News Analysis

Do broker-less property deals make good sense?

Meera Siva | Updated on January 16, 2020 Published on January 16, 2020

Agents do bill you, but they can also open many gates for you, be it as a seller or as a buyer

Anu and Manu are siblings living in different cities. Anu planned to buy a new home to move into after her retirement while Manu wanted to sell his apartment in a different city. They were both keen on handling the transactions themselves, avoiding brokers. To get a different perspective, their cousin introduced them to Amit Damodar, an office-bearer in two associations for real estate agents. They got on a Zoom call with him to hear his views.

While buying

“There are so many sites listing homes for sale. Plus, when you buy new, there is no need for an agent, isn’t it?” said Anu.

“Research on the location can be done online, through references and by visiting the place. Why should we pay an agent so much commission and then chase them to get things done?”

Plus, agents tend to pressure you to buy a property quickly, she pointed out.

Amit had a few counter-points. One, agents often have information on an area that may not be easy to gather from one or two visits or online searches. For instance, only someone with an intimate knowledge of an area will be aware of issues such as water-logging or water shortage.

Two, agents have access to more properties than online listings. For example, many smaller builders who do not list online often offer good options.

Three, once you find a property, an agent can alert you about the issues — leaks or roofing problems — that untrained eyes may not spot. These are important even in newer homes, as they add to ongoing maintenance expenses and other hassles.

Four, you can better understand the market and comparative options by going with an agent. They can be objective and dispassionate, and guide you in assessing the choices to pick the best alternative.

Five, they also help you with the process of negotiation, documentation, verification and getting the deal done.

For instance, a lot of leg work and time can be saved by a person who has a good grasp of the local landscape. “There is no fee charged for the purchase of a new apartment through an agent,” Amit said.

While selling

“Selling is much simpler — list your property in multiple sites and close the deal with the buyer offering the highest price,” said Manu. Amit noted a few points on the agent’s role here, too.

One, they can help set the right price and other expectations — such as on how long the deal may take to close — as they are keenly aware of the current market rates and the buyer interest in the area. They can also recommend home improvements that would make the property more attractive to potential buyers in that particular area.

Two, they can help market the property. For instance, they can highlight the key aspects of the home at the right sites and, besides online, they can also use their agents network to reach out.

Three, agents can better assess interested buyers. For example, it may sometimes be prudent to not go with the highest offer as there may be other issues which could stall the deal. Also, agents can help you negotiate the price and other terms with potential buyers.

Four, they can save you a lot of time by taking care of the grunt work — handling callers, setting appointments, showing the property, following up with potential buyers and handling the paperwork.

There is a lot of work involved in ensuring due processes and legal procedures for registration are followed. “Agents get paid their commission percentage only if the deal is completed,” noted Amit.

RERA aspects

“Unlike in the past, when there was no requirements or liabilities for agents, the RERA Act (Real Estate (Regulation and Development) Act, 2016) has created common rules and penalties for brokers,” said Amit.

They must be registered with the State’s RERA authorities and provide their details and maintain books, he added. In Maharashtra, for instance, not following these norms will lead to a penalty of ₹10,000 for every day of default.

Strict norms

In the case of unfair trade practices, a broker faces one-year imprisonment. And not complying with the appellate tribunal’s orders can attract a penalty of 10 per cent of the property cost and/or imprisonment of up to one year.

One must verify RERA registration and check references from clients when picking an agent, advised Amit.

Rather than going for a do-it-yourself or total hands-off approach, a judicious mix of the two may work better, especially if you have to handle the operation remotely, he added.

The author is an independent financial consultant

Published on January 16, 2020
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