Indian Real Estate, Property Portals and the 21st Century Real Estate Agent

Real estate agents? Hasn’t the internet gotten rid of them yet?

I hear this question all the time. Most people assume that property portals in India are working towards eliminating agents and facilitating direct interaction between seller and buyer. Though this is partially correct, real estate agents are the biggest customers of these portals and the portals are doing their bit to facilitate their growth. We interact with agents every day and we see most of them are doing good business. I want to take some time and explain the dynamics behind Indian real estate, the role agents’ play and how the role of agents’ is going to change in the future.

Note – Throughout this article, I’ve focused only on the rental and resale market and not gone into sale of new property by builders as the dynamics of that market are radically different. Also, the scope of this article is limited to Indian Real Estate.

“MakeMyTrip has eliminated travel agents. So why hasn’t the same happened to real estate agents?”

One needs to understand that ticketing is now a point-and-click industry – travel agents have been replaced by computers. The process of getting information about the journey AND purchasing the tickets can be done on the internet. Real estate is fundamentally an offline process. Though information aggregation is an important part of it, site visits, negotiations and paperwork all need to be done offline. Even from an owner/sellers perspective, renting out/selling a home isn’t as simple as listing it online – the process can stretch for months. This is where real estate agents step in – in guiding customers through the offline part of the transaction, bringing both parties to agree to the terms and finishing off the paper work.

Why aren’t property portals trying to eliminate agents and become virtual middlemen?

A property portal provides a platform for a seller and a buyer to interact (A seller can be an owner, builder or an agent). If we eliminate agents from this equation, portals are left with a C2C platform with property owners being the only source of inventory. Though many prefer a scenario like this, we need to figure out how the platform provider is going to monetize from this setup. They have the following options –

Listing fees – They can collect a fee from the owner/seller to list their property. There are few owners who’re willing to pay for premium listings (last time I checked, about 5% of owners listing online were willing to pay) but this is simply not enough to sustain the business. Indian consumers are ready to use a service which is free (free listings) OR pay for a service once it’s rendered (brokerage) but are not OK with anything in between.

Charge property seekers to get owner information – Another option would be to charge property seekers a fee to give them information about the owner who’s listed. This also isn’t a sustainable option because owners who list online tend to list on multiple portals and you can always finds a portal which gives you the owners information for free.

Brokerage fee when the deal is closed – This would be a great monetization scheme that everyone would be willing to pay for, but is very hard to implement. To do this, portals need to keep track of every deal that closes offline and that would be next to impossible.

There might be more options, but I don’t really see them becoming huge ‘revenue making machines’. Running a real estate portal is a VERY expensive affair and portals would need a solid revenue stream to offset that cost.

This is where Real Estate Agents step in: Agents are willing to spend good money to market their properties on a platform which would give them good leads. Property portals see this as a steady, sustainable revenue stream. This, seemingly, is a match made in heaven.

So, you’re saying property portals have made no dent in the brokerage industry?

Undoubtedly, they have. In a BIG way! With many owners listing their properties online, agents are starting to feel the heat. Coupled with the fact that the number of real estate agents has almost tripled in the last few years, you’ll see that the average real estate agent earned a LOT less in 2014 that he did in 2011. Agents are beginning to realize that there’s a paradigm shift and it’s time to mend their ways, before the game gets taken out of their hands. There needs to be a shift in their mentality and it needs to happen NOW.

Role of the 21st century real estate agent

10 years back, agents pretty much charged money for information arbitrage – “I have the contact information of the owner/tenant and you need to pay me money to get this contact” was the mantra and it has worked. A disproportionate amount of money was charged for this seemingly simple service and the world went on without a qualm primarily because there was no alternative. But now there is. Increased owner listings on portals, multifold increase in number of real estate agents, internal portals in corporate companies which help employees find accommodation, Facebook groups, etc. have all impacted the brokerage industry and there needs to be an overhaul.

