The realty boom in the country has spawned several professions, among which, a crucial one is brokering of real estate.
Real estate brokers offer a variety of transaction-related services such as property search, documentation, and property management. Over the past few years, brokers have been dominating the transactions market. Companies are dependent upon them for sale.
This dominance also comes from the fact that there is a significant difference between the discounts offered by a broker and that offered by the company. Lured by discounts, customers too prefer brokers over direct sales. But not many would know that in addition to his personal interests a broker will mostly favour the developer.
But there is a difference between a professionally driven business and a business run without standards. Generally it is seen that brokers operating in the country mostly offer services in an unorganised manner. They often work on scattered information. Usually they form groups to achieve their yearly targets. Once they have tied up with a developer firm to sell a particular number of flats within a project, they only focus on that project.
There is a strong tendency that they would portray a wrong picture of projects, where you would show your interest. If you are persistent in asking about some other project, they would seek help from another broker, who may be dealing in the other project. The trend of sub-brokering is a common practice in our country. The outcome is that as a customer you end up confused and uninformed. Also, in such as case you are dealing with at least two or three brokers.
The problem emanates from the fact that most real estate agents do not operate in a professional manner. Their work depends mostly on the information shared in sale brochures. For example, many of them wouldn't even know the exact size and dimensions of the showcased property and the projects. Many do not know the exact value of the property. They usually bargain making a base rate as their benchmark. But in reality, the actual price of the property could be even lower than the one marketed in sale brochures.
Moreover, a broker may give you some insight into the exact location of the property and its connectivity with other neighbouring regions. But he may not be able to tell you many other positive or negative attributes about the region where the project is being constructed. It is in your interest if you do your own homework. So what do we need? Problems emanate from the lack of regulation. Though a number of state governments are now putting checks to stop those who do not have any formal training or past experience in doing business, industry still is hugely dependent on brokers.
For example, brokers operating in Punjab and Haryana have to get a licence from the state government to deal with customers. But there are others who do not have their licences but are operating within these micro-markets. Respective state governments have provisions of punishing such dealers with heavy penalties and imprisonment in some cases. But identifying them remains a problem.
Based on similar lines we can actually regulate the market and the services offerings from brokers. This could be a step towards transparency. RICS has been advocating best practices within the space of brokering. Our guidance note, RICS' Real Estate Agency and Brokerage Standards has been recognised as a model for implementing policies to regulate the space for transactions involving brokers and agents.
While the country is still struggling to regulate the real estate market, a regulation on brokers sounds like a dream. The biggest hurdle is to identify those working within the space. If companies start dealing with only those agents who are licenced by the state authority or by an accrediting body, the situation will improve. Some companies are already partnering with specific channel partners and licenced brokers. Whatever the measures may be, these have to be pro-buyers.
— The author is MD, RICS South Asia
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