PDE 5 capacitation workshop Pam Snyman CPRE April 2016 - - PowerPoint PPT Presentation

PDE 5 capacitation workshop

Pam Snyman CPRE April 2016

introduction

STANDARD OF TRAINING OF ESTATE AGENTS REGULATIONS, 2008 Qualification: National Certificate: Real Estate NQF Level 5 Professional Designation: Professional Designation Exam (PDE) MPRE (Master Practitioner Real Estate)

THE EXAM

• The 4 hour open book examination comprises both a knowledge

component as well as a case study component.

• Chapters to study: Chapters 5 – 18 and 19 for reading only
• The overall examination pass mark is 50% with subminimum of

40% for each separate component

• Time allocation:

Section A: Knowledge component – 40 marks: 1½ hours Sections B & C: Case study components – 60 marks: 2 hours B: Marketing Case Study 30 marks C: Trust Accounts: 10 / CoC Case Study: 20 marks

WHAT TO TAKE ALONG

• Candidates are permitted to take books or papers of

any kind into the examination room. You may take a dictionary in and may answer questions in the official SA language of your choice

• No electronic devices of any nature, including

cellular telephones, are permitted

• EAAB registration letter and must provide positive

proof of identity - identity document, passport or valid driver's license

INDEX

An alphabetical index has been created for you that covers all the headings and sub-headings in the relevant chapters of your Study-Guide How to use it: Column 1: NB Concepts (prepare a document with page numbers where you describe each of the concepts in your

• wn words)

Column 2: Q&A (cross reference those in your course notes from pp 6 – 38) Column 3: The actual Study Guide

IMPORTANT CONCEPTS

Summarise each of these and cross-reference to your Index Column 1: 1. Accounting records ito EAAA 2. Auditing of records 3. Balance sheet, Income statement, Cash flow statement – explain and give purpose of each 4. Bank charges in respect of a Trust Account 5. Budgeting – benefits 6. Business case – elements 7. Business plan 8. Code of Conduct – disclosure ito trust moneys 9. Cost leadership– strategy and its objectives

Concepts cont…

• 9. Environmental factors that influence estate agency business
• 10. Estate Agency Affairs Act
• 11. External factors that influence the real estate market
• 12. FICA – cash transactions
• 13. FICA – internal rules
• 14. Five stages of consumer buying process – awareness as

advantage to estate agent

• 15. Fixed and variable costs – difference and examples
• 16. Fixtures and fittings

Concepts cont…

• 17. Information manual (Promotion of Access to Information Act)
• 18. Interest earned on Trust Account
• 19. Long-term and current liabilities
• 20. Market cycle – explain
• 21. Market segmentation – factors and application
• 22. Moneys in trust account , when to be paid in and when can

be paid out?

• 23. NCA
• 24. Non-resident seller – impact on purchaser

(Income Tax Act)

Concepts cont…

• 25. Quasi-fixed costs – explain and give an example
• 26. Ratio Analysis – concept and indicators to estate agency enterprise
• 27. Records management function
• 28. Risk management – elements
• 29. Structured and semi-structured questionnaires
• 30. Title deeds
• 31. Trust Account
• 32. Vital key success factors for successful estate agency enterprise
• 33. When can an agent be prohibited from utilizing the

Trust Account?

• 34. Zoning

Case study 1: Marketing

• 1. Marketing of Residential/Commercial properties/Mixed

use

• 2. Action/Operational Plan for marketing project
• 3. Marketing Plan for marketing project (what, where, how

and when)

• 4. Marketing plan to include time-lines, budgets, fees,

resources, variables, target market, secondary sales (re- sales)

• 5. Make deductions re the future of the particular

market as described in the case study (i.e. hold and let or sell to get ROI) (understand current bank lending rates etc)

Case study 2: Code of Conduct

• 1. Consider the facts and interpret according to the

Code of Conduct for Estate Agents

• 2. Was the agent acting in compliance with CoC?
• 3. Provisions that were contravened
• 4. Explanation
• 5. Penalties

(Mod 6.2)

BREAKDOWN OF MODULES

• MODULE 1: ESTABLISHING AN ESTATE AGENCY

ENTERPRISE (CH 5)

• MODULE 2: MANAGEMENT AND STRATEGY, MARKETING

AND BUSINESS DEVELOPMENT (CH5 & 14)

• MODULE 3: FINANCIAL MANAGEMENT (CH 6, 17 & 18)
• MODULE 4: PROFESSIONAL PRACTICES OF A

PRINCIPAL REAL ESTATE AGENT (CH 7, 8, 9,10, 12)

• MODULE 5: LEGISLATIVE REQUIREMENTS AND LEGAL

ASPECTS OF ESTATE AGENCY (CH 13)

• MODULE 6: CODE OF CONDUCT
• 6.1 TRUST ACCOUNTS (CH 13)
• 6.2 CODE OF CONDUCT FOR ESTATE AGENTS (CH 11)

MODULE 1: ESTABLISHING AN

ESTATE AGENCY ENTERPRISE Chapter 5: Managing Real Estate Business Operations

MODULE 1: establishing an estate agency enterprise

• 1. What are the capital requirements for establishing a

new enterprise?

• 2. What is the difference between debt and equity capital

funding?

• 3. What is cash flow and how does it affect a business?
• 4. Discuss the three different types of cash flow that

effect a real estate business

• 5. The aim of any business is to be profitable.

Define the different types of profit

Module 2: MANAGEMENT AND STRATEGY, MARKETING AND BUSINESS DEVELOPMENT Ch 5: Managing Real Estate Business Operations Ch14: Marketing Plans

MODULE 2: MANAGEMENT AND STRATEGY, MARKETING AND BUSINESS DEVELOPMENT

1. What information does an analysis of the real estate market provide to a potential estate agency owner? 2. What is the business plan and why is it so important to the continued successful running of an agency? 3. After the action plan has been drafted and managed a workplan needs to be created. What does this entail? 4. What is risk management and why is it needed? 5. Discuss what the financial strategy for an enterprise entails.

Module 3: FINANCIAL MANAGEMENT OF AN ESTATE AGENCY Ch 6: Financial Information Ch 17: Financial Records Ch 18: Financial Reports & Returns

Module 3: FINANCIAL MANAGEMENT OF AN ESTATE AGENCY

• 1. What are the requirements for sound financial

information?

• 2. What are the basic financial statements utilised

in a business?

• 3. Define cash flow and state its main purpose
• 4. Describe what the income statement is and

what its main purpose is

• 5. Explain the concept of the balance sheet

Module 4:: PROFESSIONAL PRACTICES OF A PRINCIPAL REAL ESTATE AGENT

Ch 7: Marketing Situational Analysis Ch 8: Cost Management Ch 9: Planning & Allocation of Accounting Resources Ch 10: Information Gathering Ch 12: Policies & Procedures

Module 4: PROFESSIONAL PRACTICES

OF A PRINCIPAL REAL ESTATE AGENT

• 1. What is the underlying purpose of record

management?

• 2. Explain the importance of the management of office

space and resources in business administration

• 3. What are two basic means of managing sound

information systems?

• 4. What are the elements necessary to reach a binding

lease agreement? (Rental Housing Act)

• 5. What are the aspects of a service level

agreement (SLA) that require management?

Module 5: LEGISLATIVE REQUIREMENTS AND LEGAL ASPECTS OF ESTATE AGENCY Chapter 13: Legal Requirements

Module 5: LEGAL REQUIREMENTS

• 1. What are fixtures and fittings?
• 2. A contract of sale contains material and essential
• terms. What is the difference between these?
• 3. Describe what a suspensive condition is and give an

example

• 4. What are the five legal requirements for a valid

contract?

• 5. List five legislative acts that a real estate agency

principal will encounter

Module 6: THE CODE OF CONDUCT FOR ESTATE AGENTS Chapter 11: Code of Conduct

Module 6.1 : TRUST MONEYS

In terms of the Estate Agency Affairs Act 112/76

• To be paid into trust account immediately on receipt
• Interest in accordance with mandate or sale/lease agreement
• If silent, interest accrues to Fidelity Fund 50% and 50% to

agency (Code of Conduct prescribes disclosure to concerned parties re interest)

• Only allowed to pay out when legally entitled to do so, or

instructed to pay out by the relevant conveyancer

• If pay out before entitled, the trust account will show a

shortfall which will have interest/audit implications

Module 6.1 : TRUST MONEYS cont

In terms of the Code of Conduct:

