Na­tal­ie?Brig­gs

In the search for a home, one of the first points of con­tact for many peo­ple–even be­fore fi­nanc­ing–is a re­al es­tate agent or agency.While sev­er­al buy­ers, sell­ers and, more re­cent­ly, de­vel­op­ers are opt­ing to by­pass re­al es­tate agents and deal di­rect­ly with cus­tomers, a re­al es­tate agent still re­mains an im­por­tant go-be­tween for those who are look­ing for homes.

In the lo­cal con­text, the re­al es­tate agent acts usu­al­ly on the be­half of a sell­er look­ing for a buy­er of prop­er­ty. To a less­er ex­tent, they al­so help buy­ers find places to live (see Ta­ble on Du­ties of a Re­al Es­tate Agent).

The As­so­ci­a­tion of Re­al Es­tate Agents (AREA), which was in­cor­po­rat­ed in 1990, "has evolved in­to an or­gan­i­sa­tion which is lead­ing the re­al es­tate in­dus­try and its re­lat­ed fields," this ac­cord­ing to its Web site. By the as­so­ci­a­tion's es­ti­mate, mem­ber­ship rep­re­sents about 25 per cent of agents and agen­cies in T&T, with the rest of the in­dus­try re­main­ing large­ly un­reg­u­lat­ed.

In a re­cent in­ter­view, the pres­i­dent of the As­so­ci­a­tion of Re­al Es­tate Agents (AREA) Mark Edghill, ex­ec­u­tive sec­re­tary, Mary Jar­dine and long time mem­ber, Mark Far­rell dis­cussed the cur­rent state of the re­al es­tate mar­ket from the per­spec­tive of the agents.

Prop­er­ty bub­ble

One defin­ing char­ac­ter­is­tic of the coun­try's re­al es­tate mar­ket, in re­cent years, is that sell­ers have the ad­van­tage.Afra Ray­mond says in "Prop­er­ty Mat­ters"–a com­pi­la­tion of a se­ries of ar­ti­cles penned for the Busi­ness Guardian–that pre­vail­ing eco­nom­ic con­di­tions of high liq­uid­i­ty and low in­ter­est rates have cre­at­ed an en­vi­ron­ment where pur­chas­ing prop­er­ty is seen as a pre­ferred mode of in­vest­ment and where re­turns are sure, as the val­ue of prop­er­ty con­tin­ues to in­crease.

AREA con­firmed this trend of a sell­er's mar­ket where ven­dors are able to ask for and, for the most part, get what they want. Mean­while, be­cause of low in­ter­est rates, buy­ers are able to ac­quire loans at pref­er­en­tial rates. Be­cause prop­er­ty ac­qui­si­tion is tak­en with a view to in­vest­ment, the AREA pres­i­dent says most sell­ers do not need to of­fload prop­er­ties right away.

In essence, the buy­er and the sell­er are feed­ing off of each oth­er, cre­at­ing in a cy­cle that push­es prices up. This Ray­mond has termed the "prop­er­ty bub­ble."Ac­cord­ing to Ray­mond, the "bub­ble" locks out all those not con­tained with­in. These are usu­al­ly younger peo­ple and those of mid­dle in­come who can­not com­pete in a mar­ket with prices set un­der these con­di­tions.

AREA is aware of a gen­er­al per­cep­tion by the pub­lic that re­al es­tate agents are some­how col­lud­ing with oth­er mar­ket stake­hold­ers to keep prices high but says this per­cep­tion is er­ro­neous.As Edghill ex­plained, agents re­ceive com­mis­sion on the sale of their prop­er­ties, but this does not mean they will en­cour­age high prices in hopes of re­ceiv­ing high­er per­cent­ages.

From his own ex­pe­ri­ence, Edghill says ven­dors are ad­vised to sell at a cer­tain price, but tend to be­lieve they can get more for their prop­er­ties.

"Agents al­ways get blamed. But the agents fol­low in­struc­tions be­cause that is their job. They are sup­posed to pro­vide in­for­ma­tion to the ven­dors based on what is go­ing on in the mar­ket, based on the de­mand and based on the val­ues in the area, how long ago it sold, the con­di­tion of the prop­er­ty. They are to use that to guide what kind of price they can ex­pect if they want it to sell. The low­er the price, the faster we will turn it over. Why would we want to push the price up? It would take longer to make mar­gin­al­ly more, so it's not re­al­ly prac­ti­cal to do that."

