How would I be a RERA advisor
RERA: looking for solutions from a real estate agent perspective
RERA speaks of registering the agent, but at the same time, leaves a lot of other problems unaddressed.
The real estate industry in India, which is the second largest job provider after agriculture, is expected to grow over 30 percent over the next 10 years. However, despite such a large sector, it hasn't had a legal mechanism for a long time. The advent of the long awaited Real Estate (Regulation and Development) Act, 2016, or RERA is a welcome move.
In the § § 9 and 10 of the law cover the role of a real estate agent. It is surely better to get some legal recognition, but to fix the power, duties and responsibilities of the intermediary or middleman that needs to be much more defined.
The job of a real estate broker needs more recognition and more definition along with licensing and certification. Even on a conservative estimate, real estate brokerage is a Rs 18,000-crore industry with over five lakh real estate agents across the country. However, real estate broking in India is less than one percent of the global size of the industry.
RERA speaks of registering the agent, but at the same time, leaves a lot of other problems unaddressed. Prima facie reading the said sections of the law gives the impression that it is only for the agents who work with the sponsor or are involved in a sales transaction in relation to any new project. The scope of the law needs to be expanded to include resale transactions and lease or rental transactions.
The law needs to cover real estate brokerage firms in its entirety. While a lot of responsibilities have been placed on, and ascribed to, the agent, one must understand that a realtor is a mere intermediary.
He is not a part of the promoter nor is he an entity that a project needs to refer to. In such a situation, pegging too much responsibility on him would be unfair and counterproductive, especially if his own limited interest in the offer is neither protected nor nurtured.
There are three independent parties in a typical new project sale transaction. One of the organizers. Two, the middleman (also known as the broker or an agent). Three of the buyers.
However, the law appears to have been a part on the part of the promoter as just two parties in a deal with the agent. In reality, often the agent himself is the sufferer's party.
On the part of the organizer, an agent is encouraged to bring clients a lot of leg-work "the parrot provides the project to prospective customers and in the end he is also not paid his legitimate fees quite often." On the buyer side, an agent is supposed to get the lowest price, walk around a lot, do the due diligence and in the end often the agent is left again without the fees due to him.
All of this happens when the deal goes smoothly. If that deal gets closed after some bumpy drives the agent not only loses his due fees, but is also to blame for the inconvenience. There is therefore an immediate need to define the role and fees of an agent when he is representing the promoter, when he is the representative of the buyer and also when he is representing both.
A similar definition is required for leasing and renting. Expectations an agent are so often he plays the role of a sales MANAGER, a procurement manager, a registration agent and an arbitrator at times too.
When representing a seller, a broker is also expected to play the role of a licensed architect in certifying the technical aspects of a prospect's project. Likewise, he is expected to play the role of an auditor to explain the tax implications of the deal. Then why shouldn't it be a basic educational qualification for him?
To do this, it is a requirement to set up a national level body, or an institute for real estate professionals.
Often times the terms agent, dealer, broker and consultant are interchangeable for all those who are part of any real estate offer from other than the seller or the buyer. The parties often do not realize how very different these terms are. There will be different types of professionals working for different types of deals. A professional dealing in land needs to have various skills from dealing in residential buildings. Also employed in the country there are many micro specialties. The offer of agricultural land differ from an industrial land or land in a residential area. These ambiguities would fade once a national level body of real estate professionals was established. In the absence of a recognized national level of organization, local associations and communities fungus often do more harm than good for its members.
One of the major changes being made by the real estate brokerage business in India is the shift from a Dynastic business to Professional. This occupation, which so far has been carried out largely by non-professionals and those of the less skilled people, see the entry of highly skilled workers who are today. The establishment of a national body, especially for the professionals, would be a great boost for industry and business.
A real estate professional needs four important qualities: knowledge of the construction industry, knowledge of the law, knowledge of basic accounts, finance and taxes, and knowledge of sales and marketing.
A national body is required to produce the station and groom such professionals. It is worth noting that there are about 2.5 lakh chartered accountants and about five lakh real estate practitioners in India. While the accountants have an autonomous institute under a law of parliament none exists for the real estate sector.
RERA differs an individual from a company professing real estate broking and the fees for registering the two are also different. The acts don't define the roles of the two. What if an agent is a company? Do all employees automatically get the license to practice, or only those in the company who personally register real estate agents to represent their client company.
The subject is important and also needs to be defined, beyond doubt. Just keeping a higher registration fee for the company wouldn't be enough. The law provides for an agent to register themselves state-wise. However, national registration is good enough for all states. Often times the deals happen in two states. Or, multiple deals are made between the same parties in multiple states using the same agent. The law should address these concerns as well.
The law also seeks to define the role of electronic media. The industry saw a deluge of portals and social media sites that were neither authentic nor regulated. Same property shown and sold through portals by different agents and "owners" with very different functions. Shouldn't the electronic real estate sales portals across the country also be registered and regulated under RERA?
The author is a Patron Member of The Estate Agents Association of India and is President of Central Zone - 1
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