What are informal part-time agents doing to the real estate market?

by  — 18 April 2013

Real estate website Mannzili recently conducted both a focus group and a survey in order to better comprehend what is happening in the real estate market in terms of their key users; home seekers and estate agents.

There seem to be concerns regarding informal part-time agents, as they compete with the established and licensed real estate firms whilst seemingly delivering a very poor service. Their proliferation is due in part to the fact that they are incentivised to encourage the highest price from the consumer in order to command the highest commission, whilst costing them nothing to engage. These informal agents present a number of issues ranging from poor customer service to making promises that the property managers will not keep.

Even though there are a number of reputable estate agencies operating in the marketplace, a number of interesting factors were uncovered by our research. For example, a sizeable portion of those searching for properties outside of the expatriate luxury sector tended to use informal agents. 

Qataris tended to use various channels to search for properties, which almost always meant them using part-time estate agents. Middle to high-income rental properties (defined as anything above QR5500) tended towards a more structured market where the large branded agencies operated. Low-cost housing (defined as anything under QR5500) is dominated by part-time estate agents, 100 percent of those we questioned in this segment used informal agents they found through online forums and chat services.

Part-time agents also dominate the small portfolio market. They tend to be favoured by property managers with a small number of houses to save on costs. Our research indicated that a figure close to 78 percent of the small portfolio market uses part-time agents. The other 22 percent used conventional agencies because they held luxury properties.

“A sizeable portion of those searching for properties outside of the expatriate luxury sector tended to use informal agents.”

No one questioned in our survey was willing to say that they had a positive experience using these agents, citing missed appointments, poor communication and misleading statements.

The part-time agents have a number of mechanisms that enable them to operate unhindered. It starts with property managers and owners themselves, whose interest is primarily to ensure occupancy and increased revenue. Therefore, using multiple agents with an incentive to push prices upwards works in their favour. This is why it is common to see multiple prices for the same property in various channels. 

Furthermore, property managers who use online channels overstate their prices beyond that of the part-timers. This is due to a perceived higher income level of Internet users and the need for a margin for negotiations. This creates a sense of value for customers when comparing what is seen online versus what you hear from informal agents, leading only to further reliance on them.

Due to the lack of development in how the industry interacts with their clients, these informal agents can generate a sense of high demand regardless of market conditions, and indicate much higher prices in order to command a higher commission.

How do these factors affect the marketplace as a whole? There will always be informal agents as they are an unavoidable element in the industry, even if legislation is passed against it. The difference in what we are experiencing in Qatar is the level of reliance we have on them. The general sense of poor customer service is mainly  due to the fact that it is a part-time job for these agents which complements their primary source of income.

The main point, however, is that their presence is indicative of the failings of others. Moreover, there are segments that have been largely underserviced by conventional agents that stimulated the need for these informal agents. Regardless of the lack of professionalism by some of these agents, they are filling a gap in the market that others are ignoring.

Like this story? Share it.