaction without the client’s knowledge.

However, in case there is a deviation from these duties of trust and responsibility, the principal can carry out the following remedies:

• He could withdraw his brief from the agent without prior
• He may recover the secret profit/commission made by the
• He could refuse to pay the agent his

b)        Obligations of Estate Agent to his client

Once a client has decided to either sell or let out his property, the agent plays a key role in bringing about a proportional agreement between the client and the lessee or vendee. Obligations of agent to his client are as follows:

• Act in good faith: The agent is obliged to carry out the client’s instruction as far as they are not illegal, fulfill his terms and conditions, and uphold utmost faith, transparency and honesty to the
• Rendering of accounts: A proper account of all transactions concluded on the client’s behalf must be kept and rendered to the client regularly.
• Avoidance of negligence: Negligence is a breach of a legal duty of care and implied terms of Therefore, the agent has to exercise skill and diligence when carrying out its duties. This obligation does not only stem from an agency contract but also from his professional duty as an agent saddled with the responsibility of executing agency contracts.
• Extra profit: Aside from the commission, the agent is not entitled to make any extra profit from the transaction without informing the client. Therefore, the principal should be carried along as the transaction
• Loyalty: The agent must act loyally to the client at all times during the transaction, and must not let its interest conflict with his obligations as an agent.

c)    Obligations of the client to the agent

• Truthfulness: The client must be truthful to the agent as regards the property to be sold or let. He must make sure that all the information he gives to the agent is true and there is no false
• Payment of commission: The agent reserves the right to receive a commission after the successful completion of the transaction as may be earlier agreed by both parties. The client must make sure he pays the commission agreed upon and not default.
• Indemnity: The client is meant to indemnify the agent as regards any loses suffered during or in the course of the transaction other than loss resulting from negligence on the part of the This term must have been agreed upon before the commencement of the transaction but if not, the client is not liable.

THE STEPS INVOLVED IN THE LETTING OF A VACANT PROPERTY

Letting as could be defined as the granting of use or occupation of a property under a term of contract. It could be described as the conveyance of the right of use of a property from a principal to a tenant for a specific period of time in exchange for money called rent. The right being conveyed depends on the nature of the principal’s right in the property which may be freehold, leasehold, etc.

The ultimate objective of the process of marketing is a conclusive sale or letting of the property concerned. This objective is however a long way from the point of receiving instruction to act, and usually different activities are involved in the interval. In order to ensure desired efficiency and achieve good results, proper procedures have to be adhered to in the discharge of this service. Some of these procedures may appear to be cumbersome, unimportant or even unnecessary, but experience has shown that their non-observance might pose great difficulties to the achievement of results and success of the transaction.

The property owner (often referred to as the landlord), who wants to let his property, has the choice of doing it himself or through a well-trained, qualified and competent estate agent. Many property owners who prefer to let their properties themselves do so mostly on grounds of avoiding payment of fees to estate agents. This is why it is important for Estate Agents to provide high quality service that will justify the fees they charge.

The various steps involved in the letting of a property are outlined below:

Step 1: Securing a brief/agency instruction

Step 2: Issuance of letter of authority by the client to the estate agent

Step 3: Pre-inspection and acceptance of brief by the estate agent Step 4: Report of inspection

Step 5: Letter of acceptance written to the client

Step 6: Opening a file for the new property

Step 7: Securing the subject property

Step 8: Determination of rental value through enquiries or consultation with an Estate Surveyor and Valuer

Step 9: Listing (there are three basic types of listing: the open listing, the exclusive agency, and the exclusive right to let.

Step 10: Marketing the listed property

Step 11:  Finding Tenants

Step 12: Taking prospective tenant for inspection

Step 13: Selection of Prospective Tenants. This should be strictly based on:

• Willingness and ability to meet lease terms
• The financial capability of the prospective tenant
• Intended use
• Suitability of prospective tenant to the property
• Tenant’s compatibility
• Landlords’ preference
• Legal capacity
• Past records of prospective tenants

Step 14: Issuance of letter of offer/acceptance

Step 15: Handing-over procedures and documentation of the letting transaction. Highlights of the essential things to do before handing over the keys to tenant:

• The property must be in a good state of repairs and all things agreed to be provided in the property by the landlord through the Agent must be supplied.
• Collection of rent and
• Check the tenants’
• Both parties must meet at the subject property to jointly conduct a comprehensive inspection; test the keys and the services provided within the property; take an inventory of fixtures and fittings including schedule of condition.
• The Agent must ensure that the tenancy agreement is properly reviewed by a Legal Practitioner and duly executed by the parties (i.e. landlord and tenant) concerned. After its execution, each party is to be given a copy of the agreement.
• The Agent must provide the appropriate number of keys for all the
• The Agent must ensure that the meter reading is taken, and arrange for the taking over of the account of electricity consumption by the tenant.

Step 16: Legal documentation of concluded lease transaction

Documentations with regard to a particular new tenant start from the point when he/she indicated his/her interest in the subject property. Consequently, some of the essential documentations will include the following:

• Client’s (i.e. the landlord) brief
• Tenant application form
• A copy of the letter of offer that was signed by both the landlord and tenant
• A copy of the duly executed tenancy agreement
• Duly signed inventories of fittings, fixtures, door keys, schedule of condition and any other essential facilities that may be provided within the premises.

These and other documents relating to the letting of the subject property are carefully arranged in a file specifically assigned to the property.

Step 17: Accounting: On the successful completion of every property transaction, accounts are rendered on money collected to the client and money due to the client is paid. In the performance of this obligation, estate agents are obligated to maintain separate bank accounts for themselves as well as a different one for their clients, especially, the property owners. The aim of this is to ensure that they do not confuse their client’s money with their own.

When separate account is kept, any rent or other money received on behalf of the client is credited to the clients account after deduction of agency fees as agreed. Expenses made on behalf of the landlord such as payments of salaries to client staff (e.g. security guards, cleaners, porters, lift attendants etc.) are debited to the landlord’s account. The Agent is required to render account of his services to the landlord at the intervals agreed by them. This could be quarterly, semi-annual or annual statements. However, the above applies only when the services of the agent is retained by the landlord. Where the letting contract terminates immediately after tenant is found it may not be necessary to keep account for the landlord.

PROCEDURE FOR THE SALE OF LANDED PROPERTIES

The sale of landed properties is the conveyance of the interest in a property from one person to another. The nature of interest being conveyed depends on the interest held in the property to be sold by the vendor which could either be a freehold interest or a leasehold interest. The usual process of property sales are discussed below:

Step 1    Instruction or brief: The process starts with the vendor briefing the agent. It is noteworthy to say that sale procedures are not necessarily in sequential order as some may occur simultaneously or interchangeably in the sale of a property. Prior to putting a property in the market for sale, there must be an instruction. Such instruction or brief as it is often referred to, may be oral or in writing. It is always vital to investigate the source of any brief so as to ascertain the true owners of the property or where it is jointly owned, the accredited representatives of such owners.

A brief to an estate agent should among other information contain the following – location, type of property and use, photocopies of title documents and reserved price.

Step 2 Joint inspection: At this stage, the estate agent and the property owner fix a date for the inspection of the property to take down necessary information about the property.

Step 3 Acceptance: An instruction can either be rejected or accepted by the estate agent. Such acceptance or rejection can be oral or in writing. In accepting an instruction, the estate agent must state clearly his terms and conditions of acceptance, especially his/her professional fees. It is most appropriate to define this in time in order to avoid any future problems. After acceptance, the estate agent must carry out a legal search on the title and confirmation of ownership.

Step 4 Document search and property investigation: This involves going to the Land Registry to ascertain the real owner of the property and its title to confirm if the property is genuine or not. Also, investigations would be carried out to ascertain that the document actually belongs to the person that claims to own the property. In cases where the property is a family property, investigation should be carried out to ascertain whether it is with the consent of the other family members most especially the family head that the property is to be sold. Furthermore, it would be investigated whether there is any encumbrance attach to the property and if any a means of setting it would be devised.

Step 5 Opening of file: A file would be open for the property in order to keep the documents to the property safe.  The address and name of the owner would be written on the file.

