Why is an agent necessary in a property transaction?

22 July 2014

There is a general perception among many that the layperson can carry out a property transaction without an agent and they will often, when either signing a lease or selling a property, go to a stationer and buy a generic or pro forma document.

This is often done because it is perceived to be a good way to save money by avoiding the commission payable to an agent, says Lanice Steward, managing director of Knight Frank Residential SA, although these people would very happily pay other professionals for services, recognising the value that they add. However, there are some people who don’t appreciate the necessity of an agent or acknowledge the necessity or role an agent plays and they don’t acknowledge their professionalism.

In a recent case, Mazibuko and Another v Rampersadh and Others, Mr Rampersadh decided to sell his property and put up a “for sale” sign outside his home. This resulted in the Mazibukos offering to buy his property and an agreement was entered into without an estate agent’s involvement.

Mr Mazibuko had bought two pro forma sales agreement documents from a stationer and these documents had the standard conditions applied when selling immovable property. This document had blank spaces in which finer details or other options could be filled in. The two documents were only partially completed when they met face to face but each supposedly had the same information filled in because the Mazibukos said that they were not sure whether they would get the bond needed or what deposit amount would be required. Some of the pages had also not been initialled – which is necessary to indicate acceptance of the content of those pages, said Steward.

The bond was applied for but the bank took issue with the fact that some pages had not been initialled and a meeting was called with Mr Rampersadh to remedy this. Rampersadh noticed that some details differed to what he agreed to but also made further changes regarding the occupation date – and both parties initialled the agreement.

Later, while Rampersadh was waiting for the deposit to be paid, a copy of the agreement was delivered to him and the agreement showed further changes to what that had previously agreed to. Because of the late payment of the deposit and the subsequent changes, Rampersadh decided to cancel the agreement and sent Mr Mazibuko an SMS cancelling the deal. 

There were two issues here, said Steward, the first was that the agreement was at first not completed as required by the Alienation of Land Act in that the timing and purchase price was not agreed on at the outset, which is material to an agreement being entered into. Secondly, the signatures on the agreement did not perform their function, which are meant to signify that an agreement has been entered into.

But the courts held that, if what Mazibuko said was true, that when they subsequently met and discussed the remaining issues, and Rampersadh initialled the agreement, that that could indicate acceptance and result in a valid sale agreement.

The matter was referred to trial and is pending a decision.

“Buyers and sellers should beware,” said Steward, “you might think you are saving money by doing things yourself but if selling property is not your normal line of business, do not assume you know enough to complete a transaction on your own. Think of your own line of work, where it takes years to build up the expertise needed, such is a property professional, where they will know how to complete the various steps and paperwork and ensure that the transaction goes smoothly. Doing things yourself could be a false economy if things turn out badly.”