Posted by: Martin | March 13, 2010

Estate agents

In Europe estate agents generally work for the landlord/seller. Agents that work for the buyer exist but are rare, and they generally work in the upscale part of the market for wealthy buyers (not prospective tenants) that have more money than time. It makes sense that it is the owner that use the services of an estate agent as selling is a business activity that brings in money whereas buying is not.

In the age of the internet when a property owner can both find potential buyers, and get a reasonable overview of market prices online, I’d say the value of the services provided by estate agents has been reduced significantly and possibly become  nonexistent in many cases. Services provided by chartered surveyors and notaries on the other hand, should not have been affected in the same way.

In Abidjan, interestingly, from what I have seen, estate agents are paid for by the buyer, but seem to be working for themselves more than for the buyer or the seller.  When I rented a (surprisingly nice) short term accomodation in Zone 4 for 30,000 CFA per day last year, the only really useful thing the agent did was to drive me to the place in question. The agent said that the price was 40,000 and that the absolutely lowest possible price was 35,000. When I arrived, I negotiated with the owner directly and got a better price. After that I held the opinion that it would make sense to pay the agent the equivalent of a taxi ride, but to avoid too much trouble I think at the end I paid the agent 10,000.

When I let the Cocody house I bypassed the agents completely and even put in “no middleman” as a selling point in the ad. It worked perfectly fine, and I don’t quite understand why not more people bypass the agents. Well, on a second thought, from a sellers perspective it does make more sense to bypass the agents in Europe than in Abidjan as it is the buyers that pay for it.

As a prospective tenant, if you do not know your way around Abidjan, paying for an agent could maybe make sense, but then you want them to really work for you. Currently their incentives are just close the deal regardless of the price, and hence they won’t negotiate as hard with the owner as the prospective tenant would. Also, the default price charged by agents seem to be one month’s rent which is really high, and for shorter lets the price is unclear which the agents take advantage of by not mentioning it until the deal has been done. Maybe, as a prospective tenant, one should tell them upfront that they will be paid more the better deal they manage to find in specific terms, possibly as a function of lowest price for a set quality level.

One downside with bypassing the agents as a seller could be that it angers them – in hindsight putting  “no middleman” in the ad was maybe a bit too provocative.


Responses

  1. I really don’t understand this obsession with “No Middleman” … if you are ever unfortunate to find yourself in court, the first thing you rush out to do is get a middleman, or several, in the form of solicitors or barristers!!!!

    You don’t have to!! You can defend yourself.

    The problem is not “the middleman” but finding “the right middleman (or woman) …!!!

    And why is one months rent as a fee ‘high’?

    I’ve known people in Abidjan who are in the same house the rented 20 years ago, and they still have the services of their agent, at no additional cost !!

  2. Middlemen that add value are fine. Middlemen that add value mainly through better access to information have a bit of a problem when that information becomes freely available to everybody.

    With the advent of the internet, middlemen of the latter kind have have disappeared, been reduced or reinvented themselves. That’s where the obsession of “no middleman” comes from I believe. It just saves time and money and makes things work more efficiently for everybody, except for well, the middlemen.

    The question is what type of middlemen real estate agents are. I tend to think that a big part of the value they add is just market information which is getting increasingly available online – more so in Europe than in Africa actually.

    Here’s a pretty interesting blog post discussing middlemen and the internet:
    http://blog.businessofsoftware.org/2008/04/the-paradox-of.html

    and two more links on the subject:

    http://steadfastfinances.com/blog/2009/12/14/middleman-beware-the-internet-is-making-you-obsolete/

    http://newyork.corante.com/archives/2005/09/28/technology_is_making_real_estates_business_model_obsolete.php


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: