final project g.8
TRANSCRIPT
1
THE ROLE OF INFORMAL REAL ESTATE AGENTS IN PROPERTY
MARKET INFORMATION FLOW
Case study: Makongo and Sinza in Kinondoni Municipality,
Dar es Salaam City
A THIRD YEAR SEMESTER PROJECT I REPORT
PROJECT GROUP NUMBER 8
MEMBERS
KIMARIO KEVIN J.
KIWANGO MARK R.
MASANJA EZEKIEL.
MKOKO SAMWEL E.
MITOLE MATHAYO.
MWANKENJA JOSEPH
SENTALA DEVOTHA
SIMON MARCO
i
TABLE OF CONTENTS
TABLE OF CONTENTS ................................................................................................ i
LIST OF ABBREVIATION AND ACRONYM ........................................................... v
TABLE OF FIGURES................................................................................................... vi
LIST OF TABLES........................................................................................................ vii
LIST OF MAP ............................................................................................................. viii
LIST OF PLATES ......................................................................................................... ix
LIST OF STATUTES ..................................................................................................... x
CHAPTER ONE ............................................................................................................. 1
RESEARCH PROBLEM ............................................................................................... 1
1.1 Introduction ........................................................................................................... 1
1.2 Background of the Problem .................................................................................. 3
1.3 Statement of the Problem ...................................................................................... 4
1.4 Objectives of the Study ......................................................................................... 5
1.4.1 Main Objective ............................................................................................... 5
1.4.2 Specific objectives .......................................................................................... 5
1.5 Research Questions ............................................................................................... 5
1.6 Scope of the Study ................................................................................................ 5
1.7 Significance of the Study ...................................................................................... 6
1.8 Research Methodology.......................................................................................... 6
1.8.1 Research Approach and Design ...................................................................... 6
1.8.2 Case Study Selection ...................................................................................... 7
1.8.3 Sampling Design ............................................................................................. 7
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1.8.4 Sample size ..................................................................................................... 8
1.8.5 Data Sources ................................................................................................... 8
1.8.6 Data Collection Methods ................................................................................ 9
1.8.7 Data Analysis ................................................................................................ 10
1.8.8 Data Presentation .......................................................................................... 10
1.9 Literature Review ................................................................................................ 10
1.10 Conclusion ......................................................................................................... 12
CHAPTER TWO .......................................................................................................... 13
CONCEPTUAL FRAMEWORK OF REAL ESTATE AGENTS .............................. 13
2.0 Introduction ......................................................................................................... 13
2.1 Definition of Key Terms ..................................................................................... 13
2.2 Real Property Market .......................................................................................... 14
2.2.1 Characteristics of Real Estate Market ........................................................... 15
2.3 Real Estate Agents and Ethics............................................................................. 16
2.4 Distinction between Formal and Informal Estate Agents ................................... 19
2.4.1 Legal Framework Distinguishing Formal and Informal Estate Agents. ....... 20
2.5 Operations of Real Estate Agents ....................................................................... 21
2.5.1 Operations of Formal Real Estate Agents in Tanzania ................................. 24
2.5.2 Operations of Informal Estate Agents in Tanzania ...................................... 25
2.5.3 Practice of Real Estate Agency in the United States of America ................. 26
2.5.4 Practice of Real Estate Agency in South Africa ........................................... 26
2.5.5 Practice of Real Estate Agency in Mozambique .......................................... 27
2.6 Information Quality and Dimensions .................................................................. 27
2.6.1 Information Quality Model and Categories .................................................. 28
iii
2.7 Conclusion ........................................................................................................... 31
CHAPTER THREE ...................................................................................................... 32
THE ROLE OF INFORMAL REAL ESTATE AGENTS IN PROPERTY MARKET
INFORMATION FLOW IN KINONDONI MUNICIPALITY ................................ 32
3.1 Introduction ......................................................................................................... 32
3.1.1 Background of Case Study I: Sinza .............................................................. 32
3.1.2 Background of Case Study II Makongo ....................................................... 33
3.1.2.1 Geographical Location ............................................................................... 33
3.1.2.2 Population Size, Growth and Composition by Age and Sex ..................... 34
3.2 Development of informal estate agency in Kinondoni ....................................... 34
3.3 Sampling, Data Collection and Analysis Methods ............................................. 35
3.4 Social Economic Characteristics of Informal Estate Agents. ............................. 35
3.5 Sources and Methods Used By Informal Real Estate Agents to Gather Property
Market Information ................................................................................................... 36
3.6 Quality of Information ........................................................................................ 41
3.6.1 The Quality of Information Received by informal estate agents in Sinza and
Makongo) ............................................................................................................... 41
3.6.2 Quality of Information Disseminated ........................................................... 42
3.7 Facilitation and/or Withholding of Property Market Information ...................... 44
3.7.1 Case I Sinza ...................................................................................................... 44
3.7.2 Case II Makongo .............................................................................................. 45
3.8 Factors That Influence Informal Estate Agents to Facilitate Property Market
Information Flow ...................................................................................................... 46
3.9 Factors That Influence Informal Real Estate Agents to Withhold Property
Market Information flow ........................................................................................... 47
iv
3.10 Information Dissemination and Withholding Influences Commissioning of
Informal Estate Agents .............................................................................................. 48
3.11 Challenges Face Informal Real Estate Agents .................................................. 50
3.12 Informal Real Estate Agents Adhere To Principles Of Ethical Conduct .......... 51
3.13 Conclusion ......................................................................................................... 52
CHAPTER FOUR ........................................................................................................ 53
SUMMARY OF THE FINDINGS, RECOMMENDATIONS, AND CONCLUSION
...................................................................................................................................... 53
4.1 Introduction ......................................................................................................... 53
4.2 Summary of Findings .......................................................................................... 53
4.3 Reccomendations ................................................................................................ 56
4.4 Conclusion ........................................................................................................... 58
Bibliography ................................................................................................................. 59
v
LIST OF ABBREVIATION AND ACRONYM
CCM Chama cha Mpinduzi
NASP National Association of School Psychologists
TIVEA Tanzania Institution of Valuers and Estate Agents
vi
TABLE OF FIGURES
Figure 2. 1The flow of property market information flow with connected by Agents 26
Figure 3.2 Summary of Respondents on Average Information Credibility ................. 43
Figure 3.3 Proportion of Property market information flow in Sinza .......................... 45
Figure 3.4 Proportion of Property market information flow in Makongo.................... 45
Figure 3.5 The extent of sharing information in Sinza and Makongo ......................... 46
vii
LIST OF TABLES
Table 2.1 PSP/IQ Information Quality Model ............................................................. 28
Table 2.2 Conjugation of Information Quality Group Dimensions into Attributes ..... 29
Table 3.1 the summary of dimension of Quality of information in sinza and
Makongo ....................................................................................................................... 42
Table 3. 2 Shows Quality of Information Disseminated, Credibility Given By
Tenants .......................................................................................................................... 42
viii
LIST OF MAP
Map 3.2 Showing Geographical Location of Sinza Ward in Kinondoni
Municipality ................................................................................................................ ..32
ix
LIST OF PLATES
Plate 3.1 Informal estate agents advertisement on an Instagram page……………… 38
Plate 3.2 Street billboards at Makongo ……………………………………………... 40
x
LIST OF STATUTES
Business Licensing Act of 1972 United Republic of Tanzania, Government printers,
Dar es Salaam
Business Registration Act Cap 270 of 1972 United Republic of Tanzania, Government
printers, Dar es Salaam
Companies Ordinance Cap.212 in 1971, United Republic of Tanzania, Government
printers, Dar es Salaam
Contract Act of 2002 United Republic of Tanzania, Government printers, Dar es Salaam
Estate Agency Affairs Act, in 1976, South Africa
Professional Surveyors Registration Act No 2 of 1978 United Republic of Tanzania,
Government printers, Dar es Salaam
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CHAPTER ONE
RESEARCH PROBLEM
1.1 Introduction
Real estate sector is one of the important sectors in urban economy, the sector has been
crucial to the livelihood of the majority, such as people sell property as their business,
others buy as their investment strategy, and the other important group obtains their
earnings through providing the agency services between the two groups (sellers and
buyers). Recently this sector has grown robustly; as seen by developments, which are
contributed to by both, demand side factors (increase in urban population), and supply
side factors. As a result, vibrancy in the property market has been manifested by rapid
increases in housing demand despite conditions of limited planning and financing
options restricting supply.
Property market involves, among others, two principal participants that are buyers and
sellers of real estate. Instances of real estate include land, residential building,
commercial building, and any other property attached to land which are immovable. In
the property market, transaction prices for properties include payments (rental or
capital) for both the land and the structure, both of which might be hard to value because
of the market’s imperfect nature, for example, the market that produce externalities,
monopolization of the market, market that undersupply goods, market that are unstable
and market with imperfect information (Enns, 2007).
Imperfect information is the one of the market imperfection where participants in the
markets may not be as perfectly informed as the competitive model assumes, such as in
most cases home sellers are likely to have better information than potential buyers are
about both neighborhood and house characteristics. This has necessitated the need for
real estate agents to bridge the buyers and sellers by playing a crucial part of information
dissemination.
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A real estate agent is an individual whose task is to negotiate and arrange real estate
transactions on behalf of the principal, usually the property owner. So to speak, in
agency relationship, principals assign agents to perform some service on their behalf,
which involves delegating some decision-making authority to the agent. Agents are
expected, and indeed obliged, to act in the best interest of their principals. According to
(Joseph, 2008) real estate service practitioners perform duties including finding
customers through advertising, negating with a buyer or seller, property verification,
owner verification, showing property to potential buyers, listing property, as well as
purchasing contracts. Real estate service practitioners perform highly technical work
that require the application of a body of knowledge that cuts many disciplines such as
marketing, management, taxation, finance, engineering and economics. The
development of real estate market and the shortage number of professions and skilled
estate agent has culminated to the failure in property market transactions and the
increased number of informal real estate agents in Dar es Salaam to fill the gap in the
market that others are ignoring.
Informal agency practice, which is the focal point of this study, has become increasingly
common in urban areas in Dar es Salaam. These agents operate widely in the property
market bridging the gap between buyers and sellers without recognition by the
government and the service delivery system. Geho (2002) observed that, the increase of
supply of real properties culminated to the increase of market activities, which brought
with it, in addition to the legal recognized estate agency firms, opportunities which
could be viewed by as a brief case agent. Also the reason as to why informal estate
agents continue to play ever increasing roles is because “estate agency firms compete
in the marketing of prime properties only” Geho (2001) . On the other hand, the property
market in which they operate incorporates a self-regulating process and its institutions
have, unlike formal market institutions, thrived to cope with changing social economic
and political situation and even adapted some of the prevailing normative values. The
other point, however, is that the presence of the informal real estate agents is indicative
of the failings of others. Moreover, there are market segments that have been largely
underserviced by conventional agents that stimulated the need for these informal agents.
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1.2 Background of the Problem
It is difficult for the participant to get information, which related to the real estate such
as land and housing due to property market is imperfect. The buyers and sellers of real
property they do not have full information or they do not have knowledge about the
market because of the infrequently participation in transaction, unique location and
heterogeneous nature of the real property which is different from the other market like
stock market were identical goods may be traded daily by the participants (Evans,
2004). Also imperfect market characterized by asymmetry information, which is a
particular form of imperfect information where by participants of one side in the market
has more and better information than the other. For example in the market seller could
have more information about the nature and quality of real property that he want to sell
than the buyer of that property, tenant(sharecroppers) knows more about their work
effort and harvesting condition than the landlord which lead to market failure (Enns,
2007).
Due to inadequate information about real property market buyer and seller will be
unaware for the changes which occurring around them for example changes of relative
price over time which caused by either economic changes or government intervention
in the market. According to (Evans, 2004) neither buyer nor seller knows what the price
is or ought to be, at which property will sell’. As a result each must search the market
information which will help them on deciding on the price which they will ask or accept
by the participants. Economists argued that the private place market can and will react
to solve information imperfections in different ways such as by employing real estate
appraisal, and home building inspectors to add information about a property to the
potential buyer or seller for example the value of the property and physical condition of
the property being sold. Sometime seller will also provide information about the
physical nature of their home with a ‘seller property information statement’ (Enns,
2007).
Hence, if there was perfect market information, market participants would have all of
the required information so as to make informed decisions and there would be no need
to employ real estate appraisal, building inspectors and real estate agents. However, if
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there is imperfect market information on real estate market it is important to employ
real estate professionals such as real estate appraiser, home building inspectors and real
estate agents so as the participants of real property market can overcome the problem
of imperfect information (Enns, 2007).
Therefore due to this problem seller and buyers will employ real estate agents who will
be able to provide guidance and advice about price which real property might sell for,
by using his or her experience and professional expertise. Real estate agents office or
premises may act as the market place with respect to property and the flow of
information of sales will be available to the prospective buyers
1.3 Statement of the Problem
Since the property market by nature is imperfect, there is inadequate information flow,
which necessitates to employment of real estate agents so as the participants of real
property market can overcome the problem (Evans, 2004). The performance of the real
estate market depends on the ease of obtaining up to date information among the parties
involved, since both the buyer and seller depend on the up to date knowledge including
price differences and physical condition of building to facilitate transaction-involving
real property. Up to date information in real estate market tends to be obtain
occasionally and limited geographically. The specialized functions of agents assume
importance for smooth working of the market, since they provide information on the
availability, type, and price of properties and assist or conduct negotiations (Harvey,
1992).
The conditions, which economists assume to be necessary for a perfect market, are
markets that should have many buyers, many sellers, a homogeneous product, and full
information. Now there certainly seems (In the property market) to be many selling
properties and many people buying them, but the amount of information available as to
what properties are available at any time and what their characteristics are, does seem
to be inadequate (Evans, 2004). In Dar es Salaam, despite the increasing number of
informal real estate agents, availability of property market information is still a problem,
there is inadequate information flow, which slows down the real estate transactions; in
most cases affect the general performance of the market.
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Therefore, this study sets out to find out the role of informal estate agents in dealing
with flow of information in the property market. It is an attempt to understand and
document the influence of informal estate agents on the flow of information from one
party to another in urban areas of Dar es Salaam with the case study of Makongo and
Sinza.
1.4 Objectives of the Study
1.4.1 Main Objective
To examine the role of informal real estate agents in the flow of property market
information.
1.4.2 Specific objectives
i. To examine the sources and methods used to gather property market information
by informal estate agents.
ii. To assess the quality of information received and/or disseminated by informal
real estate agents.
iii. To examine the factors that influences informal real estate agents in facilitating
the flow of information or withholds information.
1.5 Research Questions
i. What are the sources of information used by informal real estate agents in
property market?
ii. What is the quality of information received and /or disseminated by informal
real estate agents?
iii. What are the factors that influence informal real estate agents in facilitating the
flow of information or withhold information?
1.6 Scope of the Study
The study focused on examining the role of the informal real estate agents in the flow
of information about real estate properties. This will give insight into the sources of
information, the quality of information received or disseminated, and the factors that
influence informal real estate agents to facilitate or withhold information.
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This study was conducted in Dar es Salaam city within Kinondoni municipality in areas
of Makongo and Sinza, due to their accessibility, limitation of fund and time. The
information was collected from informal real estate agents as well as buyers and sellers
of real property.
1.7 Significance of the Study
This study shall provide relevant information on the various ways used by informal real
estate agents to get information on real property, quality, and flow of information.
Hence, the beneficiaries of the study are real estate agents who shall find out various
factors, which practically determine and influence on information flow and ways of
getting and interchanging information of real property.
Students also shall benefit from the study by understanding in the flow of information
on the Real property market between the agents, sellers, and buyers of the properties.
Similarly the study shall also be useful to all real estate agency firms, institution and the
governments on policy formulation and implementation.
The study will be useful for further studying; the researcher may use this study as a
reference for further study of informal real estate agents.
1.8 Research Methodology
A research methodology is the way to systematically solve the research problem. It is a
systematic approach to finding a solution to the problem. It is the application of
scientific procedures in the process of acquiring answers to the research problem
(Mlowe & Diyamett, 2012). Research methodology includes; research approach and
design, case study selection and sampling, and data collection tools and analysis –
together with the rationale for their selection.
1.8.1 Research Approach and Design
This study has adopted both qualitative and quantitative (mixed approaches) for a more
comprehensive account of the study topic. Quantitative approach used to measure
quantitative data, while Qualitative approach used to measure the qualitative data.
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Research design is a procedural plan that adopted by the researcher to answer questions
validly, objectively, accurately and economically (Kumar, 2005). And because the
choice of research methods depends largely on the nature of the research problem,
1.8.2 Case Study Selection
According to Nachmias &Nachmias (1996), a case study should base on the areas with
rich information. Generally, whatever the subject matter, the case study normally
depends on a conscious and deliberate choice about which area to select from among a
large number of possibilities (Denscombe, 2007). In this study, three areas namely
Makongo and Sinza in Kinondoni Municipality were taken to be the case study areas.
These areas have very robust and growing real estate activity as manifested by ever
increasing rents and high number of tenants including those from Universities and
Institutes (University of Dar es Salaam, Ardhi University, Tumaini University and
Institute of Tax Administration). The areas are also very easily accessible and
convenient.
1.8.3 Sampling Design
Sampling design is a definite plan for obtaining a sample from the sampling frame. It
refers to the technique or the procedure the researcher would adopt in selecting some
sampling units from which inferences about the population is drawn (Kothar, 2004).
Sampling is the process of selecting a number of individuals or objects from a
population such that the selected group contains elements representative of the
characteristics found in the entire group. So to speak, every practicing informal real
estate agent in Makongo and Sinza will constitute the sample of the study. We shall
employ a non-probability targeted testing (sampling technique) selecting respondents
from the said areas. In snowballing sampling technique, respondents are found by using
other respondents who directs the researcher to other respondents. Furthermore,
respondents from the Local Government Authorities and clients deal with property
owners and tenants in areas from which these real estate agents operate will also
constitute the sample for the purposes of this study.
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Table 1.1 Targeted Sample for Data Collection (To be improved after formulation
of data collection tools and detailed site visits).
S/N RESPONDENT INFORMATION REQUIRED
1. Informal Estate agents Ways of getting information, factors that
cause influence informal real estate
agents to facilitate the flow of
information or withhold information and
Quality of information in term of
accuracy, timeline and reliability
2. Local Government Authorities Legality and information of the case
study area
3. Clients (Buyers and Sellers of
Real Property)
Quality of information in term of
accuracy, timeline and reliability
Source: Authors Construct (2014)
1.8.4 Sample size
The sample size was seventy-five respondents composed twenty-five property owners,
twenty-five informal estate agent, twenty-two tenants and three local government
officers, the sample come from Makongo and Sinza. The researcher was used that
selecting respondents for the sake of seeking accuracy in data and good response.
1.8.5 Data Sources
To conduct the study, it is imperative to systematically gather data that has been
observed, recorded and organized.
1.8.5.1 Primary Data Sources
Primary data denotes data collected for the first time. Data has not undergone
modification in form or content. Primary data for the purposes of this study will be
collected by interviews, observation, and questionnaires.
1.8.5.2 Secondary Data Sources
This involves the use of data, which are already collected and analyzed by others in
order to get information. This second hand data source may be published or
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unpublished, usually available in various publications of the central, local governments,
private publishers, unpublished biographies and autobiographies, research workers,
Trade Association and other places (Kothar, 2004). In case of our study we have to look
into various sources either published or unpublished source. In case of published we use
books, magazine, Journal, Newspaper and other publish, unpublished sources include
letter, research work like dissertation.
1.8.6 Data Collection Methods
Interviews
Interviews have been called “a purposeful discussion between two or more people”
(Kahn and Cannel, 1957). In our study we will be using this method to collect data
where by this method require person as interviewer asking questions to the interviewee
usually face to face, also at this time the interviewee may do so by asking the interviewer
questions and get answer but the interviewer start the interviews and collect
information. We decide to use interview because not all people know how to read and
write so through this we can deal with large number of people in all groups.
Observation
This study sets out to find how informal estate agents influence information flow in the
property market, and therefore observation forms an important data gathering tool. The
results from observation will assist to link the information collected from interviews
and the existing situation and drawing of conclusion. In our study we are going to
observe the billboards.
Questionnaires
A questionnaire consists of a number of questions printed or typed in a definite order
on a form or set of forms. This method use form of questions which are sent to the
targeted persons, requesting them to answer the questions and return to the researcher.
We expect to send questions to potential respondents that are government officials,
buyers and sellers and informal real estate agents, who perform their work at Sinza and
Makongo in Kinondoni Municipality. We expect to use this method because we can get
many respondents within a short period of time and get enough information at
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reasonable sample. We will use both close and open ended questions so that to target
the objective of our study.
Document Review
Document review is another data collection technique which is adopted in this study as
a secondary data source. It entails exploration of the written documents on the pertinent
issues on estate agency and the practice of real estate agency in general. In this report
the review was conducted on different library records, project reports, published
reference books, newspapers, and dissertations with intention of collecting
independently verifiable data and information.
1.8.7 Data Analysis
In our research we expect to use both content analysis and descriptive statistics. The
content analysis is used to analyze qualitative data while descriptive statistic is used to
analyze quantitative data. Descriptive statistics including numerical counts or
frequencies, percentages, measures of central tendency and measures of variability
(range, standard deviation and variance) were of great application.
1.8.8 Data Presentation
The analyzed data of the study were displayed informatively into a number of ways
namely, text, tables, figures and pictorially as charts, graphs, plates and diagrams.
1.9 Literature Review
Agency is the fiduciary relationship between the principle and the agent. In this context,
the fiduciary refers to the relationship in which the agent is held in the position of special
trust and confidence by the principal who is the individual who hires the agent and
delegate to him or her responsibility of representing the principal’s interests. In real
estate the principle is the buyer or seller, landlord or tenant, therefore, customer is the
third party or non- represented consumer for whom some level of service is provided
and who is entitled to fairness and honesty. (Fillmore, , Wellington, , Robert,, 2006)
Real estate agency refers to a “function of buying, selling, exchanging, or, letting
immovable property on behalf of a principal for a specified period of time” (Royal
Institute of Charted Surveyors - RICS, 1970). It also entails giving of professional
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advices on matters pertaining to real properties in general. Real estate agents are the
people a client will deal with face to face when buying or selling property. These are
the people on the front lines of the real estate market and perform such tasks (amongst
others) as showing homes to perspective buyers and negotiating transactions on behalf
of their clients. Real estate agents often work on commission basis, their income
dependent upon their ability to find property suitable for their clients and closing
transactions.
Being one among the many roles played by both formal and informal estate agents is
facilitation of market transaction between the parts involved, the more the information
is available the fast the transaction of properties will be conducted. The reality that real
estate agents are very potential people in the industry of real estate market, there are
said to be certain fundamental prerequisites to effective agent based on the adage, “if
you have no information, you have no product sell”, more specifically, it is necessary
the agent to have market intelligence. (Ractliffe, , Stubb, , 2001)
In his thesis, (Kusiluka, 2012) argues that information asymmetry and opportunism are
particularly the defining factors of agency problem. The problem occurs when
information asymmetry exits i.e. when one party in a transaction has more or superior
information compared to another. The party with information advantage should also be
motivated to take advantage of the information.
In many markets, different market participants have differential information about
important characteristics of heterogeneous assets, for example, analyzes a situation in
which sellers of used cars have superior information relative to potential buyers. In other
markets, sellers are better informed than buyers on average, but there exists important
additional heterogeneity in the information sets of both buyers and sellers. On average,
home sellers are likely to have better information than potential buyers about both
neighborhood and house characteristics. In addition, however, some fraction of the
possible buyers or sellers might have an information advantage relative to their peers.
For example, real estate agents living in a neighborhood might be particularly well
informed about neighborhood trends and demographics, and buyers who have
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previously lived in a particular neighborhood face less of an information disadvantage
relative to buyers who is moving from further away. (Kurlat, & Stroebel, , 2013)
1.10 Conclusion
This chapter has provided fully description of the issue pertaining to research problem,
objectives of the study, research questions and has given deep and thoroughly
description of the scope and significance of the study to various intended audiences.
Also the chapter has greatly covered part of research methodology which is being
intended to provide the way forward to the accomplishment of this study, parts which
has been covered in large extent are such as the methods of data collection, analyzing,
interpreting and presentation so that to make a the study a success.
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CHAPTER TWO
CONCEPTUAL FRAMEWORK OF REAL ESTATE AGENTS
2.0 Introduction
This chapter provides an overview of the important concepts, meaning of various terms
and their linkages as they are applied in this project that seeks to identify, study and
document the role of informal estate agents in property market information flow. In
more detail this chapter will expound on informal real estate agent practices in general.
On the other hand, the chapter also explains in detail about the property market
characteristics and the property market information flow.
2.1 Definition of Key Terms
Agency
Fillmore et al. (2006) assert that agency is just a fiduciary relationship between the
principle and the agent. In this context, the fiduciary refers to the relationship in which
the agent is held in the position of special trust and confidence by the principal who is
the individual who hires the agent and delegate to him or her responsibility of
representing the principal’s interests. In real estate the principle is the buyer or seller,
landlord or tenant, therefore, customer is the third party or non- represented consumer
for whom some level of service is provided and who is entitled to fairness and honesty.
Therefore agency is a legal relationship in which one party, the principal, authorizes
another, the agent, to act on behalf of the principal. In agency relationship, principals
assign agents to perform some service on their behalf, which involves delegating some
decision making authority to the agent. Agents are expected, and indeed obliged, to act
in the best interest of their principals.
Real Estate Agency
Real estate agency can be generally assumed to be agency in which real property is a
subject matter. It is an art and science of dealing with buyers and sellers of real property
linking and providing information where barriers exist.
Real Estate Agents
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A real estate agent is a person who acts as an intermediary between sellers and buyers of real
estate/real property and attempts to find sellers who wish to sell and buyers who wish to buy
,in another word is a person or organization whose business is to market real property on behalf
of clients.
The task of an agent is to negotiate and arrange real estate transaction on behalf of the
principal usually a property owner. Ractliffe and Stubb (2001) are of the opinion that in
reality real estate agents are very potential people in the industry of real estate market.
Certain fundamental prerequisites have to be adhered to achieve effective real estate
agency based on the adage, “if you have no information, you have no product sell”,
more specifically, it is necessary the agent to have market intelligence.
Informal Real Estate Agents
Are the people who provide the agency services in the real estate market without
recognition by the government and the service delivery system. They perform their
work without license, these agents operates widely in the property market bridging the
gap between buyers and sellers (Geho, 2002)
Real Property
This refers to a particular type of good land or resources embodied in land (Harvey,
1992). Also can be explain as an identified parcel or tract of land including
improvements, easements, rights of way, undivided or future interests, and similar
rights but excluding mineral rights, property in the form of land as opposed to personal
possessions.
Market
Is any arrangement by which buyers and sellers are brought together to fix a price at
which goods can be exchanged (Harvey, 1992).
2.2 Real Property Market
According to Harvey (1992) “the real property market is simply the arrangement by
which buyers and sellers of virgin land, agricultural estates, industrial buildings, offices,
shops and houses are brought together to determine a price at which the particular
property can be exchanged”. Sometimes the market is formal (e.g. the London Auction
Market), sometimes informal (e.g. introduction by estate agents, deals between
15
principals). Indeed, it is not possible to distinguish the means by which people are
informed from ‘the market’. The real property market then, is an abstract term
aggregating all transactions in real property throughout the country (Harvey, 1992)
2.2.1 Characteristics of Real Estate Market
High transaction costs, buying and/ or moving into a home costs much more than types
of transaction that costs include search costs, real estate costs, moving cost, legal
transfer and deed registration fees.
Immobility, real estate is locationally immobile. Consumes come to the good rather that
the goods going to the consumer, because of this there can be no physical market place.
This spatial fixity means that market adjustment must occur by people moving to
dwelling unit, rather than the movement of goods.
Illiquidity, It takes a long time to buy or sell a property. This makes it extremely
important where real estate is brought as investment than there is a continual high
demand for the type of property that you buy. In an illiquid market owning asset which
is sliding in value with no buyers available is worst thing.
Heterogeneity, every unit of real estate is unique in terms of its location, the building
and its financing. This makes pricing difficult, increases search costs, creates
information asymmetry and greatly restricts substitutability.
Durability, real estate is durable, a building can last for decades or even centuries and
the land underneath it is practically indestructible (David Cadman and Leslie Austin-
Crow, 1983).
2.2 REAL ESTATE AGENTS
2.2.1 Function of Real Estate Agents
A real estate agent must be an active and quick witted person. Be it formal or informal,
in Tanzania they interact with both buyers and sellers. The services they deliver and
roles they play enables categorization of their functions into two parts, functions to the
buyers and functions to the seller, this is simply because once the buyer wants to buy a
property (real property) he/she must meet with the estate agent as well as the seller
whom wants to sell his/her property (real property) he/she must find the real estate
agents.
16
provide advice to buyer and seller about relevant properties for sale
Answer buyers questions about listed properties
Provide buyer with a copy of the vendor’s statement and contract of sale when
available.
Communicate genuine offers from buyer to the seller
Organize the signing of the contract of sale.
Provide with a marketing plan and market your property.
Give estimated selling price or price range based on their experience and skill.
Advertise an up-to-date price for the property reflecting rejected offers or
changed market conditions (although it is not compulsory for a price to be
advertised).
Communicate all verbal and written offers from prospective buyers to seller,
unless you instruct the agent in writing not to do so.
Arrange, organize and attend property inspections.
Organize and conduct an auction if applicable.
Receive and hold the full deposit.
2.3 Real Estate Agents and Ethics
According to (Kenneth and Johnson 2004), ethics refers to customs, values and
practices a society or communities consider to be morally sound, by which our behavior
is measured. Ethics clarify the professional values a reference point for making decision
and used as a framework for discipline and it is important when related to the activities
of skilled or professional practiced. On the other hand, the American NASP (National
Association of School Psychologists), 2008, and (Davis 1991) consider professional
ethics to refer to personal and corporate standards of behavior expected by the members
of particular profession. various professions that known and trusted by the public to
apply expert knowledge, have a code of ethics which set out their expectations of a
member’s behavior and the boundaries within which they have to operate and describe
how professionals are to pursue common ideal in order to do the best and minimize cost
to his/herself and the public or client. It is principles which provide guidance to the
professional judgment and decision.
17
So for real estate agents, we can safely conclude that ethics refers to the standards, code,
values norms and practice which guide real estate agents in their activities concerning
so as to achieve their professional goals. The code or ethics help to protect their
professional from certain pressures (like to save money for personal interest) by making
efficiently so that other members of the professional will note take advantage of his/her
good conduct. So the ethic is the solution to the problems in a real estate agents
professional because it develops principles which guide their work.
To our study case the term ethics applies specifically to a standard of appropriate
behavior as described by the professional association’s written code of conduct of real
estate agents such as brokers professional. According to the (American Association of
Realtors , 2012) the following are the ethical responsibilities of real estate agents both
to the client and public can be summarized as follows:
Agents’ should promote the interest of their client first while remain
obligated to treat all parties fairly and honestly.
Agents not to exaggerate or conceal pertinent facts
Real estate agents cannot represent themselves, immediate family members
or companies they have an interest in without informing the owner in
writing
The agents should keep a special account, separate from their personal
accounts, to hold monies in trust for clients or other parties in a real estate
transaction.
Agents should not deny services to people for reasons of race, color,
religion, sex, family status or nationality.
Agents should not mislead owners or buyers on the market value of a
property or the savings they can make through their services.
Agent should not to provide specialized services in fields he or she is not
competent. Agents must be careful they do not produce misleading adverts.
An agent can offer prizes, bonuses and other incentives for clients that hire
his services, as long as the terms of the offer are clearly explained.
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Real estate agents not allowed providing legal advice that constitutes
unauthorized practice of the law.
All Advertising and promotion of properties shall accurately reflect
property and other details and prominently display the name of the
brokerage and any additional information required by provincial regulation.
Furthermore, (Fillmore et all 2006) expounded on fiduciary duties of the real estate
agents which is a general ethics of real estate professional business. These factors can
be observed to relate very closely with the attitude and social economic characteristics
of an agent. These include:
1. Obedience, which require the agent to act in a good manner and faith obeying
the principals or client instruction in conformity with the contract but the agent
should not obey unlawful or unethical instruction because this tend to affect real
estate agents loyalty. Loyalty, it’s a duty of the real estate agents to put in place
first the interest of the client such as self-interest so s to avoid conflict interest.
2. Care, estate agents should show a reasonable degree of care to the client when
doing a business. The agents can use skills and knowledge on the principal’s
behalf also agent should know all facts of the client property such as physical
characteristics of the property and other important consideration. In case of buyer
as a client, agents should help buyer of the property to search good property
advise him about financing alternative.(Texas Real Estate Commission, 2012),
3. Disclosure, it’s a duty of the agents to provide information to the client about the
factors that could affect the transaction. Agent has the obligation to find the facts
that could be favorable or not to the principals and failure to disclose should be
liable for damage. Example agent has the following duty to disclose the
following facts to the seller such as offers, identity of the prospective buyer, the
interest that seller has to the buyer, the buyers intention to sell the property for
high profit and the ability of the purchaser to complete the sale at a higher price.
Duties of agent to disclose the following information to the buyer, deficiencies
of a property, sales contract and financing which do not suit the buyers need.
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4. Accounting, this require the agent to keep and report status of all fund received
on behalf or from of the principals .the real estate license require the real estate
agent to give accurate copies of all documents on file for a specified period of
time also the broker required to deposit the money received from the principals
on behalf immediately and within a statutory time such as deposit on a special
trust or escrow account. The brokers forbidden to us the money received from
the principals
5. Confidentiality, in this duty the agents may not disclose the personal affairs of
the principals. If the client is a seller the agent should not disclose such thing as
the client willingness to accept less than the listing price unless otherwise
authorized by him. If the client is a buyer, agents should not disclose the
information that buyer may be able to pay more than the listing price. Also there
are some state which permit agents to disclose information about the condition
of the property, permit seller to disclaimer essentially a statement that the
property is sold.
2.4 Distinction between Formal and Informal Estate Agents
In the formal realm, Letting and selling agency has not been considered as a professional
practice but rather as retail business with individuals being licensed under the Business
Licensing Act of 1972 where an individual would get practicing license ostensibly as
Real Estate Agent but technically as Sales Person.
According to (Komu, 2012) in Tanzania up to 1975 there was only one private valuation
firm namely Martin Heyman and Company Ltd incorporated under the Companies
Ordinance Cap.212 in 1971. The private sector had been growing steadily from one
firm in 1975 to 16 licensed private valuation and estate agency firms and one public
institution i.e. the Ardhi University (Department of Land Management and Valuation)
in 1996. Recently due to the open market economy, more private firm emerged and
more than 30 registered and licensed valuation firm recognized as land economy
surveying firm governed by Professional Surveyors (Registration) Act of 1977 Cap 270.
According to section 2 of Professional Surveyors (Registration) Act no 2, of 1977 (Cap
270):
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“…"professional surveyor" means a person trained, qualified or possessing, adequate
skill and experience' to enable him to· practice them of—
(a)·examining the accounts. .condition, situation, durability, Tenure, or other interests
in, on properties of an estate, a building, or other structure, real property, and.
estimating. 'Appraising or determining the value thereof for the purposes of the
management, sale, purchase, investment, and mortgage, insurance or planning or
forecasting its future use or development.
In 1990s, the number of individuals desiring to operate as a real estate agents increasing
and the National Council of Professional Surveyors Act No. 2 of 1977 was facing
problems to register these individual under the Act while they registered as Real Estate
Agents under the Business Licensing Act of 1972 as a result of formulation of Tanzania
Institution of Valuers and Estate In April, 1997. TIVEA attracted a large number of real
estate agents most of whom they haven’t physical address because it allow associate
membership with lower qualification. (Komu, 2012)
2.4.1 Legal Framework Distinguishing Formal and Informal Estate Agents.
I. Formal Estate Agent
So to speak, formal estate agency involves real estate agents whereby his or her business
is recognized by the government and licensed under the Business Licensing Act of
1972. Since in Tanzania there is no specific law or provision to govern real estate agents
specifically these agents are regarded as formal because their businesses are recognized
by the government through registration under Business Registration Act of 1972. These
businesses are regulated by the Professional Surveyors Registration Act no 2 of 1978,
Contract Act, Common Law and Tanzania Institution of Valuers and Estate (TIVEA).
II. Informal Estate Agent.
Informal estate agents is the category of real estate agents who are not recognized by
the government and run their business without business licenses as provided under the
Business Licensing Act of 1972. Informal estate agents also play a great role on the
property market to link between buyer and sellers, to provide information about the
property for sell and let, to negotiate about the selling price or rent .the things that make
to be informal estate agents are:
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a) They are not registered under the Business Registration Act of 1972.
b) They are not regulated under the Professional Surveyors Registration Act
No 2 of 1978.
c) They do not operate under contract law and common law
d) They are not registered under Tanzania Institution of Valuers and Estate
Agents (TIVEA)
2.5 Operations of Real Estate Agents
Real Estate Agents operate as important people in facilitating real estate transaction
such as rent, buy, or sell property for clients. They perform duties, such as study
property listings, interview prospective clients, accompany clients to property site,
discuss conditions of sale, and draw up real estate contracts. Real Estate Sales Agents
can represent buyers, sellers, or both.
The operations of real estate agents in the real estate market cover up various tasks such
as:
Present purchase offers to sellers for consideration.
Confer with escrow companies, lenders, home inspectors, and pest control
operators to ensure that terms and conditions of purchase agreements are met
before closing dates.
Interview clients to determine what kinds of properties they are seeking
Prepare documents such as representation contracts, purchase agreements,
closing statements, deeds and leases.
Coordinate property closings, overseeing signing of documents and
disbursement of funds
The operation of real estate agent has been varying from country to country depending
on the law that governs and control the real estate agency. In California the real estate
agents as licensees have the responsibility in the real estate business that include;
Duty of Supervision; as a real estate agent should exercise reasonable supervision over
the activities of salespersons or unlicensed individuals, or as the designated officer of a
corporation, should exercise reasonable supervision over the activities conducted by the
corporation for which a real estate license is required.
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Trust Fund Record handling; Trust fund handling and record keeping is one of the
common task of the real estate agents, in case agents handle trust money on behalf of
others, they should have the expertise to maintain proper accounting records and end up
in proper control of their trust accounts. To manage this task clearly they are required
to understand and have the knowledge about the Real Estate Law which is very specific
as to how trust fund monies are to be handled and how records are to be maintained.
There are several principles of measuring the qualities of the estate agents basing on
various angles which can be broken into the following areas:
1. The ability to know the property owners (especially for informal estate agency).
The market knowledge of knowing the owners of the properties in the certain locality
is very crucial. A good agent should develop ownership data on every potential
development or redevelopment site.
2. The ability to know the tenants
An agent with good qualities will gather as much as he can the information of all tenants
both large and small tenants operating within the market area, the tenant intelligence
should go beyond knowing the names to critical location and site criterion for the tenant.
3. Clear knowledge of the deals involved in recent and current market.
The acute agent will know of all important deals transacted in their territory as such
deals define the economic character of the market, though recent and current deals are
not easy to uncover due to confidentiality within the parts involved but good
relationship between fellow agents and prospective tenants and purchasers is
imperative.
4. Knowing the property.
Understanding the physical land and property inventory of an area is the cornerstone of
an agent practice, know type of property, amount of each type, special features of
particular property and the plan for new development is essential.
5. Competition knowledge
Acute agent will be aware of the knowledge of who else is in the market and what size
share of that market they are likely to absorb, it is wise to know how the competition is
operating, its strength, its weakness and its marketing strategies.
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The importance of real estate agents are such as are often in the better location of
attracting business, a good agent have detailed knowledge about a particular market in
which they are operating, being thoroughly familiar with current and future level of
demand and supply, they have also additional specialized knowledge and experience,
furthermore they make the market alive as they have personal contacts with other agents
and decision makers within the government departments. According to (Wilkinson and
Richard 2008) real estate agents (formal and informal agents) are important in the
transaction of real property, and in order to be effective, the agent must be continuously
involved in the market place so that they are aware of changes in market conditions.
The efficiency of a market depends on both technical and economic characteristics. This
is to say that physical conditions should ensure that price differences within the market
are eliminated easily and quickly. This comes about by buyers moving to the cheaper
parts and sellers moving to the dearer. This requires that both buyers and sellers must
have up to date knowledge of price differences and base their actions solely on price
(Harvey, 1992).
“Grading is the most efficient form of description….”
With the real property market, certain factors not only make it difficult to obtain up to
date knowledge but lead to dealing costs being relatively high. As regards the first,
knowledge tends to be obtained infrequently and is limited geographically.
For estate agents therefore, where knowledge is difficult to obtain, their specialized
functions assume an even greater importance for the smooth working of the market,
since they provide information on the availability, type and price of properties, assist or
conduct negotiations, arrange finance and insurance and collaborate with conveyancers.
(Harvey, 1992)
Real property markets consist of a number of separate markets. Differentiation can be
by the type of housing offered or geographical reasons. (Harvey, 1992)
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2.5.1 Operations of Formal Real Estate Agents in Tanzania
In Tanzania the purchase or sale of a home or investment property is among the
significant and complex activity which led people typically seeking the help of real
estate brokers and sales agents when buying or selling real estate .
Real estate brokers and sales agents in Tanzania have a thorough knowledge of the real
estate market in their communities. They know which neighborhoods will best fit
clients’ needs and budgets. They are familiar with local zoning and tax laws in Tanzania
and know where to obtain financing.
Agents and brokers also act as intermediaries in price negotiations between buyers and
sellers. When selling property in Tanzania, brokers and agents arrange for title searches
to verify ownership and for meetings between buyers and sellers during which they
agree to the details of the transactions and in a final meeting, the new owners take
possession of the property.
They also may help to arrange favorable financing from a lender for the prospective
buyer; often, this makes the difference between success and failure in closing a sale. In
some cases, brokers and agents assume primary responsibility for closing sales; in
others, lawyers or lenders do.
In Tanzania, the operation of real estate agent start at ideal stage, that is before you go
around looking at properties, meet with your agent to get an idea of the type of house,
apartment, or land you would like. In this prequalifying phase, the agent determines
how much you can afford to spend. In addition, the agent and the buyer usually sign a
loyalty contract, which states that the agent will be the only one to show houses to the
buyer.