• An agent may not influence client to pay interest to

the agent

• The agent must disclose that unless parties agree,

the interest accrues to the EAAB

• Trust moneys must be invested at the best interest

rate at the financial institution where the trust account is kept

• The full amount must be paid to entitled party

Module 6.2: THE CODE OF CONDUCT

THE BASIC PRINCIPLES ON WHICH THE CODE OF CONDUCT IS BASED:

• The code of conduct was established under Act 112/1976. It is

based on sound business principles with emphasis on moral and ethical behaviour. The underlying themes are transparency, honesty and integrity. GENERAL DUTY TO PROTECT THE PUBLIC’S INTEREST

• An agent may not do anything to harm the integrity of estate agents

in general. (cl.2.1)

• An agent must protect the interest of his client at all times, with due

regard to the interest of all other parties concerned (cl. 2.2)

• The agent must do his duty in a professional manner with care

and skill. (cl.2.3)

• An agent must comply with the Act and its regulations

(cl. 2.4)

CASE STUDY 3

Question 1

Are you of the opinion that Star Estates was compelled to oblige with the seller’s wish to market his property as discreetly and with as little publicity as possible? (2) In normal circumstances, ‘yes’, but due to the request to ‘discriminate’ as the underlying reason for the instruction for discretion and low exposure, definitely ‘no’!

Question 2

Do you believe that Josh should have advertised this property as he normally would have, ignoring the seller’s instructions to advertise discreetly as it is in the seller’s best interest to do so? (2) Josh should not have accepted the mandate by the seller because this would lead to Josh not complying with the CoC of Estate Agents which states an estate agent should not deny equal services, to any person for reasons of race, creed, sex,

• r country of origin, regulation 2.6.

The CoC is clear that the agent must protect the client’s interest at all times…BUT with due regard to the interests of the third parties (potential buyers in this case). He should not have accepted the mandate under the circumstances as expected from the Seller.

Question 3

Was Angela in your opinion using acceptable canvassing techniques to find a new property to list herself? (2) Yes, Angela’s canvassing technique is acceptable. She canvassed in the area, scanned the sections of all relevant newspapers and looked at Star Estates’ website for information on the property. She did not make any mispresentations to anyone while canvassing for the property.

Question 4

May estate agents place promotional material relating to the sale of a property in neighbours’ post boxes? (2) Yes, estate agents can prepare brochures for drops in the neighborhood. This is an acceptable method of advertising. (It has not been banned by the Code of Conduct…but

• ne must also take the Consumer Protection Act into

consideration when distributing brochures, both in terms of the content of the brochure and the actual distribution thereof)

QUESTION 5

Should it be found by a committee of enquiry that an estate agent is guilty of transgressing the Code

• f Conduct. What measures may the EAAB

impose? (3)

• 1. Reprimand the guilty party
• 2. Impose a fine of to R25 000 per transgression
• 3. Withdraw the estate agent's Fidelity Fund

Certificate.

qUESTION 6

Should Josh have refused to take the mandate on the terms expressly instructed by the seller? (2) Yes, Josh should have refused to take the mandate on the terms expressed by the seller as he would be in contravention of the CoC if he did.

Question 7

Is the instruction to find a ‘suitable’ purchaser contrary to the Code of Conduct? (2) Yes, Regulation 2.6 states an estate agent should not deny equal services, to any person for reasons of race, creed, sex, or country of origin. In this instance

• nly certain people are suitable purchasers and those

are purchasers who would fit into the neighborhood and subscribe to the same Protestant ethnic group. Estate agents may not discriminate against any person because of race and beliefs

Question 8

Have Josh and Angela acted in compliance with the CoC? (5) No, Josh has not acted in compliance with the CoC for estate agents on at least three counts:

• 1. Regulation 2.6 states an estate agent should not deny equal services, to any

person for reasons of race, creed, sex, or country of origin. An estate agent may not discriminate against any person in this regard, even if the mandator instructed him to discriminate as such.

• 2. Regulation 2.1 states an estate agent shall not in, the conduct of his business do,
• r omit to do, any act which is, or may be contrary to the integrity of estate agents

in general. It is the duty of Josh to protect himself as an estate agent by not contravening the CoC

• 3. Regulation 2.4 states that all agents must comply with the Act and its regulations

Yes, Angela acted in compliance with the COC.

The end

Good luck!