“What’s dangerous is to not evolve, not invent and not continuously improve customer experience” – Every Realtor in the country needs to latch these words said by Jeff Bezos, CEO Amazon. Information arbitrage can no longer be the game real estate agents play – We’re moving towards a world where access to information is getting easier and this cannot remain the USP of why a property seeker goes to a real estate agent. I believe agents need to adopt the following practices –

Save time for your customers – In today’s world, nobody has time to do things (even if they do have time, people don’t want to spend their time house hunting). Saving time for your customers is probably the best value-add an agent can provide. Be up-to-date on the latest inventory that is available in the locality. If you’re not confident if the customer will like your property, just tell them so! Don’t drag them to a dingy apartment they’ll never never be interested in – they’ll lose trust in your sense of judgment and never come back to you again. Learn to truly understand what your customer wants, be equipped to find the most relevant inventory, accompany them during site visits and close the deal. A really good agent should be able to close a rental requirement in 7 days and a resale requirement in 1 month, tops.

Give as much information as possible – Instead of hoarding information, agents need to freely part with it. Tell your customers exactly which apartment society the property is in, tell them exactly how far from the bus-stop it is and tell them if the owner/tenant is not comfortable with someone from their demographic. In the longer run, this helps build a better rapport with customers. Sure, other agents (or your customers themselves) might get to the owner/seller without you, but in the longer run, this is what will work.

Adopt technology, don’t fight it – Apart from Whatsapp, agents don’t use their smart phones for any business related activities. Why is this so? For starters, there’re many CRM applications on the app store which they can use. This alone will improve their productivity 100 times over! Other applications for maintaining inventory, marketing, etc. are available but are not being consumed by agents.

Develop skills a computer/technology can’t do – A computer can never negotiate a good deal for the client – that’s a job that requires a human touch. A computer can never get a feel of what the customer truly wants – Agents can do that given you’re always with the customer. This is a relationship driven industry, make sure you always remember that.

Use social media as a marketing platform – When owners are using Facebook as a platform for marketing, why shouldn’t agents? Creating a Facebook group to marketing their listings is a great way to reach new customers. There are some agents who do this already and are getting good response from the same.

Be professional – Cliche as it may sound, going back to the basics is something every agent needs to do. Being punctual, dressing in formals and talking politely to customers are some key skills that agents need to practice. Again, there are agents who’re well mannered, but the number seems to be shrinking.

The list can keep extending, but I can summarize it this way – If you’re a real estate agent, think of what you were doing for your business 5 years back and compare that to what you’re doing today. If nothing much has changed, understand that you’ll become redundant within the next few years. The world is changing and only those who change with it will live to fight another day. Portals have evolved, house hunting has changed for end customers and it’s about time the role of the real estate agent changes as well.

How are we positioned in this complicated market?

Our vision has always been to build A Technology Powered Real Estate agency that works towards helping our customers find a home they truly love. We do that by mixing cutting edge technology and expertise brokerage. We’re adding great real estate agents to our team, giving them next-gen mobile applications/desktop products to better run their business, helping them understand the market as it is today, providing training sessions and learning material and eventually, helping them serve customers better. Given the amazing response we’ve received from customers and agents so far, we’re confident of the road ahead.

How NOT to Hire a Real Estate Agent

If you do NOT read this report you will almost certainly lose thousands of dollars when you sell your home…

Home sellers don’t know how to spot a good real estate agent

This is understandable when you consider that you will only buy and sell one or two properties in your lifetime. Your home is probably your biggest asset. So, be careful whom you choose to sell it; one slip-up from an agent will wipe thousands off your selling price.

Ask the right questions

Many home sellers ask the WRONG questions when they interview an agent. They ask questions such as “How much do you charge?” or “What’s my house worth?”. While these questions are important, they should only be asked after the agent has told you what they’ll do for you and how they’ll get you the best price.

This report is your guide to hiring a real estate agent. I’m going to show you how to spot and select the best agent to sell your home. After all, I believe there’s no one better to sell your home than a highly skilled agent. The problem is that highly skilled agents are hard to find.

WARNING! Don’t settle for second best. Too many sellers make the mistake of picking the ‘best of a bad bunch’. You could be better off without an agent

Check out your agent

It’s a sad fact, but many people don’t check-out their agent until after they have signed with them – by then it’s too late. After you sign you’re stuck; you could be locked into a ‘minimum 90 day’ contract.