An agent or broker then generates lists of properties for sale, their location and
description, and available sources of financing. In some cases, agents and brokers use
computer to search and give buyers a virtual tour of properties that interest them.
Once the buyer and seller have signed a contract, the real estate broker or agent in
Tanzania must make sure that all special terms of the contract are met before the closing
date. The agent in Tanzania must make sure that any legally mandated or agreed-upon
25
inspections, such radon inspections, take place. In addition, if the seller agrees to any
repairs, the broker or agent ensures they are made.
Increasingly, brokers and agents are handling environmental problems as well, by
making sure that the properties they sell meet environmental regulations. For example,
they may be responsible for dealing with lead paint on the walls.
Real estate agents in Tanzania who sell commercial, industrial, agricultural, or other
types of real estate require knowledge of that particular type of property and clientele.
Selling or leasing business property in Tanzania requires an understanding of leasing
practices, business trends, and the location of the property. Agents in Tanzania who sell
or lease industrial properties must know about the region’s transportation, utilities, and
labor supply. Letting and selling agency has not been considered as a professional
practice but rather as retail business with individuals being licensed under the Business
Licensing Act of 1972 where an individual would get practicing license ostensibly as
Real Estate Agent but technically as Sales Person.
2.5.2 Operations of Informal Estate Agents in Tanzania
The informal real estate agents deliver the agency service in the real estate market
mostly in urban areas of developing countries and specifically in unplanned areas and
they are not recognized by the government concerned. The services serves well the
dwellers and the entire community of a certain locality where they are found, and they
operation in commission basis. Their operations in real estate market to great extent
depend on experience rather than education. The tasks performed by informal real estate
agents among others include;
1. Gathering the information about the properties for sale and rent
2. Interview clients to determine what kinds of properties they are seeking
3. Arranging the property inspection to prospective buyer or tenant
4. Disseminate property market information
Generally the Real estate agents as middle man facilitate the transaction by transferring
information from one side to another, so the flow of information depend on the agents who
may facilitate or withhold some information for the different reasons the figure 2.1 illustrate
the logic flow of information.
26
Figure 2. 1The flow of property market information flow with connected by Agents
Source: researcher (January, 2015)
2.5.3 Practice of Real Estate Agency in the United States of America
In the United States of America, (DeKleer and Matamoros 2012), Rice (2007), and
National Association of Realtors, (1986), indicate that Real Estate activities in United
States of America are highly organized. In this regard, important lessons were learnt.
There are specific and clear guidelines and laws to control the entrance into the property
management sector. There are clear and well-designed policies to bring sanity to the
industry. There are minimum qualifications and experience for individuals or company
to embark on any nature of real estate management activities. Any serious single
violation of the legal requirements calls for immediate prosecution. National as well as
individual State Real Estate Agency Boards do exist, to account for direct and daily
industry activities.
2.5.4 Practice of Real Estate Agency in South Africa
South Africa established Estate Agency Affairs Act, in 1976. It is interesting to note
that these legal guidelines were set almost 40 years ago, and are still actively being used
and adhered to today. The South African approach is a bit more interesting as there are
two separate mechanisms to oversee developments in real estate industry.
There are two specific boards which operate independently to establish the same
mission at different levels. These boards are; Estate Agency Affairs Board (EAAB),
and the Institute of Estate Agents of South Africa (IEASA). There's a world of
difference between the IEASA and the EAAB. The EAAB is the official regulating
authority for the estate agency profession in South Africa, and every estate agent must,
by law, be registered with it. The EAAB also oversees the qualification of estate agents,
and is principally the Policy Making board. On the other hand, the IEASA is a
professional organization that supports its members, and membership is voluntary. The
Disseminate Information by Agents Information received by agents
BUYERSELLER AGENT
Disseminate Information by Agents
Information received by agents
27
IEASA has a national office, and regional offices in the major centers. The IEASA looks
after the interests of its member’s estate agents and agencies, and is the legal
representative for the profession.
2.5.5 Practice of Real Estate Agency in Mozambique
Mozambique society in general is well known locally for a deep rooted culture of using
the unregistered informal real estate and property management agents for all their
residential and business property needs. Whenever anyone wants to buy or rent a house,
buy or rent an office, it is inevitable in Beira (Capital city of Mozambique) to come
across the highly popular informal real estate and property management intermediates,
commonly called commissionistas in the local language. Many are undesirable cases
that have been reported in national media. According to a specific report that was done
by the national newspaper, Savana, the agencies enter into serious conflict with the
property owners and property seekers, at times culminating with death threats.
Numerous complaints from the Mozambican public surface concurrently about the
charging of commission from both buyers and sellers of the properties, unspecified
threats when one refuses to give a second commission. There are incidence where the
house selling agencies (comissionistas) end up robbing their very clients due to the
simple fact that they would have fully inspected a property and now fully understand
the house contents and security conditions.
2.6 Information Quality and Dimensions
Information quality is commonly thought of as a multi-dimensional concept with
varying attributed characteristics depending on an author's philosophical viewpoint
(Klein, 2002). Most commonly, the term "Data Quality" is described as data that is "Fit-
for-use" (Wang & Strong, 1996), which implies that it is relative, as data considered
appropriate for one use may not possess sufficient attributes for another use (Tayi &
Ballou, ,1998). Information Quality has both subjective and objective dimensions
dependent on the information and the application to which it is applied. For purposes of
this research, this is information in the in the imperfect property market as received and
disseminated by informal estate agents who have a monopoly of this information.
28
To obtain a realistic measure of information it is therefore necessary to examine each
of the contributing dimensions. Continuing from this, a minimum set of dimensions that
can define quality should be an independent set of dimensions. To this end, researchers
have employed the concept of “quality dimensions” or attributes which are used to
distinguish distinct properties that define information quality (IQ) and are clearly a
useful constructs that allows the creation of a number of possible metrics. It must be
noted however, that there are no fixed or agreed set of information dimensions and their
definitions in the literature as many authors have many different criteria developed to
suit preconceived purposes. It is also obviously clear that a large number of dimensions
are necessary to define information quality with a high degree of precision. However
the effort of establishing measures and applying these to a large amount of information
would be prohibitive. Therefore a restricted set of information quality dimensions needs
to be established.
2.6.1 Information Quality Model and Categories
For the purposes of this study, and arguing for a relation of informal estate agency to a
service and real property to a product, we have adopted the Product And Service
Performance Model For Information Quality (PSP/IQ) Categorization, which is
based on the data customer and data specification as advanced by Lee et al. (2002) and
Pipino et al. (2002) This has four categories as summarized in table 2.1.
Table 2.1 PSP/IQ Information Quality Model
CATEGORY WHICH RELATES TO
INTRINSIC Quality of data in its own right
CONTEXTUAL Quality of data with respect to task at hand
REPRESENTATIONAL Quality of how data is represented by the system
ACCESSIBILITY Quality of how data is secured and accessed by the system
Source: Lee et al. (2002) and Pipino et al. (2002)
29
It was also established that these grouped dimensions are independent in their
characteristics and a further refinement of the major groups was necessary. The result
is as displayed in table 2.2
Table 2.2 Conjugation of Information Quality Group Dimensions into Attributes
CATEGORY SUBJECTIVE OBJECTIVE
INTRINSIC Accuracy
Currency
Consistency
Objective
Reliability
CONTEXTUAL Believability/Trustworthiness
Reasonability
Precision
Relevancy
Completeness
Precision
Timeliness/Updateness
REPRESENTATIONAL Reputation Identifiability
Security
ACCESSIBILITY None in our case None in our case
Source: Authors Construct, 2015).
From the previous deliberations, the following information quality dimensions were
presented and defined.
Accuracy: The degree to which the data is regarded as a correct value and free-of-error.
Believability: The extent to which the data is regarded as true and credible.
Consistency: The degree to which information remains constant between sources.
Completeness: The degree to which data is not missing and is of sufficient breadth and
depth for the task at hand.
Currency: The extent to which the information remains relevant to the problem at hand.
Identifiability: The degree to which data can be uniquely identified to a source.
Objectivity: The extent to which the data is unbiased, unprejudiced, and impartial.
Precision: The level at which the data has information in significant figures at a given
order of magnitude and unit of measure.
30
Reasonability: The degree to which data conform to reasonable expectations.
Relevancy: The extent to which the data is applicable and helpful for the task at hand.
Reliability: The extent to which the data is true, reliable, valid and accurate.
Reputation: The degree to which the data is highly regarded in terms of its source or
content.
Security: The extent to which access to data is restricted appropriately to maintain its
security.
Shareability: Where the information is from and if the information is shared.
Timeliness: The degree to which the data is sufficiently up-to-date for the task at hand.
Validity: Means whether the data represent what we think they represent.
Considering the coverage and time limit for this study, it was considered logical to
choose few among the above derived information quality dimensions and use them
effectively to analyze the quality of information received and disseminated by informal
estate agents.
The following dimensions were considered most appropriate and their corresponding
attribution and measurement scales to assist and guide further detailed analysis.
1. Reliability
A. Attribution: Has the informal estate agent source got a history of
consistent work?
Measurement Scale: Binary
B. Attribution: Is the property market information in electronic form?
Measurement Scale: Binary
C. Attribution: Is the technique used to acquire the information reliable?
Measurement Scale: Binary
2. Timeliness/Updateness
A. Attribution: Does the information have a time limit?
Measurement Scale: Binary
B. Attribution: Is the information up-to-date?
Measurement Scale: Binary
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C. Attribution: Last known time of update to the information?
Measurement Scale: Scale
3. Completeness
A. Attribution: Is all the information for the current problem present?
Measurement Scale: Scale
B. Attribution: Is the information of sufficient depth and breadth for the
task?
Measurement Scale: Scale
4. Validity
A. Attribution: Is the information self-consistent?
Measurement Scale: Binary
B. Attribution: Does the information agree with other sources?
Measurement Scale: Scale
C. Attribution: Is the information logically sound?
Measurement Scale: Binary
D. Attribution: Are there alternative methods to validate the information?
Measurement Scale: Scale (Likert Scale)
2.7 Conclusion
This part provides in summary form what is narrated in this chapter of the project work
concerned with the role of the Informal Real Estate Agent in Property Market
Information flow. Furthermore, the chapter provides concepts on real estate agency, real
property market, and functions of real estate agents, real estate agents and ethics. Also
the chapter described more on the operation of both informal real estate agents in
Tanzania as well as the practice of the real estate agents in other countries including
United State of America, South Africa and Mozambique. This will enable us to perform
the task within the boundaries and with much courage aimed at achieving the
significances fore mentioned.
