People & News

Penalty for estate agents

The Institute of Estate Agents of South Africa's (IEASA) contravention of the Competition Act arises from its recommendation of a 7.5 percent estate agent's commission and the indirect fixing of other services provided by estate agents such as hourly rates and sales commissions to be charged for property administration services and sales of businesses.

Menzi Simelane, the commissioner of the competition commission, has said that "as competitors estate agents should have individually determined their prices and those prices should have been based on the service each estate agent offered to the consumer without having being influenced by set tariffs of the nature of those contained in the tariff book". In such a case competition would become non-existent and result in firms becoming less innovative.

Bill Rawson, the Institute's president, said he was amazed at the commission's conduct as the Institute had last published a tariff list in 2002, and had immediately passed a resolution abolishing the tariff guidelines - see Recommended tariffs dropped - when the prosecution of other professional bodies by the profession was brought to the attention of the Press. The Institute had agreed to pay and administrative penalty of R522 000 or R100 per member rather than incur "tremendous legal costs" in fighting the commission.

Article in Business Report

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