The questions and information in this report will give you the knowledge you need to keep the power when you’re selling a house. After you sign you lose your power.

Agents love to say they are all different but basic research will prove most are the same. It’s the ‘cookie cutter’ approach when it comes to selling your home – every property is sold the same way.

What to look for when choosing an agent

In 2006 Neil Jenman (my Dad) was asked to provide a list of questions, comments, and hints to help home sellers choose an agent for a TV show he was hosting. He called his list of questions and comments, GUIDE TO GRILLING AGENTS. Over the last few years I have given the guide to many home sellers. This report contains many of the questions and comments in his original guide.

What does a good agent look like?

Most agents will be well dressed, on time, and prepared. But the best real estate agents will be the ones who put your interests first. They will offer solutions that suit you first, not them.

Agents who ask for money to advertise your home should rarely be hired. After all, if advertising was the only reason your home sold why do you need a real estate agent?

Questions are the answer

Sometimes the answer to one good question will give you the confidence you need to hire the best agent to sell your home. Good questions do the hard work for you. Before you jump in and start grilling real estate agents, take a step back.

Put your home buyer shoes on. And start with a mystery shop…

MYSTERY SHOP

Department stores do it, so why shouldn’t you? Use the ‘process of elimination’ to weed out the poor agents. Why bother interviewing a real estate agent who doesn’t bother to return buyer’s calls? Start with an email. Approximately half of all buyer enquiry arrives via email.

If you send out 10 emails to 10 local real estate agents, I can almost guarantee that you will not receive 10 replies. If only 5 reply, then you have just saved yourself having to interview 5 agents. Include your phone number in your email. Do they call you back? Or do they just email a standard response? An agent who follows up with a call has a much better chance of ‘closing a sale’ than an agent who sends a standard reply.

QUESTIONS ARE YOUR BEST WEAPON

If you don’t ‘test’ your real estate agent before you hire them – one thing is for sure – the buyers for your home will do it for you.

What follows are questions that have proven to be a huge help to sellers.

REMEMBER: You are the owner of the property. You are considering employing an agent to sell your property. You are the boss. You have the power BEFORE you sign up. Make sure you keep that power at all times. Control the agents, do not let the agents control you.

Your home’s selling price is determined by your agent’s ability to negotiate

• HOW ARE YOU GOING TO GET THE BEST PRICE FOR MY HOME?

When you ask this question many agents will start throwing around the word negotiation. You want to be certain that they are capable of negotiating a high price for your house, ask them to teach you something about negotiation.

Question their ability to negotiate.

Ask them what they know about negotiation. It’s a big point that most home sellers miss because they focus on what the agent says rather than on what they do.

Here’s one of my favorite questions to ask a real estate agent:

• WHEN/IF YOU BRING ME AN OFFER, HOW CAN I BE CERTAIN THAT IT’S THE ABSOLUTE BEST PRICE THAT THE BUYER CAN PAY?

Many real estate agents will have difficulty answering this question. It’s a question that’s rarely asked of agents. Ask it. The answer will tell you a lot about an agent.

Some more questions you can ask are:

• Are you a good negotiator?

• Can you tell me some of the main points you know about negotiation?

• Can you give me some examples of the results of your negotiating ability?

The Biggest Liar Gets the Job

When hiring a real estate agent, the biggest liar (the agent who quotes you the highest price) often gets the job. It’s an old (and very true) real estate saying.

Unfortunately many home sellers hire liars. This happens because people who hear what they want to hear don’t perceive the information as being a lie.

One of the best questions you can ask is:

• WHAT WILL YOU DO TO GET THE BEST PRICE FOR MY HOME?

Once you are satisfied with the answer then ask:

• WHAT PRICE DO YOU THINK YOU CAN SELL MY PROPERTY FOR?

Most agents will try hard to hedge around this question. They may be vague and say such things as “It depends on the market,” or they may use the common ploy of answering a question with a question, such as, “How much do you want?”

Sellers should stand firm and press the agent on this point by making such comments as:

You are the agent, you sell lots of properties in this area, surely you know how much you can sell my property for – even if you have to give me a range. After all, you are the expert, aren’t you?