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CHAPTER THREE
THE ROLE OF INFORMAL REAL ESTATE AGENTS IN
PROPERTY MARKET INFORMATION FLOW IN KINONDONI
MUNICIPALITY
3.1 Introduction
This chapter is composed of what was found out in the field on the role of informal real
estate agents in Kinondoni Municipal in property market information flow. This include
first putting up background information of the study areas which are Sinza and
Makongo to examining the sources of information used by informal real estate agents
in the property market, assessing the quality of information received and/or
disseminated by the informal real estate agents. Furthermore the chapter presents an
analysis of whether informal estate agents withhold or facilitate the flow of information
in the property market, and the factors leading to sharing/withhold of property market
information. Finally the summary of the chapter will be incorporated.
3.1.1 Background of Case Study I: Sinza
3.1.1.1 Geographical Location
Sinza ward is the one of ward found in Kinondoni Municipality, Dar es Salaam. On the
North, it borders Mwenge and Kijitonyama, on the East it borders Tandale and
Manzese, on the South and Western side borders Ubungo.
Map 3.1 Showing Geographical Location of Sinza Ward in Kinondoni Municipality
SINZA
Source: Google Maps (January 2015)
33
Sinza started as a settlement area in the late 1970s, before which existed a cashew nut
plantation and valleys for rice cultivation. The common tribes found there by then were
the Zaramo, Matumbi and a few Makonde. This area according to the Dar es Salaam
master plan was planned as a residential area for low-income earners; those people who
earned 400 to 1,000 shillings per month at that time.
3.1.1.2 Population Size, Growth and Composition by Age and Sex
According to the 2012 National Census, Sinza has a population of 18,892 male and
21,654 female people making the total of 40,546 people. The average household size is
4.1 and the sex ratio is about 87. In general Sinza is facing the problem of rapid increase
in population due to rural - urban migration, increase in commercial activities in the
area and natural population increase.
3.1.2 Background of Case Study II Makongo
3.1.2.1 Geographical Location
Makongo is one of the wards in Kinondoni Municipality that borders on the East by the
Bagamoyo road, the Sam Nujoma road on the South, Kawe ward on the North and
Ubungo ward on the West.
Map 3.2: Location of Makongo Ward in Kinondoni Municipality
Makongo
Source: Google Maps (January, 2015)
34
3.1.2.2 Population Size, Growth and Composition by Age and Sex
Makongo has a number of 21289 males and 22507 females making 43796 people. The
average household size is 4.3 and the sex ratio is about 95 according to the National
Census of 2012.
3.2 Development of informal estate agency in Kinondoni
The development of informal real estate agency in Kinondoni municipality was the
result of the direct increase of the population as well as the development of urban city
sprawl. As the number of people increases, the need for more houses to accommodate
this population also increased, this in turn led to more demand of residential and
commercial properties. The demand for properties and shortage in information flow
about the properties that was contributed much by the presence of small number of
formal property agencies to provide the services caused the rise of people who were
willing to seek and disseminate the information (informal real estate agents). Shortage
of formal agencies automatically becomes the catalyst to some of the people who had
the knowledge of the neighbourhood in Kinondoni to act on behalf of the formal agents
so that they could provide the information about the availability of the properties
together with the price.
It should be born in mind that not only the failure of the formal sector to provide the
intended service to the customers that led to the growth of the informal estate agency.
Also due to the geographical limits in term of knowledge about the neighbourhood and
the availability of the properties for sale or let. Another reason to the development of
the informal estate agents was the time limits and work specialization which forced
people to concentrate much to their work and left the task of looking for the properties
for sale or let to other people on behalf of them.
These people known as “madalali” were required to provide information about the
properties to the one who need that information with the promise of being given
commission for the service offered, hence gradually the informal real estate agency
started to take its pace.
As the need of information became much more increased, the number of the informal
estate agents increased, they started to work as solo, then in small groups. It was found
35
that these people were located in areas around the neighbourhood popularly known as
“vijiweni”, example of these in Sinza are such as kumekucha, mori and Africasana,
while in Makongo are such as KK, Makongo CCM, Makongo stand, Mpakani. The
informal estate agents started to operate in small area, as the property market increased
and urban sprawl it resulted to expansion of the area of operation. In addition, number
of “Vijiwe” increased to various location and their role in looking for, receiving and
disseminating information about the properties from various sources increased.
3.3 Sampling, Data Collection and Analysis Methods
In this study the sample included a number of respondents who were informal real estate
agents, landlords, tenants or buyers and local government administrators found within
Sinza and Makongo. The total sample were 75, the informal estate agents were all those
who were found in the respective centres (Vijiweni) and who were conversant with the
practice of real estate agency qualified to be respondents, the methods of data collection
to the informal estate agents were questionnaire and interview.
The landlords and tenants selection based on the fact that they form the other parts in
information channel while the informal agent is the middle part links the flow of
information. In case of landlord and tenant, respondents were also chosen from the
selected case study areas and the data were collected through the same methods of
questionnaire and interview. The questionnaire papers were designed in such a way that
they can help in obtaining the information and establishing the relationship between the
data collected as can be seen in the appendix.
3.4 Social Economic Characteristics of Informal Estate Agents.
The social economic characteristics of Informal real estate agents is one of important
aspect in studying the agents since the operations and various deals in the real estate
market can be affected by these characteristics for example per say education can affect
the operation of agents in event of written contract with the client. It was found out that
the informal real estate agents differs in social and economic aspects. The level of
education among the real estate agents significantly differ, most of the agents have
attained primary education few of them attained “O” secondary education. Also it was
found that the age of agents range from 30 to 60 years with different level of work
36
operation the maximum of which was 30 years. 80% of the agents were male and 20%
were female.
3.5 Sources and Methods Used By Informal Real Estate Agents to Gather
Property Market Information
Informal estate agents have many different and varied ways of obtaining information
from various sources using different innovative and, in the wake of advancing mobile
and internet technologies, continuously changing methods. Information in this regard
may include knowledge as to the presence of a property to rent buy or sell, the price at
which the property may rent, sell, or buy, and lastly the condition of the said property.
From the conducted interview, it was found out that informal estate agents employ many
sources other than the property owner and many methods are utilized to this end. These
are
1. The Property Owner
2. Property Valuers
3. Social Networks
4. Other Informal estate agents
5. Street Billboards
6. Searching around the streets
Communication with Property Owners
A good number of informal estate agents use the property owner as the sole source of
information regarding the existence of a vacant property or plot, price of the property
to be rented or sold and the condition of the property. In fact that the researchers found
out that 92% of interviewed agents accepted as having used the seller as the sole source
of information regarding the existence of the property to be sold or bought in
combination with other methods and source of information.
Property Valuers
Property valuers are also used as sources of information, either alone, or in combination
with several other methods. At times, informal estate agents rely on the informed
opinion of valuers to have an idea of the value of properties that they want to deal in,
37
especially if legal processes are to be followed – usually renewal/occupancy of a right
of occupancy. In Sinza, 7.7% of respondents responded that they use property valuers
informed opinion in conjunction with the owners judgment to arrive at the property
asking price. This practice however seems only to apply in areas with highly developed
real estate activity of Sinza. In Makongo area, there was no one respond to using the
services of property valuers.
Social networks
Informal estate agents displayed a very highly developed system of physical and online
social networks in the whole process of dealing in property. One of the interview agent
actually argues that all informal estate agents in Dar es Salaam know each other. They
also obtain properties for sell/ buy and corresponding clients from their friends or
relatives. Here, friends and relatives act as a link by introducing and directing those co-
workers who own properties to the informal estate agent when they want either to sale
or to lease.
Furthermore agents responded that they use social networks as a source and a way to
acquire valuable information about property in online social media. In Sinza 8% of the
interviewed agents maintain an active online presence in addition to searching around
the streets. In Makongo 42.9% of all interviewed agents responded that they use social
media in addition to information from other agents and seller information to acquire
property information. This increasing percentage can be attributed to increased social
media communication technologies
38
Plate 3.1 Informal estate agents advertisement on an Instagram page
Source Research field (January, 2015)
Other Informal Estate Agents
Informal estate agents agree that their business is a cooperative venture. Without the
collective correspondence, it is not possible to exist in the system. An agent with a client
in need of a property to rent may lose that client if he tries to find the property all alone.
Similarly, an agent with a property to sale or lease in conditions of multiple agency, in
absence of written or oral agreements may lose that property if he does not engage other
agents to find a suitable client within required time. The accruing commission has to be
39
shared according to stipulated and well laid down procedures of equal shares for equal
tasks.
Source field completion (January 2015)
Street Billboards
In this method the informal estate agents take note of recently prepared selling/letting
boards and that have been put before the house so that any passer be able to see. These
boards containing properties for sale or letting are presented with the headings “Nyumba
inapangishwa” House for Rent “Nyumba inauzwa” House for Sale and “Kiwanja
inauzwa” Plot for sale. In Sinza this is not very common as no agents admitted to have
used street billboards, this can be explained by more online activity on social media. In
Makongo 14.3% of the agents agreed to have utilized street billboards to identify
properties for transactions.
58%
76.90%
25%
15.40%
17%
7.70%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
MAKONGO
SINZA
sharerability
case
stu
die
s
Figure 3.2 show the wiliness of informal
agents to share information
BOTH NOT SHARE SHARE
40
Plate 3.2 Street billboards at Makongo
Source: (field 2015)
Searching Properties in the Streets
In this method, informal estate agents obtain properties for sale or letting through
physical inquiry that is passing street-to-street searching for properties. They may ask
people living in that neighborhood whether there are properties for sale or lease
(sometimes faking or pretending to be buyers or prospective tenants seeking property).
Through this method informal estate agents will be in position to note all properties for
sale or leasing found in the neighborhood.
In Sinza 8% of the respondents agreed to have searched for properties around the
streets in addition to social media campaigns. In Makongo no agents said that they
walked around looking for property – possibly because of the limited geographical
area in Makongo and rugged terrain.
41
3.6 Quality of Information
3.6.1 The Quality of Information Received by informal estate agents in Sinza and
Makongo)
a) The reliability of information
The reliability of the information depended on whether the informal real estate agents
trust the information received, reason being trusting the sources of their information. It
was found in the field that 68% of the respondent accepted that they trust information
received because they obtained information from the seller, 32% of respondents
disagreed that the informal received is reliable.
b) The validation of information
It was found that 100% of the respondents accept that they prove the information
obtained from their sources is correct, so as to be confident of the information received
through own inspection of the said property, by asking the neighbors and asking from
the local government leaders.
c) The updateness of information
According to the findings found in the area, it showed that 84% of the respondents
receive updates information from the source, if anything happen to the subject property,
till the customer is obtained for example changes of the price and condition of the
property and 16% responded that they do not receive update information.
d) The completeness of information;
It was found in the field that 68% of the respondent accepted that the information they
receive is complete because the sources of information they use supply to them all
necessary information about the subject property and only 32% of respondents
disagreed that the informal received is complete.
The table below show the summary of the dimensions used to measure the quality of
information as found out in Sinza as the one of case study area.
