c-re-08

Real Estate Broking Business

Trainings by Vidya Bhagwat

Agenda

• Steps to be taken before starting business• Skills and knowledge required by real estate brokers• How to Start a Real Estate Agent Business in India?• Current scenario in the real estate sector• The potential in the real estate sector• Restrictions in setting up a real estate business• Progress after setting up


Steps to be taken before starting business

1. Build and compile a database of properties available in the city/town.

2. Build relations and network with developers around for future reference.

3. Get in contact with flat owners looking for tenants.

4. Look for buyers in the market.


Scenario 1

• A customer is looking for a flat for rent. A real estate broker/consultant uses his database or his network to get in touch with various flat owners according to the needs of the customer. The consultant charges 1-2 months of rent as commission when the transaction is successfully completed.

Activities carried out by consultant:-– Home search – Negotiation between the flat owner and the customer– Area information– Fix meetings– Provide documents– Police verification– Legal processing


Scenario 2

• A customer is looking for a house or a flat to buy. The consultant uses his database of developers who provide him with information about the various projects or any new projects coming up around the desired location. The consultant then compiles the information received and provides those to the customer that suit his needs. In this process, the broker charges 1-5% of the product value from the customer as well as the developer after the transaction is successfully completed.

• The consultant usually signs a Memorandum of Understanding with the developers to help them get customers.

Activities carried out by consultant:-• Home search• Negotiation• Area information• Provide documents• Fix meetings• Legal processing• Help in getting home loan


Scenario 3

• A flat owner is looking to sell his flat or put it on rent. The consultant here would help the owner to look for potential buyers meeting the criteria set by him. He could also advertise the house for resale. In such a case, the consultant charges 1-2% of the product value as commission.


Skills and knowledge required by real estate brokers

1. Communication skills2. Negotiation skills3. Real estate knowledge4. Home loan calculation5. Market knowledge6. Customer Relationship Management7. Networking skills8. Problem solving techniques9. Local area knowledge10. Legal knowledge


How to Start a Real Estate Agent Business in India?

• With the real estate business booming in most parts of the country, being a real estate agent and establishing a real estate business is a good plan for those looking for self employment opportunities. The commercial sector, in particular, has been experiencing a high over the last few years. However, if you are just venturing into the industry, its best to begin by handling residential properties.

• The residential sector too is doing just as well with cities beginning to expand their limits and large scale projects cropping up around the outskirts. This growth in the real estate sector has been widely attributed to an increasing purchasing power, customer friendly banks and home financing solutions, a wide network of realtors and favorable reforms implemented by the government.


Current scenario in the real estate sector

• While the real estate and property development sector in India has been fairly fragmented up until recently, large scale developers like Sobha, DLF, Hiranandani and Raheja have been instrumental in bringing about a change in the industry.

• To meet the ever growing demands in the industry, they have resorted to sourced financing and IPOs (initial public offering) in Tier 1 cities like Mumbai, Hyderabad, Bengaluru and Chennai. This has brought some order and organisation to the real estate sector in these cities, although Tier 2 and Tier 3 cities and small towns are still struggling to find a more systematic approach.


Current scenario in the real estate sector

• Although the market is still on struggling grounds in several parts, the upward trend in its growth is remarkable. This growth is also largely due to the demands of multinational occupiers and the flood of international property consultancies.

• When it comes to the residential sector, the need for quality residential complexes and the opportunity to invest in real estate owing to higher purchasing power of the middle income group have both contributed towards its growth.


The potential in the real estate sector

• Step 1: Educational qualifications and licensing

• Step 2: Register your real estate business

• Step 3: Establish yourself in the industry


Restrictions in setting up a real estate business

• Since this is a fairly unorganised sector, you are not likely to come across too many restrictions. Although setting up the business and registering it could be a tedious procedure, you are not likely to face too many restrictions once you are set up. A notable exception may be that NRIs cannot start a real estate business in India.


Progress after setting up

• While setting up your business may have taken a lot out of you, make sure you stick to your business plan once you are all set up and good to go. Structuring a feasible business plan for the first year after your commencement is quite important. It’s quite easy to get carried away with the ample prospects in the real estate business. But keep in mind that while you are just starting up, there are many experienced players in the field as well.

• Your business plan should include setting a realistic sales target, ways to target your clients and making your listings available in multiple forums, and a budget that takes into account expenses for marketing, technological investments and your company’s infrastructure.


Progress after setting up

• A lot of your success rides on choosing the right mentor and agency to train under before you establish yourself. By the end of your term there, you are likely to have built a clientele to take with you to your new set up.

• As always the advice we give in these articles should be checked and we always advise that you seek professional advice before setting out in a new business.


Assignments

1. Describe the process by which you would set up your own broking business.

2. Analyse the skills required by consultants. What other skills do you think you need to possess in order to succeed in this field?

3. How would you handle a customer who is dissatisfied with his flat owner?

4. Study the work of any big real estate broking agency. 5. Make a report on How could you start your own Real Estate

Business


Thank You