Once the agent has given a [verbal] quote, ask the following:

1. Will you give me that quote in writing?

2. Do you usually sell properties for the price that you quote the sellers?

Regardless of the answers, don’t dwell too long on any point at this stage. Just keep the questions rolling…

It’s not what you pay an agent, but what they cost you, that counts.

• How much commission do you charge?

Most agents will talk about ‘standard rates’ or they will say that the rate is recommended by the Real Estate Institute – this is to soften the shock. Sellers should make comments such as:

Is your fee negotiable?

Have you ever reduced your fee for anyone?

If you should ask me to accept a lower price than the price you have quoted me, will you also accept a lower fee?

NOTE: Be wary of agents who cut their commission to get your business.

These agents are often poor performers who rely on discounts to get you to sign with them.

• What is it about you and your agency that makes you better than other agents?

This is a great question. The agents all want to say that they are “the best” but they will struggle to define what is meant by “best”. Of course, “best” to a seller means the highest price with the lowest risk and the lowest cost.

The Issue of Advertising

With almost every agent, advertising will be a big point. Be careful, this is the most common way in which thousands of home-owners lose thousands of dollars without selling their homes!

The Golden Rule when selling a home: Never pay any money for any reason to any agent until your home is sold and you are satisfied.

The Silver Rule is this: Don’t sign anything that requires you to pay any money [in the future] for any reason if your home is NOT sold.

Some agents will say “you don’t have to pay for advertising until your house has sold” but what they fail to mention (or make clear) is that if your home fails to sell you will still have to pay.

Here are some comments and questions that can be made to an agent which show the absurdity of the advertising policies in most real estate offices.

• Why do you expect me to pay for the advertising to find a buyer? Surely the commission should include advertising?

• Why should I pay twice – once for advertising and once for commission?

• If you put ads in the newspapers [and charge sellers for those ads] and the buyers are going to come via you, what are you doing that sellers can’t do for themselves?

• If you advertise my home and I pay for the ads and you get calls from buyers and those buyers buy a home other than mine, do you give me any money back? If not, why not?

• If I pay you [thousands of] dollars for advertising and you do not sell my property, what happens to the money I paid?

• I notice that your advertising has your name and the name of the agency prominently featured. Surely I don’t have to pay the cost of advertising you and your agency?

• Based on the length of time you have been in business and the number of people who contact your office, don’t you already have a list of buyers on your books?

• I am not going to be paying any money to any agent for any reason until my home is sold. Once my home is sold within the price range that you quoted me, I will be delighted to pay you a GENEROUS commission as a reward.

This is my firm policy as a seller. Do you accept my policy?

Random comments and questions… [or other ways to make the same major points] might include…

• I want an agent who will get me the highest price at the lowest cost with the lowest hassle and, of course, without any risk of loss if there is no sale. Are you comfortable with being able to meet these simple requests of mine?

• How many properties do you sell? (Let them ask you if you mean weekly, monthly or annually, to which you reply that the time frame doesn’t matter. You just want to know that they are capable of getting results).

• What provisions do you take to ensure the security and safety of my home when it is being shown to prospective buyers?

• If I find a buyer – such as a close friend or relative – will you want me to pay you any commission?

• Have you ever had any unhappy clients?

• What were they unhappy about?

• If I employ you and I am not happy with your performance, I want to be able to dismiss you without any penalty to me. Is this okay by you?

• The agent I choose will be given an initial time period of 30 days on the selling agreement between us. If my property is not sold in 30 days and if I’m happy with the performance of the agent, I will be happy to extend the term of the agent’s appointment. Is this okay by you?

SELLERS’ TERMS & CONDITIONS

Get the agent to agree to your terms BEFORE you agree to the agent’s terms.

Finally, the biggest and most important point of all for home sellers – DO NOT SIGN the document that the real estate agent asks you to sign – at least NOT on the agent’s first visit.

Ask the agent the following questions:

• If I decide to employ your agency to handle the sale of my home, what document will you be asking me to sign?

• Can I have a copy of that document so that I can get some independent advice about it?

• The following is the start of your final words to the agent at the end of the agent’s first visit…

As I am the owner of the home and as I will be employing an agent, I will be preparing a list of my own terms and conditions under which I employ an agent. I will be asking the agent to sign my terms and conditions before I sign any terms and conditions prepared by the agent. Further, if any of my terms conflict with the agent’s terms, then, of course, my terms will take precedence.

