Buying or selling a real estate property is a major financial undertaking for most of the people. While going for a property transaction the first consideration that comes in mind is to use or not to use an agent. Prima facie it seems that doing the real estate transactions on your own can save a significant amount of commission for you. However, flying solo may end up being more costly, time consuming and may lead you to take substandard decisions. Find out why you shouldn’t discard the idea of hiring an agent and what to expect while dealing with them.
Whether you agree or not, a real estate agent plays an important role in real estate related transactions. They can assist you with almost all your real estate related requirements like sale/purchase/lease/sublease/portfolio management/lease management, negotiation etc. With the market started becoming more mature, the real estate professionals also started providing specialized services in various fields like residential, commercial, industrial and retail. The services are even further bifurcated in primary market and secondary market services. Where primary market generally referred buying the real estate from the developer for first time and secondary market services are resale transactions. Working with a professional can save you from the confusion of dealing with multiple parties like agents, landlords, developers and consultants. At the same time professional consultant have exposure to a lot of potential clients including HNIs, developers, NRIs, corporates and multinational companies. Generally, large corporates and MNCs prefer to work with the IPCs (International Property Consultants) to do any property related transaction. The advantage of dealing with large corporate and MNCs is that they are less fussy and oblige all the terms and conditions. If it’s a lease transaction, they are also more likely to lease property for a long period of time and unlikely to default on the rents and if it’s a sale transaction they are likely to be more transparent and oblige the payments on time.
Having said that, before you start working with an agent you should always make it clear that what parties is the agent represents in the transaction. In India, a real estate agent or firm may represent more than one party in the same transaction. You should be aware of if the agent is engaged for both Seller and Buyer. It is also important to decide on the specific assistance that you are expecting in the real estate transactions. Beside all the documentation work, the scope of service can include a number of services like list, sell, purchase, exchange, rent, lease, manage, administer, negotiate or auction of the property. Another important aspect that a real estate broker can do better than you is negotiation and assistance in providing the mortgages and financial analysis of the transaction as they do this kind of transaction day in and out.
Don’t mistake to assume that a real estate agent will also provide legal and technical due diligence services. Generally, the real estate brokers do not provide due diligence services, however, they have network with the legal professionals and can guide you to get the legal advisor who can do the legal and technical due diligence for you. Legal and technical due diligence may include title search of the property, legal check of building plan, sanction plan, layout plan, approvals from fire, environment, airport authority, ground water and certificates like occupancy certificate.
It is also important to understand the process of the entire transaction from the broker, generally it is a 6 step process which start with defining the scope of services, doing project analysis, appointment of agent, create and develop a solution, implementation of solution and monitor and evaluate the options and negotiation. If the real estate transaction requires advertisement, auction, valuation, RFPs responses etc. it is advisable to take the proposal which define their scope of service, process, fee, timelines etc. The proposal also includes who will bear the expenses which will be incurred by the agent during the transaction. After appointment the agent workout an implementation plan which may include asset familiarization, asset benchmarking, micro market analysis, positioning and pricing, marketing etc.
While agent take care of most of your headache it is important to do your own research and ask question during the entire transactions.
About the author
Surabhi Arora, leads the research team in India and has more than13 years of experience in carrying out multi-disciplinary research and analysis in the area of finance and real estate industry. Surabhi specialises in real estate economics, policies, commercial and residential real estate research with in-depth knowledge of market dynamics across major markets in India.