Real estate agency biz is coming of age

BANGALORE: Your typical neighbourhood real estate agency is a dingy, 10ft X 10ft place, with a cheap tin board outside proclaiming its status as a real estate agency.

It often doubles up as a photostating service or a travel agency. There will be just this one guy, who will provide you info on places available and take you there.

If you do rent the place, he'll charge you a month's rent as fee, and, if the houseowner too has asked him to look for a tenant, he'll charge the houseowner a similar amount.

That's the last you'll probably see of him, and, effectively, you pay him a handsome sum for having taken you to a neighbouring location.

Not surprising that many customers end up feeling more than a little cheated, and never quite sure if they negotiated the correct rent.

But now, like many other areas of retail, the real estate agency business too is beginning to get organised. Foreign players are entering the business, and many of the bigger independent local agencies are coming together to form national and international networks.

These are bringing with it codes of ethics that could provide comfort to customers, and lots of value adds that could enrich the experience of a house buyer, seller, owner and tenant.

"Almost 75% of all real estate deals in India is residential. Yet, we do not have organised players in this area, like there is in commercial buying/leasing, where you have the likes of CB Richard Ellis and Jones Lang LaSalle," says Ramneek Bakhshi, the Indian master franchisee for L J Hooker, an Australian real estate franchising organisation that plans to set up a countrywide network of neighbourhood real estate agencies.

Farooq Mahmood, president of the Bangalore Realtors' Association, is busy setting up the India chapter of US-based National Association of Realtors (NRA).

Mahmood says the NRA, which has presence in some 50 countries with 1.3 million members, will not just bring more convenience to customers, but also a strong code of ethics.

"It mandates that the agency be a taxpayer, must have an office, should not have a criminal record, should not deliberately mislead the client on any matter, and a whole lot of other things," he says. The India chapter hopes to bring in some 5,000 domestic agencies as members.

These initiatives will enable someone in US, who plans to buy or rent a house in Bangalore to approach his local (US) agency, who will immediately connect with member agencies in Bangalore to find the required property.

More professional agencies are also becoming full-service outfits - that manage the entire requirements of a house owner who, for instance, does not reside in the same city.

Everything from finding tenants and collecting the rent to paying the taxes and bills, and doing repairs. And payments for finding a tenant will be collected only from either the house owner or the tenant, not both.

"Many houses are locked up because of houseowner worries about how to remotely manage the place. It's a big thing for people to have the right people managing their big ticket item in life - their house," says Warren McCarthy, CEO of LJ Hooker.