Jar­dine ac­knowl­edges the need for mid­dle in­come, mid­dle-class hous­ing and, as agents, they have been ad­vo­cat­ing the cre­ation of more of these.

Fu­ture trends

The 2011 Cen­tral Sta­tis­ti­cal Of­fice Re­port has called cen­tral Trinidad a "growth pole" and pre­dict­ed that peo­ple look­ing for hous­ing will be­gin to view cen­tral Trinidad as an at­trac­tive lo­ca­tion. AREA ad­mits this is par­tial­ly true.Edghill said: "Peo­ple will want to find hous­ing where ameni­ties are avail­able, em­ploy­ment is avail­able. Ch­agua­nas is a de­vel­op­ing area ...the cine­plex, Price Plaza and Prices­mart. Peo­ple ob­vi­ous­ly want to be near­by or close to those types of ar­eas."

He added that in­ter­na­tion­al en­er­gy com­pa­nies were al­so look­ing for lo­ca­tions their south and cen­tral-based em­ploy­ees can get to eas­i­ly. This, in turn, will fu­el fu­ture de­mand for prop­er­ties in cen­tral Trinidad, as the com­pa­nies in­creas­ing­ly be­gin to base op­er­a­tions there.

The need for mid­dle class, mid­dle-in­come hous­ing is so acute that AREA says peo­ple have been go­ing any­where they can af­ford prop­er­ty. The con­sen­sus of the AREA mem­bers in­ter­viewed by the Sun­day BG is that the search has pushed po­ten­tial home­own­ers in­to ar­eas de­fined as "rur­al."But AREA al­so be­lieves the Gov­ern­ment re­mains a crit­i­cal part­ner in help­ing peo­ple reach their goal of ac­quir­ing a home.

Gov­ern­ment ac­tion nec­es­sary

AREA said it has served in an ad­vi­so­ry ca­pac­i­ty to suc­ces­sive gov­ern­ments on re­al es­tate mat­ters.Edghill re­calls one of the as­so­ci­a­tion's more re­cent projects: work­ing with the Min­istry of Le­gal Af­fairs Con­sumer Di­vi­sion on its pub­lic rent con­sul­ta­tion in 2012.He said even though there were rec­om­men­da­tions com­ing out of the con­sul­ta­tion, no ac­tion ap­pears to have been tak­en.

Edghill said they have al­so pro­posed the idea that gov­ern­ment fo­cus on mid­dle class, mid­dle-in­come home­own­ers as op­posed to low-in­come hous­ing. This way, gov­ern­ment can earn a prof­it from lands for hous­ing by sell­ing to the mid­dle-in­come earn­er, as op­posed to us­ing tax­pay­ers mon­ey to sub­sidise low-in­come. The prof­its gen­er­at­ed can then be used to build homes for low-in­come fam­i­lies.

So far, this is yet an­oth­er idea AREA has seen no ac­tion on and Edghill said it has be­come typ­i­cal for the gov­ern­ment to talk about plans for sus­tain­able de­vel­op­ment in the hous­ing mar­ket, but not to act on them."This would en­cour­age ter­tiary ed­u­cat­ed, mid­dle-in­come grad­u­ates to stay in the coun­try in­stead of look­ing for op­por­tu­ni­ties out­side be­cause they can­not af­ford to buy a home based on their cur­rent in­come."

Leg­isla­tive pro­tec­tion

Calls to cre­ate and im­ple­ment leg­is­la­tion de­signed to give greater pro­tec­tion to re­al es­tate agents, sell­ers and buy­ers have al­so gone large­ly un­heed­ed, ac­cord­ing to the as­so­ci­a­tion.Edghill ad­mits that as much as 75 per cent of the peo­ple who deal in re­al es­tate fall out­side of AREA's um­brel­la. And usu­al­ly, when there are com­plaints from home buy­ers, they of­ten come from agents in this brack­et."There is no leg­is­la­tion man­dat­ing that peo­ple are qual­i­fied for or have to be li­censed to be­come re­al es­tate agents.

"We have many who get in­to re­al es­tate for a day or two and cause prob­lems. A lot of un­eth­i­cal prac­tices take place."But the sit­u­a­tion ex­tends to the macro-lev­el. There is no le­gal re­quire­ment for prop­er­ties to be reg­is­tered so this makes it dif­fi­cult to fol­low trans­ac­tions over time.Edghill com­plains it is dif­fi­cult to get a true sense of the mar­ket be­cause of this lack of his­tor­i­cal da­ta.