Regularising brokerage firms seems to be the need of the hour for the real estate sector. While RERA is all set to be rolled out soon, will broker regulation be a part of it?
The Central government has taken a step forward to regulate the real estate industry. The RERA (Real Estate Regulation Authority) is almost ready to roll out which is expected to keep a tight check on the malpractices in the industry. In the regulatory bill, the government has proposed stringent terms and conditions so as to protect the interest of buyers and make developers accountable for their actions. However, this is not enough. One major area that still needs attention in real estate sector is unorganised broking.
A large number of unorganized broking firms have cropped up across cities that indulge in a number of frauds every day which reduces the credibility of the real estate sector. In order to tackle this problem, the government is planning to bring regulation for real estate consultants or brokers. Real estate brokers are key players between developers and buyers; and the decision to register real estate brokers is a much awaited step.
A prospective buyer does not mind paying brokerage or consultation fee if all services are rendered in a professional and transparent manner. On every sale, developers also pay a good amount of money as commission to brokers, as per the MOU signed between them. As a decent amount of fees is levied on both developers and buyers, they both expect hassle free transactions and no after sale complaints.
However, once the commission is paid, a number of unorganized brokers or consultants disappear from the scene and also start avoiding phone calls from customers. Due to such instances, the image of the entire broker community gets maligned and customers become hesitant to take services from consultants or brokers.
I firmly believe that registration and licensing of real estate brokers will bring accountability and transparency in the industry. It will help to ensure that brokers or consultants are held responsible for their commitments made to customers. The suggestions mentioned below can be incorporated in the broker’s registration and monitoring process:
Each broker/consultant should be registered with their proper KYI (PAN card/TIN no/Service No/ Aadhar Card). This will help in identification of every broker on pan-India basis.
Establishment of a central or state level authority which would offer all information about registered brokers. This body should provide information like transactions done in a financial year, complaints and respective services offered, registration no, address & contact details, associated developers, separate window for consumer grievances with status of resolution, number of team members, total tenure of operation, ranking with credibility, etc.
The government can also certify brokers on a pan-India basis. This accreditation would help customers to opt for well-renowned consultants or brokers and make a more informed choice. The accreditation can take into account parameters like number of litigations, association with developers, track record of honouring credit notes, infrastructure and presence in different geographies. This will help in minimizing frauds and misconduct on the broker’s part and increase transparency for buyers.
Similarly, information should be made available to NRI customers as well who may also want to verify the details of a broker or log a complaint against him. This can be a tentative model which will ensure speedy action against fraudulent brokers.
If real estate brokers are regulated, most of the frauds and malpractices in the sector may be curbed to a large extent.
Author's note: Pawan Jasuja, Director, Finlace Consulting Private Limited, is a seasoned real estate and IT professional with more than 14 years of successful experience in direct and indirect sales of a range of Products & Services working with a team to redefine professionalism in Indian Real Estate.He holds a Master’s degree in Computer Sciences and has worked across the US and EMEA.