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 own 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 DEVELO PMENT 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)
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