Step 6 Advice to clients: The estate agent must advice to his/her client on the likely selling price of the property based on valuation figure obtained from an Estate Surveyor and Valuer. This valuation figure should be as objective as possible but the property could be introduced into the market at a higher price to create room for reasonable negotiation. In as much as some clients insist on their assumed figures irrespective of the Valuer’s opinion, the best approach is to allow the market forces to prove such client right or wrong.

Step 7 Marketing: Sales strategies and methods

Sales strategies: As stated above, the subject property may be placed in the market at a price slightly above the value of the property so as to allow for negotiation. In selling a property, the estate agent may adopt a combination of strategies to quicken the disposal. The sale strategies include:

• Advertisement in the daily newspapers, magazines and journals. The advertisement should be precise. It should state thus:
  • The type of property, and schedule of accommodation
  • Location and neighbourhood character
  • The asking price and interest
  • Contact address of the Agent for the

This strategy though very expensive, exposes the property to a wider market.

• Property bulletin: This shows a list of properties the Agent has for sale or lease in his property portfolio. Most often, it contains more details about the property than the This can be distributed to individuals, corporate bodies and other property Agents.
• Property brochure: The major difference between this and property bulleting is that property brochure most often is prepared for a single property. It contains more details than the property bulleting and some photographs of the property. It is also distributed as property
• Sale’s boards: This is usually displayed on the property and contains the key words – “FOR SALE” and the address of the Agent to be contacted for more details. The most frequently used is the personal contact.

Methods of property sales: Several methods are at the disposal of an estate agent. The one to be adopted depends on the type and character of the property in question and the vendor. Any of the following methods are often adopted in practice.

1. Private treaty
2. Tender
3. Auction

Step 8 Offers/inspection with interested buyers: Offers are made by interested prospective purchasers. Then a date for inspection would be fixed by the agent and the prospective buyer to inspect the property. From all enquiries received, a serious purchaser is identified and provided with the photocopy of title document for his/her own personal verification and investigations after which agreement is struck on essential terms like price, handover date, mode of payment and vacant possession where possible.

Step 9 Negotiation/payment: After inspecting the property, if the intending purchasers like the property, then the price may be negotiated by the client and the agent. If an agreement is reach and it is certified okay by the client and agent, then the purchaser can pay for the property. The mode of payment is usually through cheque because it usually involves huge amount of money.

Step 10 Preparation of necessary sales document: The necessary legal documents are prepared for execution before payment is made to the vendor. These include:

• Deed of Assignment
• Form IC consent paper
• Purchase receipt
• Sales

Also documents like tax clearance certificate, receipts/demand notes for payment of ground rent and tenement rates are collected from the vendor. A date is then fixed for hand over and subsequent disbursement. On a final note it may also be necessary to procure a letter of indemnity from the vendor to indemnify the purchaser where Governor’s consent is not granted.

Step 11 Exchange of title document for money: The climax of any property sale transaction is exchange of title documents/transfer documents and money. This should preferably be a draft or banker’s cheque. Cheques may be accepted but the documents cannot change hands until the cheque clears. The transfer documents must be signed by the vendor before disbursement of funds; this is so because it is common that after the vendor had picked his cheque, he becomes recalcitrant thereby giving one excuse or the other for not signing the document.

Step 12 Signing of relevant document and the handing over or transfer of the subject property: When the cheque is cleared, then the necessary documents to the property will be duly signed (Deed of assignment and sales receipt), etc, by the property owner, purchaser and witnesses. Then the documents are given to the purchaser for the Governor’s consent, after which the purchaser becomes the rightful owner of the property.

