AMIDST CORONA THE CRISIS
On a conservative estimate, real estate broking is a Rs. 18,000 crores industry in India and there are over 5,00,000 real estate agents across the country. The real estate industry in India is the second-largest job provider after agriculture and is expected to grow more than 30% in the next ten years. But, the growth of the industry wouldn’t be achievable without the help of the broking fraternity of the industry. Half the deal is done if the broker is chosen rightly. On one hand, the industry needs brokers or the agents while on the other hand, the broking industry needs to mould itself to be more professional. A professional agent can be of great help in the growth of the industry at large.
Perform or perish.
Gone are the days when even an under-graduate could earn his brokerage or commission just by showing a property to any prospective taker. His job was only to introduce a buyer to the seller ( or the landlord ) and an owner to the buyer ( or the tenant ). But, nowadays, a lot is expected from the middleman in the transaction.
Corona crisis and the real estate agent.
One good thing which has happened to the real estate industry due to the current lockdown is that the industry has recognised the role of a broker. Almost all the deals which have happened during the lockdown have happened only due to the efforts of the broker in between. A flood of properties has come to the market amidst the Corona crisis. But, it is only the professional broker who knows the price ( or rent ) to which a seller ( or the landlord ) should come down to and puts his efforts specifically accordingly. If the broker is good, he even advises his client not to go below a certain price level rather than cutting a deal at any price. Similarly, it is only the broker who knows well the price ( or rent ) which his client should pay and works accordingly.
The industry, which hesitated to pay even 1% on the sale deals, is happily accepting to pay 3% to 5% of the deal value as brokerage. Similarly, the brokerage on rent deals has been accepted as one month ( on a deal of twelve months ), two months ( on a deal of thirty-six months ) and three months ( on a deal of sixty months ) of rent.
Survival of the fittest.
A real estate agent is required to possess four major qualities – knowledge of the construction industry, knowledge of the law of the land, knowledge of basic accounts, finance and taxation and the knowledge of sales and marketing. Nowadays, so much is expected of a real estate agent in a deal that at times, he plays the role of a sales manager, at other times that of a procurement manager, at yet another time that of a registering agent while sometimes that of a lawyer and arbitrator too. At times, when representing the seller, a broker is also expected to play the role of a Chartered Architect who is required to explain the technical aspects of the project to the prospective buyers. Similarly, when representing the buyer, he is also expected to play the role of a Chartered Accountant who is required to answer all tax implications of the transaction to his clients.
In the eyes of the law.
Sections 9 and 10 of the recently introduced RERA do cover the role of a real estate agent but, only of those agents who represent the builders. It is definitely better to have some legal recognition of agents than none but, the scope of the act needs to be widened to resale transactions and also to lease and rent transactions. Primarily and principally, the role of a broker is limited to getting a deal confirmed and getting the agreement signed. The brokerage in a deal becomes due and should be paid immediately after the agreement is executed. The broker is neither a business partner ( to share your profit or loss ) nor is he your lawyer ( to conduct due diligence on your behalf ). Also, he is neither a paid employee ( to whom one can dictate terms ) nor is he a rent factoring agency or a rent collector ( to collect or ensure the payment of rents every month ). A broker is also not a financier to provide with the liquidity out of his brokerage. Any of these services, if provided, is eligible to be billed separately.
Often, the terms agent, dealer, broker and consultant are used commonly and interchangeably for all those who are part of any real estate deal as other than the seller or the buyer. There are different kinds of professionals for different kinds of real estate deals. The parties concerned should choose their agent or the broker carefully and wisely and the one who is specifically qualified for the job. A professional who is dealing in lands possesses a different set of skills than the one dealing in residential premises. Similarly, a sale deal is different than a lease deal. Half the deal is done if the broker is chosen well.
Be in the land of the living.
One of the most significant changes of the real estate broking business in India would see in the times to come is the shift from being a dynastic business to a professional one. This profession which hitherto was being carried out largely by non-professionals and the less qualified ones is now seeing the presence of highly qualified professionals who really are an asset to the industry and help a deal happen smoothly. If the broking business is nurtured well and their professional interest is safeguarded, the real estate agents could be the agents of growth of the industry.
Law unto oneself.
It is worth noting that there are approximately 2.5 lakhs Chartered Accountants and over 5.0 lakhs real estate practitioners in India. The Chartered Accountants have an autonomous institute of their own governed by the act of parliament while the real estate practitioners have no such body. A national-level body is required to produce, train and groom such professionals. To do so, there is a requirement of setting up a national-level body or an institute such as the Indian Institute of Real Estate Professionals. In absence of any such properly recognised national level organisation, local associations and communities mushroom up which most of the time cause more harm to its members than benefit them and more misguide them than guide them. On top of it, a deluge of portals and social media pages have come up which are neither authentic nor regulated and often tend to mislead their patrons. The electronic portals selling real estate across the country should also be registered and regulated.
Alok Gupta is the President of the prestigious The Estate Agents Association of India, Central Zone One. He can be reached at [email protected]. Views expressed are personal.