42
Table 3.1 the summary of dimension of Quality of information in sinza and Makongo
Quality
dimension
Completeness Updatenes Shared Reliability Validity
Yes 68% 84% 88% 68% 100%
No 32% 16% 12% 32% 0%
TOTAL 100% 100% 100% 100% 100%
Source: Researcher’s Compilation, 2015
3.6.2 Quality of Information Disseminated
The analysis was based to measure the extent to which information disseminated by the
Informal real estate agents to the landlord , sellers, tenants and buyers of the property.
The analysis is based on the extent from highly credibility, medium credibility or low
credibility as it was observed that the respondent’s that is landlords/ sellers and
tenants/buyers in our case study area uses Informal real estate agents to get information
in the real property market. Property owner uses to get tenants and tenants used to get
information on the rental houses, also the buyer and seller of the property uses the
Informal real estate agents to link them.
Information disseminated to the tenants
It was found out in case study area the tenants responded has different level of the
trustworthiness to the informal real estate agents. In the interview, other respond high
credibility to the information disseminated other medium while others low, as the table
3.4 illustrate.
Table 3. 2 Shows Quality of Information Disseminated, Credibility Given By Tenants
Area High Credibility
% of Respondents
Medium Credibility
% of Respondents
Low Credibility
% of Respondents
SINZA 14.3 57.1 28.6
MAKONGO 13.3 60 26.7
Source: researcher’s compilation 2015
43
The trustworthy of informal real estate agents to tenants
The analysis based to measure the extent to which information disseminated by the
Informal real estate agents to the tenants about real properties was trusted. Also the
analysis was aimed to measure the extent to which the tenants trust these agents. The
extent was measured on credibility level from highly credibility, medium credibility to
low credibility. It was found out in case study areas the tenants responded has different
level of the trustworthiness to the informal real estate agents. 66% of the respondent
revealed medium credibility, 23% low credibility and 11% high credibility.
Figure 3.2 Summary of Respondents on Average Information Credibility
Source: Author’s Compilation 2015
The trustworthy of informal real estate agents to landlords
The analysis based to measure the extent to which information disseminated by the
Informal real estate agents to the property owners about real properties was trusted. In
addition, the analysis was aimed to measure the extent to which the landlords trust these
agents. The extent was measured on credibility level from highly credibility, medium
credibility to low credibility. It was found out in case study areas the property owners
responded have different level of the trustworthiness to the informal real estate agents.
54.3% of the respondent revealed medium credibility, 15% low credibility and 28.7%
high credibility.
11%
66%
23%
High Credibility Medium Credibility Low Credibility
44
3.7 Facilitation and/or Withholding of Property Market Information
In this analysis, the main aim is to study on the matter of how the informal estate agents
withhold or facilitate flow of information in the property market. To test whether
informal estate agents facilitate or withhold information, the means of testing was
finding out whether informal estate agents share, information obtained from the sellers,
buyers and among agents themselves. This information was collected through interview
and questionnaire, which was carried out in Sinza and Makongo in Kinondoni
municipality.
In case study areas it was found that some respondents facilitate property market
information flow, others withhold information while there were also those who do both.
3.7.1 Case I Sinza
Respondents said that sometimes they have to share the information so that the
collaboration and social ties between various agents who usually are found in various
areas can be maintained, they revealed that on sharing information, it create trust among
the agents hence in turn the agent when not have any. In Sinza where the respondents
were found in three different areas which are Kumekucha, Mori and Africa Sana, it was
found that 77% of the total respondent were facilitating the flow of property market
information, 15% responded that they were not sharing the information among the
agents, 8% replied that they do both (they facilitate as well as they withhold) as figure
3.3 illustrate.
45
Figure 3.3 Proportion of Property market information flow in Sinza
Source: researcher’s compilation, 2015
3.7.2 Case II Makongo
Respondents said that they sometimes share the information that the collaboration
between the agents who usually found in various areas so that the good relationship can
be maintained; and others also responded that they do not share the information. It was
found that 58% of the total respondent were sharing information, who not sharing were
found 25%, those who do both (sharing and not sharing) were 17%.
Figure 3.4 Proportion of Property market information flow in Makongo
Source: researcher’s compilation, 2015
SHARE77%
NOT SHARE15%
BOTH8%
SINZA
SHARE58%
NOT SHARE
25%
BOTH17%
MAKONGO
46
Therefore, in general all case studies, it was found that 68% of the respondent said that
they share the information hence facilitate the information flow of the property market,
20% were not sharing the information and 12% do both (sharing and not sharing the
information)
Figure 3.5 The extent of sharing information in Sinza and Makongo
Source: Researcher’s Compilation, 2015
3.8 Factors That Influence Informal Estate Agents to Facilitate Property
Market Information Flow
a) To speed up transaction
The respondent revealed that they share information so that they can obtain the buyer
easily hence the transaction will be speed up, the more the information is shared the fast
the availability of buyer and tenants in the property market, since the buyers are not
only found within the area of operation of the agents but also found in other areas where
the agent is not operating, thus the need to share the information arises.
b) To avoid losing the client (buyer/seller)
The respondents revealed that they are obliged to share the information among
themselves because withholding information can result to the loss of the customer. Once
the agents get information about the property for sale or let, on sharing that information
they can easily get the customer who will be connected to him by a fellow agent but if
SHARE68%
NOT SHARE20%
BOTH12%
ALL CASES
47
they not share the information they can lose the customer as the client can decide to find
another agent hence the deal can be lost.
c) Good will among the agents (Cooperation)
It was found out that by sharing of information, agents create and maintain good
relationship among them. This creates good relations between the agents as it builds
conducive working relations between one agent and another.
d) The property market situation
The agents put clear that, there are times when there is necessity of sharing information,
when the current property market is not good the need to speed up the flow of
information among the property agents is very important, when there is high price in
acquiring the property the number of buyer available in the market also decrease so
there become shortage of customer, as the result the need to share the presence of
property and whereabouts of buyer is necessary among the agents. Also since it is the
common knowledge that property market in nature has illiquidity characteristics,
therefore the agents have to share the information among them so that they can secure
the customer within a short period of time.
e) Easiness in performing their work
The respondents revealed that in order to enable their daily responsibility to run
smoothly and cater the need of their customer (buyers/sellers/tenants) the need to share
the information arise, the increasing demand for the property to buy/sell or let usually
need good flow of information among the agents, their collaboration helps to enable
their daily work to be easy, run smooth and be accomplished on time.
3.9 Factors That Influence Informal Real Estate Agents to Withhold
Property Market Information flow
a) Kind of deal available
The agents revealed that there are some occasion in which the necessity to withhold
information arise, when the work available can be handled by the agent, the need to
involve and disseminate information to other agents also decrease, not only that but also
when the transaction of the deal involve small amount of money the need to disseminate
48
the information also decrease as well, because it will reduce the commission of that
agents, but if the transaction involve huge amount of money the need to disseminate
information so that the deal can be executed arise.
b) Personal interest
The respondents revealed that sometimes they deny to share information in order that
the available commission will not be shared among the agents but will be only taken by
the single agent who has facilitated the transaction, another reason on which was shed
the light on is that the agent can withhold information so that he can advise the owner
of the property to increase the price so that he can get high commission, some agents
withhold information in order that he/she can purchase that property for himself/herself
and sell it at high price.
c) Current situation of property market
The agents put clear that, there are times when there is necessity of not sharing
information, when the current property market is good the need to speed up the flow of
information among the property agents is not important, when the property market is
conducive the number of buyer available in the market also increase, as the result the
need to share the presence of property and whereabouts of buyer is not necessary among
the agents.
3.10 Information Dissemination and Withholding Influences Commissioning
of Informal Estate Agents
It was found out that the estate agency industry is highly competitive, and the emergence
of social networks has given property buyers and sellers more information and more
choices than ever before. To counter this relative advantage and maintain monopoly
over property information, informal estate agents have developed innovative ways to
share information and this has implications for structure of commission.
It was found out on field that sharing of information that leads to a successful deal
imposes a duty of necessity on the agents to share the commission amounts
correspondingly. This may act as a barrier to information sharing and may result into
withholding of information in the property market.
49
Commissioning for informal estate agents and information sharing are very interrelated
and variable depending on:
Type of property to be dealt with (Land, House)
Use of the property (Commercial, Residential or Industrial)
Nature of the transaction/deal (Sale/Lease)
Location of the property (High end areas – Masaki, Oyesterbay,
Upanga as compared to Low end areas – Bunju, Kimara and
Mabwepande)
Expected commission (High or Low).
a) Type of Property.
If the property to be dealt with is land, the commission is paid as a percentage of the
sale price (For agents in Sinza 10% and for those in Makongo 12% - possibly due to
higher land values in Sinza) and agents expressed concern over the possibility of fraud
on the part of the sellers who may not fulfill their part of the agreement. If the property
is a house, then alternative means have to be found including a percentage for a sale
which is paid by the buyer or a monthly rental payment.
b) Use of the property (Commercial, Residential or Industrial)
The use of the property too, influenced both the commissioning and sharing of
information. It was found that commercial and industrial properties are associated with
higher rents and hence the incentive to share increases. For residential properties, the
expected commissions were much lower and hence the incentive to share the
information was much lower and the effect of losing the deal were much more
insignificant.
c) Nature of the transaction/deal (Sale/Lease)
The nature of the transaction too is an important factor which determines first from
whom the commission comes from, the possibility of fraud on the part of the agent’s
client and the expected commission amount. If the transaction is a sale, the seller pays
the commission while if it’s a lease, the buyer/tenant pays the commission. It was also
established that it is very risky on part of the agents to provide a seller with a client as
soon after the seller may change mind and decide not to pay the agents. Expected
50
commissions were also much higher for sales that for leases and higher commissions
are associated with information sharing.
d) The location of the property.
It was found out that while informal estate agents have fixed bases around which they
stay most of the time ‘KIJIWENI”, they have widely variable areas of operation. Infact,
some even said that “Madalali wote Dar tunajuana” roughly translated to “All agents
know one another in Dar es Salaam”. The location of properties in high end areas is
associated with higher rents which are payed for by the seller and hence possibilities of
higher commissions for agents in areas such as Upanga, Masaki, and Oyesterbay
necessitated the dissemination of information. In the lower end areas there are lower
commissions that are payed for by the buyer who usually bargain to the fullest of ability
and circumstance. This lowers down the motivation for information sharing in these
areas.
e) Expected commissions.
Where commissions are expected to be higher, informal estate agents were generally
found to be more willing to share the information because even shared dividends would
be satisfactory to the agent. Where commissions are expected to be lower, informal
estate agents generally chose to withhold the information and work to secure the other
end of the deal alone.
3.11 Challenges Face Informal Real Estate Agents
The practice of the Informal real estate agents according to our study is facing with
many challenges which includes the followings:
Denial of commission.
