Roopankar Chakroborty, a resident of Noida, had no clue about the trouble that was going to come his way when he booked an apartment in the 19th floor of an upcoming, but delayed project in the Noida Extension region, in 2012. Chakroborty’s troubles emanated from the fact that he trusted a local real estate broker, who used a false name and a company, to book his flat in the project.
Controversy over land acquisition had already resulted in delays, in several projects in the region. To compound matters, at the time of possession, Chakroborty’s developer sent a demand letter for escalation charges and late payment penalties. “There was very little clarity in the beginning, over various charges and payments that I had to make,” he laments, adding that his broker withheld crucial details about the project. Chakroborty admits that he had little idea about the number of floors in the upcoming tower, the concept of a park-facing apartments and the applicable preferential location charges. Moreover, he has been unable to trace the broker, who had set up his shop right opposite the developer’s office.
Chakroborty’s case is one among many in the country, where properties are sold to buyers on the basis of inaccurate information. Often, the real estate agents who oversee such deals, are a far cry from being organised. Over several years, India has seen the emergence of various organised real estate consultants though, who offer services that remain absent in the unorganised sector.
Direct benefits of organised brokers
“An organised brokerage services firm provides end-to-end solutions, to those who are transacting in the real estate market – right from selection of the property, to registration and possession of the property,” points out Ashwinder Raj Singh, CEO – residential services, JLL India.
“The biggest benefit for a buyer, is that the organised broker will give you options for which he has already done the due diligence,” adds Singh. This due diligence encompasses various aspects, including land title, track record of the builder, outlook of the project, pricing, etc. The organised consultant will also offer the same pricing to the buyer, as compared to other local brokers. Moreover, the entire transaction process through an organised broker, is likely to be transparent and fair.
What should buyers and sellers do?
A buyer can seek the services of an organised real estate consultant, to buy in under-construction or upcoming properties or even in established localities (resale). For a property seller, there is always a brokerage charge that one needs to pay and organised brokerage firms may charge a premium over regular brokers.
Impact of the RERA on property brokers
The Real Estate (Regulation and Development) Act (RERA) that came into force from May 2017 across states and at the national level, mandates only licensed, organised brokers to operate in states. According to the provisions of the Act, no broker without a RERA certification, will be allowed to market any project. Builder firms will also have to register their channel partners or brokers, who will market their projects.
RERA also imposes a compensatory punishment on errant brokers. For example, provisions of the notified Act in states such as Maharashtra, say that brokers will be penalised five per cent of the project costs, in case of misrepresentation of facts pertaining to projects. If they fail to pay the penalty, they can face imprisonment of up to a year. These provisions will deter brokers from wrongdoings and will keep the interest of property buyers safe.
Prospective buyers can also visit the state RERA website and look for registered brokers and registered projects, says a former regulator from Madhya Pradesh, Anthony De Sa. This initiative is likely to benefit buyers, by making transactions more transparent, provided the buyer opts for a licensed broker.