Real estate nails race to the mast
Only a fifth of South Africa’s property agents are black, with start-up capital a major barrier to entry.
They are a common sight in South Africa’s leafy, blossom-bordered suburban streets. Posters that advertise the smiling faces of estate agents, eager to help you sell your home or buy a new one. The faces are predominantly those of women and almost always white.
The racist comments by former estate agent Penny Sparrow, which sparked countrywide outrage, have also prompted a national conversation about the slow pace of change in the residential property sector and in the broader economy.
From the barriers to entry faced by young people from disadvantaged backgrounds in becoming estate agents – a profession perceived to be lily-white – to the difficulties black people face when trying to buy or rent a home, the problems are manifold. But, according to some in the industry, change is happening, albeit slowly.
The chief executive of the Estate Agency Affairs Board, Bryan Chaplog, said that in the past 10 years, the number of estate agents whom the board classes as previously disadvantaged individuals or black South Africans has grown from slightly more than 1 000 in 2005 to 6 337 in the 2015 calendar year. This equates to about 17% of the nationwide total of more than 36 700 licensed agents.
The growth in the number of black estate agents could be for a number of reasons, said Chaplog, including a growing awareness of the property sector in general and as a career option. He said more previously disadvantaged and unregistered agents were also being brought into the formal sector.
In addition, the board has been promoting young black estate agents through its One Learner, One Agency programme. It was launched in 2012 and is aimed at encouraging the placement of young black people in established estate agencies.
Furthermore, more black estate agents are moving from operating in the townships to more affluent suburbs.
“We don’t have a concentration skewed to only the townships or affordable areas,” he said. Increasingly, the large, well-known estate agencies are taking on black agents, who work wherever these brands operate.
But “we still have a long way to go”, Chaplog acknowledged.
The barriers to entry for young black estate agents can be enormous. Typically, an estate agent has to serve a yearlong internship, after which they must pass an exam to become fully fledged agents.
Because the industry is driven solely by commissions from sales, estate agents who are just starting out may have to wait anywhere between three and six months before they see any income, Chaplog said.
Agents interviewed believe this may be one of the reasons why the industry is dominated by white women. They are more likely to have the start-up capital needed to pay for a car, cellphone and marketing material, as well as having a support network, such as another income earner in the household who can keep them going through the leaner months.
Charles Mbobo, who left a career in sales with a financial firm, has been an estate agent for 15 years and works mainly in Gauteng’s North Riding and Fourways areas.
“Its not easy to crack through because there are a lot of things to learn,” he said. Finding stock and marketing yourself requires tenacity. So, too, does the commission-based nature of the business, which requires that “you make your own salary”, Mbobo said.
The number of black estate agents entering the industry is getting better, he said, but the pace is very slow.
When he started out, Mbobo said, he was asked by a white colleague: “How are you going to service North Riding? It’s too white.”
But Mbobo said he wanted the challenge, and added that he cannot count more than five people who were “quite racist” towards him during all his years on the job.
Mbobo said he tries to focus on delivering the best service he can and lets his performance speak for itself. Things that sound simple, such as never being late for appointments and staying in contact with clients, have made all the difference, he said.
Another black estate agent, who works in Johannesburg’s upmarket Illovo, Sandton and Gallo Manor areas, said white clients often greet him with distrust. This kind of reaction is lessened when he is partnered with a white colleague, he said, adding that estate agencies often partner agents when covering an area.
In these cases, however, he produces his credentials and profile to ward off the mistrust. His solution to addressing subtle racism is to be “honest and transparent and open”, he said. Having originally been willing to speak on the record, he asked to remain anonymous after his employer, a well-known brand in the property sector, instructed him not to speak to the media.
Increasingly, there are more black people entering the business, especially in former township areas, he said. Black people are also buying big-brand real estate franchises in traditionally upmarket areas.
But the property sector encompasses far more than just the estate agents who serve home buyers – it includes the buyers themselves.
Data that reveals the racial make-up of home ownership is difficult to come by as the deeds office does not record this information, according to Paul-Roux de Kock, the director of analytics at Lightstone Property, a firm that provides valuations and market intelligence to the industry.
De Kock cautioned that the algorithm the company uses to predict race uses information such as surnames and thus has a large “margin for error”.
These limitations notwithstanding, very broad estimates from Lightstone suggest that black people in 2015 made up more than half – or 52% – of home buyers. The figure has remained more or less the same since 2010, according to Lightstone data.
John Loos, the household and property sector strategist at FNB, said the housing market is a function of the labour market. As it transforms racially and as previously disadvantaged groups move into middle- to higher-income jobs, so does the residential property market, he said.
“This is happening, but it is a case of how fast you create jobs for those groups because that is what enables buying,” he said.
According to SA Home Loans, a credit provider, the number of specifically African home buyers has grown substantially in recent years.
“We continue to see double-digit growth in the number of buyers from this group and they have driven the growth in the residential property market in recent years,” said Zakheni Dlamini, the company’s director for business development.
