The country’s real estate sector, which gets the largest proportion of an individual’s savings is largely unregulated and so is the intermediary that guides the home buyer to the property of their choice, the broker. If there is no regulator to monitor the behaviour of developers, the scene is even more dismal in real estate brokerage, where brokers do not operate under any regulatory framework.
The financial sector offers a different picture where regulators have been established to provide the investor protection against the malpractices of product promoters and brokers. The average investor parks a significantly lower proportion of savings in financial sector and products as compared to real estate.
While the Union government aims at making the real estate regulator a reality, which would also lay down guidelines for brokers.
Even as that is under process, the industry has come together to bring about some standards in brokerage operations. The earliest entrant in this field have been big banks and housing financing companies that have established subsidiaries in this space.
HDFC has an arm HDFC Realty and ICICI Bank has established ICICI Home Search who help prospective buyers choose a property and also verify if the developer whose properties they list have all the paperwork in place. There is, however, a limitation to their business model since they operate mostly in the primary segment (new constructions) and account for a small percentage of the brokerage industry.
Of late, there are global real estate service providers who have entered the Indian property brokerage market in a big way and have spread across various cities, and whose products are aimed at the average property buyer.
One such company is RE/MAX, that has completed five years of operations in India. It is an American company that operates in over 90 countries through its franchise model, bringing local real estate brokers in its network and providing them with upgraded training and skills at running professional brokerage operations.
Another recent entrant is Century 21, also US-based, that operates in around 75 countries. Other brokers operating on the franchise model such as Coldwell Banker Real Estate and Keller Williams Realty, both American companies that are making their push towards India.
“The industry needs several changes. While brokers need to serve the interest of the consumer as against that of the developer, it is important that they are provided training and the government makes it mandatory for them to be certified and gives them licence to operate as real estate agents,” said Sam Chopra, chairman, RE/MAX India.
THE BUSINESS MODEL
According to industry estimates, there are close to 30 lakh people across the country who deal in the buying and selling of real estate, but only a handful of them have any continued…