• Are you okay with me, as the owner of the home, telling you, the agent, what I require you to do?

Thank the agent for coming and tell the agent that you will be in touch should you require the services of his/her agency. Stand up, shake hands, walk towards the exit or front gate. Wave goodbye.

Smile, you have done well. You are in control.

Lloyd is founder and chief of The Real Estate Helpers – a real estate start-up based launched in November 2010.

He’s the son of real estate ethics crusader Neil Jenman, and at 29, he is an 11 year veteran of real estate

His concept of offering help to home-sellers is set to revolutionise property selling in Australia.

All About Real Estate Agents

Who Are They…

Real estate agents are professionals instrumental in connecting the buyer with the seller.
Additionally, many real estate agents manage rentals wherein they introduce tenants to landlords and oversee the maintenance of the property on behalf of the landlords.
In most areas real estate agents are required to be highly educated, licensed and are regulated by a governing body.
Some real estate agents are also Realtors.
To use the title Realtor, a real estate agent must be a member of the National Association of Realtors which in addition to a number of other requirements, requires Realtors to adhere to a strict code of ethics and offers Realtors additional educational and designation opportunities.
Though not required by rule or law, it might be a wise decision to seek the services of a Realtor.

What Do They Do….

Real estate agents bring together two or more interested parties, perform those steps necessary to successfully conclude a transaction and charge a commission for their services.
For sales transactions, they charge commission to the seller while for rentals, commission is typically charged the landlord.
Real estate agents generally calculate their fee as a percentage of the selling price (in the case of a sale) and as part of the rent for rental units.

How Do They Do It…

People who want to sell or rent their property leave details of their property with the real estate agent.
Along with all property details the real estate agent will typically have keys to the house to facilitate showings.
The other interested party (i.e. the buyer/tenant), gets access to this information and to the property by contacting the real estate agent.
That’s how the real estate agent becomes a hub of information.
Contrary to some common misconceptions, real estate agents typically represent the seller or the buyer but rarely both.

Why Should I Use One…

First and foremost, to protect yourself. Real estate transactions are highly regulated, highly paper (document) intensive transactions.
The real estate agent possesses an in depth knowledge of the laws, rules, regulations, disclosures and documentation necessary to successfully complete the transaction to the satisfaction of the buyer, the seller and the law.

Because real estate agents are most familiar with local real estate market conditions, it is wise and makes sense to seek the advice of one to get an idea of the current trends and pricing for properties within that market.
A good real estate agent will know the prices (or price range) of various properties of different types and at various locations within the region.

Because of the real estate agent’s knowledge and expertise, property sellers often get a few thousand dollars more for their property.

Many home seekers, including seasoned real estate investors use the services of real estate agents to locate the best real estate bargains in the easiest and quickest manner.

Furthermore, the best agents analyze the wants and needs of a home buyer/tenant and provide valuable input as to the kinds of properties available to them within their budget. Therefore, a good real estate agent will not just present a list of available properties to the buyer/tenant but will actually discuss their needs and make suggestions.

The good real estate agent, working in this manner benefits in at least two ways…
First and most obviously, when the real estate agent is able to successfully complete the transaction the commission is earned and the real estate agent is paid…
and secondly, if they make the customer/client happy they earn a good reputation and often receive referrals (hence more business).

Worth Noting…

It is worth noting that there is a myth floating around that real estate agents only work on behalf of the seller, buyer beware.
This is not written in stone nor is it always the case. Real estate agents are, in most regions, highly regulated.
With few exceptions, real estate agents work either for the seller (as is the case with many listing agents) or for the buyer (as is the case for a buyer’s agent).
Additionally, some areas allow for dual agency where an agent can work for both the seller and the buyer or as a transaction broker where the agent represents the transaction itself and neither the seller nor buyer individually.
However, in the case of dual agency/transaction brokerage, note that rule, regulation (law) and ethics do not permit the agent to act in favor of either party while in detriment to the other.
If you are unsure of the relationship between you and your real estate agent, do not hesitate to ask.