It is the duty of the landlord to pay commission to the agent as it agreed during their
agreements, but this is vice versa in which the Landlords do not pay the agents once the
property has been sold or leased .On other hand the landlord pays few commission to
the agents which is mainly against to what was agreed before, also the landlord made
this in installment which also affects the agents. This was found to be the main challenge
facing the informal real estate agents in their practices which they cannot report the case
anywhere because there is no any laws which regulates them.
51
Risk of life to the agents
Also the agents are facing with this as the problem which endangers there life , and
this is the direct threat from the landlords in which when the agents demands their
commission the landlords assumes that is the disturbance ,also this is another challenge
facing mainly the informal estate agents in their practices.
Conflicts between the informal real estate themselves
This is another challenge facing the informal real estate agents in their practices in
which the agents are subjected to conflicts which mainly also associated with
commission in which the one agent can have a property while others have the client so
they agree to share the commission equally . This becomes adversely in which once the
property is leased or sold the agreement is violated due to personal interest in which
everyone wants to accumulate more commission than the other. And this is due to the
lack of regulating machinery in their work.
Complaints from the sellers and buyers to the agents.
Also this is the challenge much caused by the agents in the way of facilitating to sale or
lease the property in which the agents do not disclose all the information of the property
including the encumbrances of the property like not disclosing if the property have the
mortgage or any other bills which mainly affects the tenants. Landlords also complained
about the behavior of the tenants who have been brought by the tenant. Also this is the
challenge facing the informal real estate agents in their practices.
3.12 Informal Real Estate Agents Adhere To Principles Of Ethical Conduct
It was found from field most of the informal real estate agents said that they abide by
ethical standards that guide their business include obedience, loyalty ,honest,
confidentiality, disclosure and care. On the other side of the respondents 80% of the
tenants responded that some of the informal real estate agents they are not trustworthy
in their work for example they lie about the condition of the building and price and they
do not provide full information about the property. Also informal real estate agents they
work for their interest not for the interest of the client they do not care about their
customers for example tenants and buyers claim that informal estate agents increases
price of the property because of their interest of getting high commissions and only 20%
52
responded that informal estate agents follow their ethics. On the side of the landlord and
sellers also about 45% of respondents said that informal estate agents they are not honest
they only care about their interest lather than their client and 55% responded that
informal real estate agents are trustworthy, honest and confidentiality. Due to this
unethical behavior, informal real estate agents cause many conflicts to the buyer and
sellers for example conflict caused by double selling or letting of the property,
unsatisfactory condition of the property and conman. All these behaviors affect the
quality of information in the property market.
3.13 Conclusion
This chapter provides various findings on the case study selected, the chapter analyses
the various sources and methods used by informal real estate agents to get property
market information, furthermore the chapter analyses the quality of information
disseminated to the tenants, buyers, sellers and Landlord of the property and factors that
influence them to facilitate or withheld property market information. The chapter
analyses various findings, which was gathered through observation, interview, and
questionnaire, which is vital in the recommendation of this research.
53
CHAPTER FOUR
SUMMARY OF THE FINDINGS, RECOMMENDATIONS, AND
CONCLUSION
4.1 Introduction
The previous chapter of this study actually relied on the discussion of findings within
the study areas where data analysis and presentation was carried out using relevant
techniques and tables, pie charts and bar graphs for the illustrations respectively. This
last chapter of the study comes in to lay down a summary of findings as analyzed in the
previous chapter. It also aims at putting down basic recommendations relative to the
study findings and lastly provides some conclusive remarks basing on the study as a
whole.
4.2 Summary of Findings
In conducting this study, various things have been revealed regarding the informal real
estate agent including sources and method used by the informal estate agents, the quality
of information and the flow of the property market information nature and environment
of their operation. The following is a summary of the results:
The informal real estate agents use the property owners to obtain information
The most and reliable source of information to the informal real estate agents are the
property owners as they provide information regarding the existence of a vacant
property to be rented and plot or property to be sold, price of the property to be rented
or sold and the condition of the property.
The informal real estate agents use Social Networks to gather and share
information
The agents developed system of physical and online social networks in the process of
dealing with property information, this involve obtaining information about properties
for sell or buy and corresponding clients from their friends or relatives. Also it was
revealed that informal estate agents found in various parts of Dar es Salaam know each
other which facilitate the process of sharing the information.
54
The quality of information used by the informal real estate agents
The quality of information received and disseminated by the informal real estate agent
depended on the source of the information, the supplementing information and the
agents themselves to confirms the given information by inspection of the subject
property, asking the local government leaders and neighbors about the ownership of the
property
The trust of the clients to the informal real estate agents was of medium credibility
The property owners and buyers do not fully trust the informal real estate agents due to
the existence of the fake agency in the market blended in the informal real estate agency.
The tenants tend to be unsure about the presence of the property or room to rent and the
tenants tend to be unsure about the information about the property exactly reach in the
same amount to the buyer or tenant.
The factors influencing informal real estate agents to facilitate the flow of
information.
The informal real estate agents share the information informal estate agents share
information obtained from the sellers, buyers and among agents themselves in doing so
they facilitate the flow of information. The factors are to speed up transaction, to avoid
losing the client (buyer/seller), good will among the agents (cooperation), the property
market situation and easiness in performing their work.
The factors influencing informal real estate agents to withhold the property
market information.
In some instance the informal real estate agents do not share the information obtained
from buyers and seller to their fellow agents. They work secretly in finding the potential
buyer or seller so that the information is not exposed and spread in the market and to
other agents. The factors for withholding information are personal interest, small deals
and good property market situation.
The education level and basis of operation of the informal real estate agents
55
The most of informal real estate agents attained the primary education and only few
with secondary education. Their practice depend much on experience and they don’t
use written contracts or agreement with their clients thus making both side vulnerable
to fraud, that is between buyer and agent or seller and agent involving in transaction.
The agents are found in localized centers but their operation exceed the borders of
their locality.
The informal estate agents are segmented into various centers (Vijiweni), in all these
centers the agents perform their work without limit to location boundaries of an areas,
and it has been found that they undertake their work in various parts of Dar-es- Salaam.
They are found in the centers when they don’t have the deal or when waiting for the
clients, the deals with client are done in whatever the area they are found at that
particular time.
Information Dissemination/Withholding Influences Commissioning of Informal
Estate Agents.
It was found out on field that sharing of information that leads to a successful deal
imposes a duty of necessity on the agents to share the commission amounts
correspondingly. This may act as a barrier to information sharing and may result into
withholding of information in the property market.
Commissioning for informal estate agents and information sharing are very interrelated
and variable depending on:
Type of property to be dealt with (Land, House)
Use of the property (Commercial, Residential or Industrial)
Nature of the transaction/deal (Sale/Lease)
Location of the property (High end areas – Masaki, Oyesterbay,
Upanga as compared to Low end areas – Bunju, Kimara and
Mabwepande)
Expected commission (High or Low).
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Several Challenges Face Informal Real Estate Agents.
The practice of the informal real estate agents according to our study is facing with
many challenges which includes the followings:
1. Denial of commission.
2. Risk of life to the agents
3. Conflicts between the informal real estate themselves
4. Complaints from the sellers and buyers to the agents.
Informal Real Estate Agents Adhere To Principles Of Ethical Conduct.
It was found from field most of the informal real estate agents said that they abide by
ethical standards that guide their business include obedience, loyalty ,honest,
confidentiality, disclosure and care.
4.3 Reccomendations
4.3.1 Establishing a legal framework and an Agent Registration Board
This will include a policy followed by acts, regulations and rules set up purposely to
recognize and protect the informal estate agents practices. This is primarily because of
the inadequacy of the current laws pertaining to agency including under Act No 2 of
1978 (Professional Surveyors- Registration Act) and Act No. 2 of 1977 (the Business
Licensing Act of 1972).
A new robust legal framework regulating estate agency is necessary. This will provide
specific and clear guidelines and laws to control the entrance and operations into estate
agency sector. There should be clear and well-designed policies to bring order and
functionality to the agency industry. There should also be minimum qualifications and
experience for individuals or company to embark on any nature of real estate
management activities. Legal protection will ensure that in event of fraud informal
estate agents have somewhere to report to and have mechanisms in place to solve
conflicts in the industry. This will also safe guard the public against unscrupulous
business behavior, but also that they are obliged to contribute to the fiscal authorities
like any other formal business entities
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4.3.2 Formalization of informal estate agents and their operations in the market
It is has already been established that substitutive informal institutions (informal real
estate agent) can operate where formal institutions are ineffective but goals between
formal and informal are compatible Formalization of informal estate agents will have
several advantages to the government, the informal estate agents themselves, and their
prospective clients. The government will be able get income from taxation of the
informal estate agents, the agents will have to adhere to more strict conditions and rules
of ethics and hence become more trustworthy and believable to the general populations.
This will increase their incomes, status and elevate their profession. Furthermore,
majority of practicing estate agents in Tanzania have no physical address and their
transactions end when their customers have managed to get the accommodation sought.
There is practically very little information that gets back to the government and other
interested players in the market that would help inform of future plans. There is an
emerging trend however on listings in recent times mainly by estate agents firms in
major cities, some of it as an online material and in few cases on brochures.
Formalization will solve this problem and enhance agent’s availability. Formalization
will also reduce ganging influence deals as a means of for higher commissions by
informal estate agents due to lack of market information and regulations.
4.3.3 There should be provision of education/training to informal estate agents.
The property agents need to be formerly trained and oriented on what and how exactly
they should do their business activities. The suggested real estate board must come up
with clear practical and functional instruments that will give minimum qualifications
and recommended courses or training before one is registered as a real estate and
property management agent. The recommended real estate management course or
certificate must cover specialized subjects such as ethics and real estate business global
standards and trends. These areas will help improve, standardize and globalize the real
estate business activities in Tanzania.
4.3.4 Improvement in social network capabilities for informal estate agents
Because social networks have been found to be an emerging source and method of
sharing property market information, there should be improvement in social network
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capabilities for informal estate agents by the government to consolidate information
sharing within the informal estate agency sector. This will enhance information sharing
and the development of the estate agency profession.
4.3.5 Encourage formation of informal estate agents social support groups and
associations
The formation of informal estate agents social support groups and associations which
can formalize and centralize the information sharing experience it facilitate more in real
estate transaction. This may make it easy to arrange for offices for these agents, which
can increase their trustworthiness.
4.4 Conclusion
This study has tried to establish and fill the gap regarding information dissemination
and/or withholding by informal estate agents in the real estate market. In this age of
rapid proliferation of digital technologies, there have been guarantees of ever-changing
sources and methods of disseminating information within the property market. The
quality of this information was also tested using appropriate model concepts,
techniques, concluding that the quality was generally good, and the information reliable
largely. Interesting results were found out and recommendations of the way forward put
forward.
59
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