The second most important decision a person makes in life after marriage is investment in real estate be it a residential property or a commercial property. It is important because it puts at stake a person’s life long savings or binds him into a long repayment schedule and changes his way of life altogether. Having such high stakes involved it is but natural that a person treads carefully with the help of middlemen who guide him and who take care of his interests. Such middlemen are `real estate agents’.
Traditionally the business of mediating between buyers and sellers was done by old or elderly men who were retired or out of job or active business. Since elderly people have more experience and knowledge about the worldly affairs their word was given value. But of-late with the real estate business booming, a lot of young people have entered the trade in various capacities.
There are agencies which are running an organised business and there are agents who are in an unorganized market, spread all over, and each opening shop wherever possible. There are no restrictions on anybody starting the business and there are no rules and regulations laid down by any Law. Whatever norms that are followed in the business constitute an unwritten code and ethics evolved over a period of time. Generally agents work for a commission of a certain percentage of the sale amount. A minimum of 1% extending up to 5% is the existing commission rate. The range of commission currently in vogue for residential properties is 1-2%.
Now-a-days there is a shift in the services offered by the agents. People have started expecting more services from the agent. Earlier, an agent would simply bring both parties together, show the seller the property and leave it at that. But now the agents identify properties, list them and show them according to customer preferences, fix the price, iron out any differences of opinions or misunderstandings between the parties, be a witness to the transaction and exchange of money, run around the registry for the registration and finally be present at the handing over of the property. Only then can he collect his commission. Any problem at any stage may cause the deal to be put off
With a boom in the economy the Real Estate business also has taken an upswing. Further Government policies in granting deduction of interest on housing loans, removing restrictions on foreign investment in real estate, relief from the restrictions on exchange of funds from the Reserve Bank of India etc. have encouraged more and more people to go in for purchase and construction of residential houses and commercial complexes.
The house building Cooperative group societies emerged out of the middle class need for residential house and to have some body to manage the construction.
The Realities or Real Estate Agencies, a more organised group came into being as results of this need. A middle class man prefers safety to gains. He cannot put his life’s savings at stake on the responsibility of one man. So he prefers an agency that employs experts, who have knowledge of various aspects of construction and also more organised than a one man show.
Real sate Agencies like Ansals group have successfully en-cashed on this need of the day and have in fact provided a safe agency whom people can trust for investment in real estate. However all is not well with agent and agencies. There are agents who strike dubious deals, sell the property for higher rate but pass on to the seller only some portion of it apart from collecting huge commission. There are agents who cheat the buyers in respect of the quality of the property by colluding with the seller for higher monetary benefit. Unfortunately there is no Law in India which regulates the trade and prescribes any ethics for the agents except the general Law under which frauds and torts can be tried.
In view of the prevailing boom and also the expected rise in the real estate market it is necessary and imperative for the Government to lay down certain criteria for people choosing to go as agents. The agencies are at least bound by the Company Law as many of them are private limited companies and their activities can be controlled to some extent by the exercise of Company Law. But the unorganized sections of the Real estate agency have to be reined in to create a more healthy and safeinvestment environment in the country.