Current Market Scenario

What is the state of the current real estate market in India? The market is plagued by a lot of problems and barriers to property transactions...

Problems in the Real Estate Industry & Property Market

Fewer Inventories:

The current real estate broking industry offers few property options for buyers even when there is a build up of inventory in the market. Since each agent is not sharing his listings with other agents in the market, the seller generally has a lesser chance of getting the right price for his property and liquidating it quickly. Further, an agent tries to represent both the buyer and the seller and that deters either of the two getting the right deal. Agents do not work on exclusive mandates so there is always a fear in the mind that the inventory they share might be used by other agents, as a result of which they would be bypassed from the entire deal.

Less Leads:

Leads are one of the most important parts in a successful real estate brokerage practice. However, because of limited reach and capacity to serve clients individually, a normal agent is not able to generate leads on properties on a regular basis. This creates a constant issue of not having enough listings to serve the buyers or not having genuine buyers to match properties put on the market by sellers.

Matching issues:

Since there is lack of sharing of inventory, each property is advertised less and so is not shared with other agents. Buyers do not have an idea whether properties matching their requirements are available or not. Agents working for the buyers also have a similar issue; they are not able to search for properties matching buyers’ requirements in online real estate portals, newspapers or any other advertised media.

Advertising Budget:

Real estate agents don’t have the budget to advertise as there is no assurance of income. Hence there is hardly any advertising by real estate agents in India. However, in developed markets, real estate agents have a higher advertising budget than builders as they can offer more options to the buyer than a builder can.

No Training in Real Estate Broking:

Since the only prerequisite to start a real estate career is to have a mobile phone, most real estate brokers in the country do not train themselves in any form of property broking practices. Also, the lack of licensing of real estate broking practice makes it even more difficult to regularize the entire brokerage practice and the manner in which it is conducted. A dearth of best practices and other training programs also make it difficult for anyone to start a real estate brokerage practice.

Staff Retention:

Once an employee works with a real estate broker for a few years, he obviously learns the tricks of the trade and feels that there is no major value addition or input coming from the real estate broker. Since the real estate broker is also trying to restrict his growth by giving him a modest salary and a small percentage of the commission, the staff member always feels that he is compensated less for the hard work he is putting in. Further, once he leaves the office and starts his practice in a nearby shop, he becomes a big competitor to the existing real estate broker.

Staff Monitoring:

As long as a broker is working for someone, it is very important to monitor him as he will be getting a fixed salary irrespective of whether he closes the transaction or not. His motivation to close the extra transaction is limited as there is no special incentive waiting for him if he goes the extra mile to serve the customer.

Staff Motivation:

Staff motivation determines the level of productivity of the office. Higher motivation levels and better customer service will lead to greater revenues and repeat clientele. However, real estate broking staff is generally not motivated to work harder as incentive structures are not high enough.

Agent Recognition:

An agent in a small office gets limited recognition from his peers, associates colleagues or competitors in the industry. This creates a constant unfulfilled need for recognition in the minds of the agent working on the ground. Further, many times it has been observed that the real estate agent is not allocated his own visiting card by the employer for fear that he may start doing business on his own.

Restricted Network:

A real estate broker today has limited network, be it within his city, state, country or outside his country. This restricts his ability to do business and go for property deals outside the area of operation. Companies who are looking for single point of contact to serve their real estate requirements or who are on a rapid expansion spree face a major challenge as they have to contact multiple brokers in multiple cities to source properties for them.Then comes the question of assurance of getting referral commission.

No Trust:

A customer is looking for trust since he is going to put his life savings into the purchase of property. Hence, he is more likely to go for a person who can provide him reliable, quality service and who he trusts enough with to put his life savings to good use.

Unorganized Market:

Since the property market is unorganized, there is no specific real estate data available that can enable an agent to analyse past transaction numbers, predict market movements, or even know the amount of transactions he is doing compared to the total market size.

No International Presence:

Lack of international presence gives an agent limited reach to do transactions in specific segments like international relocations, expatriate relocation services, migrations or even organisations wanting to operate in foreign markets. There are innumerable examples of companies coming to India from abroad and vice-versa. Such companies are constantly on the lookout for trusted real estate brokerage service providers to serve their needs.

Advertising by Builders:

Builders advertise real estate they develop without any assurance of property sales. Brokers charge commission on sale of property individually, which the builder pays only when the transaction is complete.

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