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

ii

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

1

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.

2

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.

3

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

4

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.

5

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.

6

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.

7

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.

8

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

9

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

10

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

11

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

12

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.

13

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

14

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.

18

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.

19

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):

20

“…"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:

21

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.

22

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.

23

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)

24

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

31

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.

32

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).

56

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

57

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

58

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

Bibliography

David Cadman and Leslie Austin-Crow, 1983. Property Development. Great Britain:

J.W Arrowsmith.

Denscombe, M., 2007. The Good Research Guide. s.l.:s.n.

Enns, D., 2007. empm. [Online]

Available at: http://www.empm.ca/reports/Property%20Markets.pdf

[Accessed 24 12 2014].

Evans, A. W., 2004. Economics, Real Estate & the Supply of Land. s.l.:s.n.

Fillmore, , Wellington, , Robert,, 2006. Modern rel estate practice. chicago, illinois:

Dearborn real estate education.

Harvey, J., 1992. Urban Land Economic. 3 ed. London: The Macmillan Press Ltd.

Joseph, A., 2008. An Examination of Real Agency Practice in Uganda. Kampala: s.n.

Klein, B. D., 2002. When do users detect information quality problems on the World

Wide Web?. s.l., American Conference in Information Systems, p. p 1101.

Komu, F., 2012. Regulating Estate Agency Practice in Tanzania, s.l.: s.n.

Kothar, C. R., 2004. Research Methodology Methods and Techniques. New Delhi:

New Age International Puplishers.

Kurlat, & Stroebel, , 2013. Knowing your neighbourhood; Asymmetric information in

real estate market. New york: stanford university.

Kusiluka, M., 2012. Agency conflicts in real estate investment in sub-saharan Africa.

s.l.:s.n.

Mlowe, L. & Diyamett, L. M., 2012. Research Methodology and Techiniques. Dar es

salaam: NBAA.

Nachmians D. & Frankfort Nachmians C, 1976. Research methods in the Social

Sciences. New York: Martin`s Press.

Ractliffe, , Stubb, , 2001. Urban planning and real estate development. london:

university of california press.

60

Strong, R. W. &. D., 1996. Beyond accuracy: What data quality means to data

consumers?. Journal of Management Information Systems.

Tayi, G. K. & Ballou, D. P., ,1998. Examining data quality. Communications of the

ACM. s.l.:s.n.