By George Mouskides, General Manager, FOX Smart Estate Agency & Chairman Cyprus Property Owners Association
To get their license, real estate agents must have a university degree, work for a licensed real estate agent and pass the relevant exams. All these pre-requisites aim to safeguard both the buyer as well as the seller involved in a property transaction.
Reality shows that agents’ services are not employed to the degree they should be, leaving people unprotected.
Protection when a real estate agent is involved
The relevant legislation requires real estate agents to inform buyers of all legal and natural characteristics of a property so that they can take an educated decision of whether they want to go ahead with the purchase or not. Real estate agents code of ethics demands that agents fully inform their clients, buyers and sellers, helping them reach the right decision.
What does an agent have to offer to a transaction? To begin with an agent has knowledge of the market and tries to marry the needs of the buyer with the seller’s property. He offers all available information to both parties and oversees the preparation of all relevant documents required by authorities, (Tax Dept., Lands & Surveys). Agents ascertain that the most efficient approach is adopted (i.e. so that the 2 parties pay the least possible legal tax) and oversees procedures through their final stages. The agent is also in control of the payments so that both parties are protected.
The question which arises is in how many of the 7.000 transactions completed in 2016 were real estate agents involved? How were the interests of the parties protected, in transactions where no agent was involved? Without any official statistics available, our guess is that agents were involved in less than 50% of the transactions.
The State must protect both sellers and buyers. This is a mission impossible, if no agents are involved in more than half of the transactions. How well does the average buyer understand the legislation and the procedures? How easy is it for a seller to misinform and mislead a buyer and vice versa?
Consider the usual case of a down-payment being paid to a seller with the buyer finding out that due to a memo placed by a third party on the property (e.g. late tax payments) title cannot not be transferred. If the seller cannot return the deposit back the buyer becomes trapped.
Need to be done
Legislation must be put in place to make sure that each and every transaction is controlled by a licensed real estate agent. Before the seller and the buyer sign any agreement they must seek the services of an agent who will also act as a guarantor of the correct procedure at all levels. A small fee could be agreed, (around 0,5%) on the sale price with a floor and a ceiling.
It should be required of agents that a clients’ account, certified by the Central Bank, is set up to deposit all payments until the agreement is finalised. This is actually similar to an EU Directive.
Concluding, the main concern of the State should be the protection of its citizens, in this case sellers and buyers of real estate properties. The current legislation puts over than half of the transactions in serious danger, as both parties are expected to conclude, an once or twice in a lifetime big ticket deal without any knowledge of procedures and regulations. A small fee could safeguard the success and speedy conclusion of all real estate transactions.