TERMINATION OF AN AGENCY CONTRACT

Termination is the act of something coming to an end. According to Encarta Dictionary (2007), termination is the process of bringing something to an end or of being brought to an end. Therefore termination of agency is the process of bringing an agency contract to an end. Agency Contract can be terminated in the following ways:

• Agreement by the parities: the agency relationship may be terminated by mutual agreement between the principal and the agent. In an event whereby an agent was commissioned to accomplish a certain purpose or for the duration of a definite period, then the agency automatically ends with the completion of the specific purpose. For instant, whenever, a buyer or tenants is found to purchase or let a property, then agency relationship between them
• Frustration: This occurs when the goal(s) of the agency contract is hindered or prevented by some factors which cannot be overcome. For example, the destruction of the subject property either by natural or man-made disaster may terminate the agency.
• Revocation: The principal can unilaterally revoke authority since the agent is acting on the instruction of his principal. Similarly, the agent can also unilaterally renounce the authority of the principal. Both parities must give notice to that effect and this notice of either revocation or renunciation will not affect terms and conditions created between principal and third
• By performance: This type of termination of agency occurs when the agency contract has been This means that once the contract is executed there no longer exist any agency relationship between the principal and the agent/agency department.
• Bankruptcy of client or agent: This is a situation whereby either the client or the agent is unable to discharge or carryout his obligation effectively, thereby having a negative effect on the agency contract, which therefore leads to the termination of agency contract.
• Insanity: when the principal or the agent or both is mentally sick, the power of the agent ends immediately irrespective of third party knowing about it or not.
• Death: The death of the estate agent or principal or both put an end to the agency, also where the principal is a corporate body, dissolution or liquidation of the principal automatically ermines the agency. The death of the principal will not have any effect on the contract entered into by an agent who has an authority that is irrevocable.

THE CHALLENGES AND THE WAY FORWARD FOR THE PRACTICE OF ESTATE AGENCY IN NIGERIA

a. The Challenges

Estate agency is faced with enormous problems which serve as a barrier against its practice and the proficiency of its practitioners. Some of these problems are discussed below:

• Arbitrary rent: This is another problem of estate agency where property owners demand for outrageous and unrealisable rents on their properties without having the knowledge of the current rental value of the area where the property is located. This also unduly prolong the letting period thus making the property remain in the property market for a long
• Secrecy: Some property owners do not want advert boards to be placed on their property, and also would want the Agency Surveyor to exclude their sitting tenants (if any), friends and relation from the sale of their property so as to ensure the sale is conducted secretly. This however limits the scope of exposure of the property and often causes delay in concluding the transaction.
• Non-availability of basic amenities/infrastructures in a neighborhood: The non-availability of basic amenities /infrastructural facilities like good road network, pipe bore water and electricity in a neighborhood sometimes makes it difficult in letting properties especially residential ones. These factors also affect the value of the property.
• Slow pace of legal system: The process of obtaining justice is too slow and characterised by endless adjournments which make it sometimes frustrating. Though justice may eventually come but it may be too late.
• Wishful tenants: Some prospective tenants’ show interest in a property they know that they cannot afford, and therefore make the Agency Surveyor take them through the process of letting only for the agent to discover at the later stage that the tenant cannot afford the rent after wasting lots of money and time.
• Difficult clients: Problems will definitely arise for the Estate Agent where his client does not give him the free hand to perform his duties in marketing the property for which he has received Most of the negative roles played by some of these clients include the following:
  • Letting/selling their landed properties themselves (after granting exclusive listing right to an estate agent) in order to evade the payment of professional fees
  • Refusal to give their appointed agents the free hand to select tenants for their properties. They do not only categorically state the caliber of tenants that should be considered, but most times give other near impossible condition that must be fulfilled in the letting of their properties
  • Refusal to accept rentals or selling price which the property can command
  • Refusal to foot advertisement cost in certain cases and at same time refusing to consent to the display of boards that would have both enhanced and complement marketing efforts of the Agent handling their landed properties
• Non-attendance to repair works on time prior to letting or sales of such

b)     The Way Forward for the Association

Over the years, the growth in the number of estate agents has grown astronomically. The present and future prospect of estate agency lies basically in its professionalism. Professionalism implies the practice of a profession according to set rules which regular and guide the conduct of the practitioners. The estate agent is expected to be proficient and also maintain a high degree of intelligence, honesty, competence and ethical responsibility. He/she should possess, amongst others, a detailed knowledge of the property market, of rents, the usual lease terms, rates and values which make it possible for him/her to perform his/her functions creditably well. Estate agency when handled by qualified and skillful estate agent makes property acquisition and disposal very easy. Estate agents offer good and qualitative advices and services as to the fair rental, capital and market values to prospective sellers and buyers. He/she also enlightens the clients on all necessary factors that affect market structure of their property transactions. Introduction of computer technology would also aid the practice of estate agency.

