Real Estate Broker: An Asset or a Liability

Thursday, August 20, 2020

“Is a real estate agent needed?”For ages this has been a big question that is looming over prospective sellers or buyers of real estate. Brokers are often looked down up on in the Indian society and for a simple reason that their manner of working & functioning is totally disorganized. Since no specialized training is required just about anyone can become a broker. This freedom and ease has been traditionally abused by many. As our roadsidedhobhi, Nai(barber), newspaperwala and above all the local paanthelewala, all have tried to be a broker at one point or the other in their life time. A lot of people feel that they can buy or sell their property without an agent, but this is not advisable.

There are a number of reasons why hiring an agent is the best idea when working with the property market. For a property owner, one of the biggest headaches is to sell or lease the property with a good rate. A real estate agent or broker can provide you good and required guidance’s on prices as they have the knowledge of current trends in the market and prices of other properties in particular areas to attain the best possible results. They are able to guide help to negotiate the best prices taking into account the current supply and demand conditions. Ideally they should provide you list of people and references with which they have worked with. Hire a broker who knows the market well, can compare your property with similar propertynearby, and can highlight your property‘sfeatures important to most regional buyers or corporate tenants. You want your propertyviewed by the largest market of potential buyers/tenants possible and marketing power and reach are critical to the success of your propertybeing sold or leased quickly and for top dollar. India is one the very few places in the world where a property broker charges commission from both the parties. The present system of payment of brokerage fee in India is to charge both sides, how can a person work fairly for two people at the same time? The broker becomes a balancer of the deal, when he is representing both the parties. In my personal view, the commission should be chargeable to one client only, irrespective of the percentage. The person who appoints the broker first, either to identify the property or to sell the property should only pay brokerage, the commission should accordingly be mutually decided between the agent and the client.

There are very few RERA registered brokers and equally few registered with the GST department. It is pertinent that this is checked before appointing the person as your broker/consultant and a reasonable time is given to him to exclusively market the property. Appointing more than one broker at a time always works against the client, as the broker would be more interested to finalize the transaction at the earliest at any price, so that he doesn’t lose his commission. For the client it is utmost important to discuss upfront, the scope of services to be provided by the broker and his charges. A professional broker would always make it clear right in the beginning about his charges, he should also have the knowledge of local property laws and should always accompany the client to the lawyers at the time of agreements and registration and should also help in (a) payments of stamp duty and registration fees (b) mutation of property at the relevant departments (c) transfer of electric /water meter/any other property related matters. The standard practice or an unwritten rule of brokerage fee in India is 2%(each from both sides)of the sale amount plus GST or 2 to 6 months rental on lease, subject to lock-in periods, deposits and lease period, which is comparatively way less when compared with international markets that range between 4-10% in most advanced countries.

Keeping in mind,especially the COVID19 crisis as well as normal times, an experienced, educated and ethical broker shall always be an asset andshould be hiredby any smart investor/seller wishing to sell, buy orlease a propertyto help the transaction to reach its logical conclusion, that is to complete the transaction smoothly.

 

32 years of experience!

GST. No.: 627ACIPP9336Q2ZL

MAHA RERA No.:A50500013760 

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Pankaj Roshan

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roshan@roshanrealestate.com
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Comments(1)

Anthony R
8/31/2020 3:27:21 AM

Nice Article

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