Corruption in Real Estate Sales चोरी या मजबूरी

[Section 1: Understanding the Problem]

In school days, we used to listen to our parents talk about ” कोयले की दलाली में हाँथ काला “, and in 2003, I initiated my real estate journey. My family and friends in the IT space (since I am a computer engineer) used to say रियल एस्टेट में सब चोर हैं.

Contrary to the above, my 20-year journey in real estate has been a successful demonstration of how real estate can handle keeping one’s value system intact and one’s white shirt spotless. Of course, lots also depend on the people with whom you work, their ethos, and their values. Lucky for me, I found the right people on this path.

I started my career in a young small company by the size of the business, team, and infrastructure and hence got involved in all works starting with land purchase, Liasoning from design to development, and finally from marketing to selling, with my core KRA being Marketing, Sales, and CRM.

In Sales, I was truly scared of working with realtors (channel partners or brokers), for I was told that brokers follow unethical practices and, if caught, put the entire wrongdoing on the sales staff. I devised a strategy of selling directly to customers, which led to a whole community of realtors standing against me.

In my recent career path of selling real estate, I changed my strategy and collaborated with realtors to expand my reach and increase the volume of sales. Trust me, no broker has bribed me or asked me to do something unethical, and I have not gotten any comment from my team member about being corrupt.

Why is it that sales team members are looked at with suspicion or are believed to be colluding with brokers to make that extra buck?

I dug deep into the process of sales through realtors, brokers, or channel partners to get a clear understanding and to further table my findings in front of developers, sales team members, and brokers about what needs to be done to make the process transparent and clean the image of sales team members and brokers.

To understand the process, we need to understand the roles of sales team members and brokers in detail.

Sales Team Member

1. An employee of the organization
2. Manage the site: Customer Visits, Sample Flat tours and Project Detailing, facilitation of home loans
3. Maintaining Collaterals Brochure and Price List
4. Keeping knowledge of the competition
5. Being fully aware of the credentials of the organization, its past, present, and future initiatives
6. Completely aware of the credentials of the promoters
7. Maintaining the site office facility

Brokers

1. RERA registered the business to be legally compliant.
2. Have proper knowledge of the project or product they are working on.
3. Seek and preserve a set of all approvals and collateral from the developer of the project they are working on.
4. A skilled and well-trained team
5. Generate leads (prospects).
6. Conduct a site visit and introduce the developer to the sales team of the developer.
7. Facilitate transactions and hold hands till the paperwork is complete.
8. Facilitate 30% payment
9. Raise bill

What is the reason for corruption if the process is so well defined?

The reason is that the broker typically gets 3–5% brokerage on the transaction value, which is multiple times more than the salary of the sales staff.

Let me detail this: let us assume that the cost of the apartment is 1 crore and the developer is passing 5% fees to the broker, meaning he gets Rs 5 lacs in fees. Compare this with the salary of the sales staff at the site, which is typical for an order of Rs 50k to Rs 75k in a month.

The broker might have just two sales in a month, has time on his hands, and is not stuck with one project and one territory. He ends up making Rs 10 lacs, and all expenses add up to at least Rs 5 to Rs 7 Lacs.

The sales staff gets his salary and sometimes an incentive, which is small compared to what the broker makes.

The sales staff is frustrated because he attends to the customer and puts all his heart and soul into convincing him to buy, but the broker takes the biggest share of the cake.

Here starts corruption.

The sales staff and broker agree to a particular share of broker commission to be paid to the sales staff. The sales staff agrees not only to put in extra effort but also to give direct visit leads to brokers and other support. Both are happy. The developer must accept that his landing is defined, so he doesn’t care. One last step: since the customer knows that the broker gets a handsome commission, he demands a pass back.

At the end of the day, the brokerage is shredded into pieces.

The broker further has the task of issuing the bill, getting it approved, and then getting it processed and paid. This process also has milestones for paybacks to be made by the broker.

This is so embarrassing. Absolutely Ruthless

The whole system is just taking a share of the brokerage from one point to the next, and in this process, misrepresentations, false commitments, and fraud happen between the developer and the customer.

Who is responsible for all this?
How do we correct this process?

This whole business of real estate sales has brought so much shame to the sales personnel and broker community that people with ethics and values are considered failures.

Wait to read [Section 2: Resolution to the Problem].

Sanjeev Kathuria
Founder, Author & CEO
   Torbit Consulting