When an  estate agent applies his training and knowledge into his practice and appreciates the enormity of the trust placed in him by the general public and his/her clients, he/she will distinguish himself from others and the difference will be clear. As a professional, he/she is guided by his/her professional ethics and rules and regulations that stipulate absolute honesty. Professionalism in estate agency does not lie in the gathering of a separate group of people known as professional estate agents but in the rendering of quality estate agency services by the practitioners to their respective clients.

Professional duties to clients therefore involve maintaining constant communication with them through the mailing out of brochures that relate to their properties, schedule of advertisement programme, and results of marketing programmes; the making of timely recommendations and reporting to them the outcome of all inspections; in summary, carrying the client along as regards all dealing with their properties. The estate agent should also carefully examines and screen all prospects and present to him client only those who have been properly screened and qualified.

In order to maintain professionalism in estate agency, controlling and regulating instruments need to be cultivated and these instruments include:

a. Defined Appointment: There is need for the appointment of the estate agent to be properly Such defined appointments will state the terms of appointment and the powers granted to the agent. In the case of any dispute, the parties can always fall back to the instrument of appointment and to that extent; a defined appointment also serves as a control instrument on the agent.

b. Professional affiliation: In this democratic dispensation, there is an advantage in the proper organization and identification of estate agents and the effective control of their activities. Estate agency should no longer be left to be practiced in the unprofessional manner in which it is presently done. Furthermore, your Association must realize that estate agency is an integral part of estate surveying and valuation profession and so there is no need for your Association to affiliate with the Nigerian Institution of Estate Surveyors and Valuers (NIESV) and the Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON) for effective supervision and regulation of real estate This has become necessary because of the current bastardisation of the estate agency practice in most of our nation’s urban area, particularly Lagos. With this proposed affiliation with NIESV and ESVARBON, the activities of the unscrupulous elements within the fold will be checkmated

c. Formal training in colleges, universities, etc: In order to introduce professionalism into estate agency practice, there is need to stipulate some learning as preparatory for its practice. Apart from the professional qualifications, an Estate Agent should have a minimum general education of the Senior Secondary School Certificate With this basic qualification, members are encouraged to proceed further in their education in any of the numerous tertiary institutions that offers estate management. Alternatively, registering with NIESV as Student member with a view to sitting for and passing the 3-stage professional examinations and eventual registration with both NIESV and ESVARBON by following due process.

d. Continuous education: Periodic seminars and workshops for estate agents both now and in the future should be encouraged. Such seminars and workshops would teach participants the main features of estate agency, incorporating new development which is required not just for renewal of licence to practice but also for up-grading the practitioner’s knowledge of estate agency.

e. Self discipline: Amongst all the controlling instruments listed above the most potent is self discipline, without which no one can be successful in life. Self discipline should rank higher in estate agency where the agent may be placed in a position to receive money on behalf of his principal, and where people may rely on his opinion in committing large amounts of money in the acquisition of property.

CONCLUSION

The objective of estate agency is to accomplish a successful transaction. In order for this objective to be achieved, the estate agent must have detail knowledge of the property market. This will help him/her in making adjustment in the objectives of the principal and the prospective purchaser or tenant where this becomes inevitable. In addition, the estate agent should ensure that he/she does not engage in shady practices that could negatively affect his/her clients and the image of the profession. By so doing, the present and future generation of practitioners will have a rich professional background, and as such would be held in high esteem.

From all that has been said, there is no doubt that there is every need for some form of control and regulations to be brought to bear on the practice of estate agency, such regulations will lift estate agency from been seen as a practice for ‘all comers’. It is hoped that if estate agents is practiced the way he/she is trained and puts professionalism into it, the practice of estate agency will be made more interesting and elevated to the status it deserves. It is only then that it will be seen as a profession rather than a trading or commercial activity as it is being presently portrayed.

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