by Akhilesh Kumar
India’s growing population and increase in per capita income have had a positive impact on the realty sector. With government impetus to boost urban development and infrastructure and add 25 million homes, 40 million dwelling units and 98 smart cities by 2022, the real estate sector is poised for a growth leap. The real estate industry in India is slated to be a 180 billion USD opportunity by 2020 according to the IBEF August 2015 Report. By 2022, the employment of real estate brokers and agents is expected to increase by 11
The sector has traditionally been unorganized, fragmented and lacking in fundamentally in terms of practices. However, with the introduction of Real Estate Regulation and Development Act (RERA) 2016, the sector is moving towards increased professionalism, transparency, and accountability.
Traditionally, real estate brokers or agents have been the only bridge between the buyer and seller. They were largely overlooked by the regulatory and operating framework. Real Estate brokers aligned themselves with local bodies and associations to protect their interests.
With no barriers to becoming a broker or property agent in India, there was an influx of unqualified brokers in the sector who did not necessarily have a complete, or sometimes even partial understanding of the real estate transaction. Hence, a number of home buyers have been dissatisfied in their experience with brokers. In addition, the highly fragmented nature of the market coupled with the unavailability of certification programmes, made it challenging for a consumer to assess the credentials of a broker.
Property agents are largely distrusted for their unprofessional behaviour and lack of work ethics. They work through a network and often have no direct contact with the property owner. Therefore, they are not in a position to give the buyer minor details of the property in question. Secondly, due to intense competition in the market, agents are eager to close the deal at any cost, often hoodwinking the ignorant buyer in the bargain.
As customers grow more educated and informed, they have found alternatives in portals such as nobroker.in, grabhouse.com and homers.in etc. which allow users to select a house to buy or rent without the involvement of a broker. Some of the recent online real estate sales, such as the Indian Realty Flash Sale (99acres.com) and Great Online Home Festival (Magicbricks.com) also do not involve brokers. Here, developers put up properties online and customers can directly interact with builders through their marketing teams. Yet other construction companies are hiring, training and developing their own sales force, albeit with its own set of pros and cons.
RERA, 2016 has recognised brokers and agents within its framework as essential facilitators of real estate transactions. Real estate brokers or property agents will now need to be registered and verified to be able to facilitate a real estate transaction. In more advanced markets, they will also need to undergo a minimum of 45 hours of training, followed by annual continuing professional development (CPD) training, and successfully complete the license exam.
Various agencies are also making an effort in this direction. For instance, Tata Housing Development Co. Ltd has recently launched a platform called “Bandhan” that will provide training and certification to brokers.
In view of the changing dynamics of the emerging realty market in India, it is imperative that brokers understand the legal or regulatory aspect of a transaction; key terminologies and calculations, approval processes, home loan process, the NRI tax planning process to cater to additional market segments and stay relevant in time to come.