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The hard work of property agents/brokers is mostly underestimated in Ghana. Most people think an agent's work is only to find and show them properties. Real estate agents are intermediaries between property seekers (buyers/tenants) and landlords. Property owners may sell or rent out their properties through an agent. Property seekers may save themselves the stress involved in property acquisition by using an agent. Finding a property that meets clients' specifications isn't an easy task. An agent spends time and resources to find what the client is looking for. Sometimes, an agent must drive through specified locations to find a property for a client. There are numerous risks an agent must bear to satisfy a client. Every professional agent is expected to guide their client in the real estate market and furnish them with necessary information for decision-making. Most importantly, the agent must conduct due diligence to safeguard the client's interest. The agent leads negotiations on behalf of the client and ensures the client's interest is well protected.
The real estate market has laws regulating transactions, but lacks appropriate regulations to license agents and set standard agency fees, protecting both the public and agents. Over time, it has become conventional for real estate agents to charge 10% (or one month's rent equivalent) for rentals and 5% for property sales. However, some Ghanaians feel these conventionally adopted agency fees are unreasonable and exploitative, not knowing the work done prior. Others reference Section 25(1)(c) of the Rent Act (1963), which states an agent's commission on rental transactions should not exceed 5% of the annual rent. This could be a good deal if both tenant and property owner agree to pay 5% each as commission. But, most landlords don't want to pay commission when they haven't officially engaged the agent's service to find tenants.
In some situations, there may be a landlord's agent and a tenant agent, where each party keeps the agreed-upon commission. The question is, does the Rent Act's portion regulating agents' fees on rental bind the Real Estate Agency Council (REAC) to limit the fee structure to 5%? Let's leave that for lawyers and REAC to decide. From a business perspective, imagine an agent handling a Ghc500 (Five hundred Ghana Cedis) per month rental transaction. The agency commission, per the Rent Act, should not exceed Ghc300 (Three hundred Ghana Cedis), representing 5%. It's economically imprudent to handle such requests as an agency, considering operational costs. Established companies often refuse rental requests below Ghc2000 (Two Thousand Ghana Cedis) per month, even with 10% commission, due to resource constraints. As we await REAC's clarification on appropriate agency fees, understand your agent's terms and conditions before engaging their services.
In sale transactions, real estate brokerage firms may use company lawyers, surveyors, consultants, and professionals to ensure safe transactions. These professionals must be paid from the commission received. In conclusion, the role agents play in real estate transactions cannot be overemphasized. It requires skills, knowledge, and logistics to be a real estate agent. Before engaging any agent, ensure you understand their agency terms and conditions and negotiate when necessary.
EBENEZER OPPONG ABOAGYE
Head of Brokerage Service, DETELLE Company Ltd.
Vice President, Ghana Association of Real Estate Brokers.
