Home is where one starts from.
– T.S. Eliot, American poet
You need to plan carefully and save for years to buy a home. While doing so, however, it is also vital to choose a good real estate agent, who will make the actual buying process smooth. “Consumers tend to take the advice of brokers at face value and later realise they have been misinformed,” says Sachin Sandhir, Managing Director, Royal Institute of Chartered Surveyors, (RICS) South Asia, a self-regulatory body of real estate professionals. “Consumers’ choices relating to service and price options are restricted by the informal anti-competitive practices that brokers indulge in.”
How can you be sure that your broker is taking care of your interests and not playing tricks with you to benefi t only himself? Here are a few tips:
Persuasive pitch: Brokers rely a lot on their persuasive skills to sell houses. A common strategy is to claim that property prices in the locality where you are considering a few options are rising fast, citing a few infl ated examples, in a bid to hurry you into taking a decision. Though it is diffi cult to fi nd out prices accurately, you can get a rough estimate from property portals and newspaper ads. Another option is to contact several brokers. You could also approach a person who has recently bought a property in the same locality for advice. But do not depend on a single broker. “A broker may drop names of upcoming projects in the vicinity which may be pure speculation,” says Ganesh Vasudevan, Vice President and Business Head of property portal Indiaproperty.com
SPECIAL: How to win a good property deal
Quality Control: Brokers often try to hide a great deal about the quality of construction of a particular house or apartment, especially if it is shoddy. Two similar-looking properties in an area may be priced the same, but one may be far better constructed or have more amenities.
Distance sale: When a buyer wants to make a long distance purchase, or the buyer and the seller are at different locations, the former’s dependence on his broker is much higher. And so is the risk of his being misled. “The parties concerned often don’t meet face-to-face. Often deals are rushed into at the broker’s insistence,” says Sandhir. Always insist on meeting the seller to fi nalise the deal. If the broker wants to close the deal without the buyer and the seller meeting, something may be amiss.
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RICS, a self-regulatory body, has prepared a code of conduct for real estate brokers, which has been supported by several leading brokerages. Some of the directives:
- Conduct business in an honest, fair, transparent and professional manner
- Ensure clients are provided terms of engagement and incorporate details of complaint-handling procedures
- Avoid confl ict of interest and, where they do arise, deal with them openly, fairly and promptly.
- All communication with clients should be fair, timely and transparent
- Advertisements should be honest and decent
- Brokers should have professional indemnity/error or omission insurance to ensure customers do not suffer losses as a result of negligence on their part
- Give a realistic assessment of the likely selling, buying or rental price or associated cost of occupancy to the client based on market evidence and using best professional judgment
Transparent fees: Brokers get a commission from sellers for each sale they make, which is usually a percentage of the deal value. You should inquire how much the broker is getting from the other party. If you do not get a clear answer, take it as a warning. “It is imperative that the broker state his commission and give evidence that the property has a clear title,” says Sandhir.
Online ads: Real estate websites are full of misleading listings by brokers. And free listings are more likely than paid ones to make false claims. Do not put much faith in them. “Agents often use misleading photos and cite false specifi cations or quote unrealistically low prices to draw home buyers’ attention. But when people contact the agent, they are told that the listed property is not available, but there are others they can choose from,” says Vasudevan of Indiaproperty.com.
There are around a million brokers in the country, according to estimates, none of whom are registered or regulated. “Many are unqualifi ed and inexperienced,” says Sandhir. Big brokerages have a reputation to keep up and are usually more professional. They are expected to make full disclosures to their clients, quote the best prices and ensure there are no nasty last minute surprises.
“If an individual broker has the requisite experience and integrity, he may go the extra mile to service your requirements. There are, however, some distinct advantages such as depth of knowledge and lower risk with large brokerages,” says Aditya Verma, Executive Vice President and Chief Operating Offi cer, Makaan.com, a property portal. “Before fi nalising a broker, ask him for names and phone numbers of fi ve or six people who have dealt with him in the recent past and check back with them,” More often than not, agents tend to drive their own agendas to earn higher commissions. “A broker is just an intermediary. He is not answerable in case of overpricing or any other issue. If you have been overcharged, nothing much can be done,” says Indiaproperty.com’s Vasudevan. Lack of adequate regulations and certifying bodies for real estate agents is one reason for the lack of professionalism in the sector.
“Ideally, the agent should be a fair and honest mediator and ensure property transactions are transparent and swift,” says Sandhir. Brokers are indispensable to the real estate sector. But till they are brought under a regulatory body, stay on your guard.