Dealing with Tricks

Pritam P Hans        Print Edition: June 2012

"Home is where one starts from."
- TS Eliot, American poet


Before you can call a place home, you have to tread a long road that involves detailed planning and years of savings. A good real estate agent is all it takes to make the journey smooth. For this, it is important that the selection is done carefully.

"Consumers tend to trust the advice of brokers at face value and subsequently realise that they have been misinformed. Consumers' choice about service and price options is restricted by informal anti-competitive practices that brokers indulge in," says Sachin Sandhir, managing director, RICS South Asia, a self-regulatory body of real estate professionals.

How can you know that your broker is taking care of your interests and not playing tricks that will benefit only him?

SPECIAL: How to win a good property deal

PERSUASIVE PITCH
Brokers rely a lot on persuasive skills. A common strategy is to cite increase in value of other properties in the locality to create a fear of price rise so that you panic and take a quick decision.

Though it is difficult to know the actual prices, you can get a rough estimate in property portals and newspaper ads. Another option is to contact several brokers. You can also approach a person who has recently bought a similar property in the locality.

"A broker may drop names of upcoming projects in the vicinity which may be just speculation," says Ganesh Vasudevan, vice president and business head of property portal Indiaproperty.com.

SPECIAL:What the new-age property brokers do differently

QUALITY CONTROL
Brokers are often not transparent about the quality of construction. Two similar properties in a locality can be priced the same but one may give more value for money in terms of construction quality and amenities. Ask for a detailed such as whether the common areas are the same.

DISTANCE SALE
The dependence on the broker is higher when buyers and sellers are in different locations.

"The parties often don't get to meet face-to-face.In such cases, deals are rushed on brokers' insistence," says Sandhir.

Insist on meeting the other party to finalise the deal. If the broker wants to close the deal without the buyer and the seller getting to know each other, something may be amiss.

TRANSPARENT FEES
Brokers get a commission, which is usually a percentage of the deal value. You should ask the fee 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. In the online space, free listings are more likely than others to make false claims.

"In online listings, agents often use wrong photos, false specifications and low prices to draw attention and generate leads. When people contact the agent, they are told that the listed property is not available and they can choose from other properties," says Vasudevan of Indiaproperty.com.

BIG ADVANTAGE
According to estimates, there are around one million brokers in the country who are neither registered nor regulated. "Many of them are unqualified and inexperienced," says Sandhir.

Big brokerages have a reputation to keep and can be more professional. They are expected to make full disclosure to clients, quote the best price and ensure there are no nasty surprises at the last minute.

"If the broker is working as an individual with requisite experience, 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 officer, Makaan.com, a property portal.

"Before finalising a broker, do a background check by asking for names and phone numbers of five-six people who have dealt with him in the recent past and interacting with them," says Verma.

UNLICENSED BROKERS
More often than not, agents tend to drive their own agenda to earn higher commissions.

"A broker is just an intermediary. So, 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 unprofessionalism in the sector.

"Ideally, like in many parts of the world, the onus should fall on agents to act as a fair and honest mediator and should ensure that property transactions are transparent and swift," says Sandhir."

Brokers are indispensable in the real estate sector. Until they are brought under a regulatory body, you will have to stay on the guard.


GUIDING STEPS
RICS, a self-regulatory body, has launched a code for real estate brokers. The code has been supported by several leading brokerages. Some points of the code include:

>>Conduct business in an honest, fair, transparent and professional manner.
>>Ensure that clients are provided terms of engagement and incorporate details of complaint-handling procedures.
>>Avoid conflict 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 loss as a result of any negligent act.
>> 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.

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