According to him, this segment saw growth of 14% between 2014 and 2015.
These buyers cover “the entire spectrum of the residential property market”, Dlamini added, including first-time homebuyers, those who are trading up and buying a bigger property, and those who are buying an investment property.
But affordability and access to credit still remain problematic for those in lower-income markets. These buyers face more challenges in accessing home finance and there is a shortage of housing units in their price range, Dlamini said.
This is something seen first-hand by Pappy Ntumba, who has been an estate agent for 13 years.
He works in Soweto and said affordability remains an obstacle for many of his clients.
“They are too committed on other debts … and, when they apply to a bank, the bank does not approve them and they can’t qualify.”
There needs to more public education on how to save and how to spend money before one decides to buy property, Ntumba said.
Added to this, demand for property in Soweto, particularly in the R250 000 to R370 000 price range, has risen substantially and it is very difficult to find homes of this value, he said.
It is much easier to find homes priced at about R400 000 or higher, but many Soweto buyers do not qualify for mortgages of that size, Ntumba said.
He is a keen advocate for young black people to enter the estate agency business but he said not having a basic salary is a major stumbling block.
In an effort to address this problem, the Estate Agency Affairs Board’s One Learner programme is partially funded by the services sector education and training authority, according to Chaplog.
Young black people placed with host employers earn a monthly stipend while they complete their yearlong internship. During 2015, 802 interns were given a stipend of R1 500 a month.
The narrower question of the ownership of companies in the property sector, either private or listed, is another sore point.
One of the well-known real estate brands that has announced significant ownership changes in recent years is Re/Max Southern Africa. The local arm of this United States-based franchise is 45% black owned, after it entered into an empowerment deal with the Z Capital Group, headed by chief executive Amanda Cuba.
In addition, the total number of black agents and franchisees is estimated at about 25%, according to Re/Max Southern Africa’s regional director, Adrian Goslett.
Cuba said one of the bigger hurdles facing transformation is that many established agencies are family owned. Increasing the participation of black people requires a “shift in mind-set from the past to where we are currently”, she said.
This is slowly happening and, as much as legislation is compelling this change, businesses are beginning to engage with the idea of transformation, said Cuba.
The industry has to battle the perception that people of colour cannot become estate agents, she added, hence the importance of the board’s One Learner programme.
The state is aiming at a 50% transformation target for the sector, she said, but this will require baby steps given the difficulties many black entrants face in getting to much-needed start-up capital.
Some businesses have put mechanisms in place to help support new entrants, Cuba said, including paying advances to staff. But this often requires that businesses “claw back” this money once new agents begin earning steady money, she added. But this is a risk for any business, as the agents could leave before they have paid the money back.
Speeding up the long lead times in the conveyancing and deeds registration process could also go a long way towards addressing these kinds of problems, said Cuba.
The Mail & Guardian has used the term black to include African, Indian and coloured people, as defined in the Broad-Based Black Economic Empowerment Amendment Act of 2013.
Doors still slam on black renters
The experience of black people looking to rent or buy property can be alienating, according to readers who participated in a brief survey run by the Mail & Guardian.
Themba Msimang is a researcher in communications who has lived in Cape Town since 2010. When looking for a property with his friend, who has an Afrikaans-sounding name, Msimang said he had no problems finding accommodation, particularly when his friend made the inquiries.
“When I did the inquiries, somehow it didn’t work out,” he said.
To add insult to injury, a year later, when Msimang wanted a place of his own, he contacted the same estate agent who helped place him and his friend, but this time the agent was “incapable of helping me”.
This treatment has become so ubiquitous and normal, said Msimang, that he considers a positive interaction to be any one in which he is not treated with overt racism or obvious prejudice. “But that’s not normal,” he said.
Mamosa Makaya said that, in 2012, she entered into a lease agreement for a house in Pretoria North. She signed the contract and paid the deposit, but she was told a week before she was due to move in that the landlord no longer wanted to rent out the property.
“I believe that, when they discovered that a black person wanted to live there, they decided not to rent it out to me,” she said.
She laid a complaint against the estate agent with the Estate Agency Affairs Board. According to Makaya, after the board contacted the agent in question, they came back to her to say there was nothing they could do.
Makaya, now based in Bloemfontein, said some property adverts are written in Afrikaans. This suggests that the owners only want Afrikaans-speaking tenants and this will generally exclude many black people, she said.
There are other instances where it is stated that only white people may apply, she said. She has not taken this further because, after her previous experience, “you start to believe that nothing will be done”.
But the board is adamant that it will work to address this kind of treatment and improve enforcement over contraventions of its code of conduct.
Its chief executive, Bryan Chaplog, said a wider probe, beyond its investigation into Penny Sparrow, will look into instances of racism or discrimination in the sector. Its professional development programme, in which all estate agents must take part, will include more education and sensitivity training on these issues.