Real estate agents face testing times

In a first, as exam prep, real estate agents went through many workshops where they were explained the preamble, purpose and objectives of RERA Act. They participated in virtual tours of the MahaRERA portal to familiarize themselves with the basics of the trade -- how to verify promoter identity and project details, access legal titles of the property, calculate the RERA carpet area, access the building approvals like commencement certificate, the financial information about the project, any litigations against the project etc

MUMBAI Winds of change are drifting into the real estate sector, which was once plagued by black money transactions, builder-led scams which resulted in a series of stalled projects and a trail of hapless homebuyers left in the lurch after they invested their life-savings in under-construction projects. While the vicious legacy from the pre-RERA (Real Estate Regulatory Authority) phase continues to haunt the underbelly of the sector, since it was constituted in 2017, there has been a move towards compliance and transparency with the aim to seek industry status.

In development havens such as Mahalaxmi, Mumbai, and others in the state, real estate agents will be allowed to operate only after they earn the certificate of competency by MahaRERA. (Anshuman Poyrekar/ HT Photo)

Towards that goal, in January this year, MahaRERA became the first RERA authority in the country to mandate online examination for all the 44,656 agents registered with it to obtain MahaRERA Real Estate Agent Certificate of Competency before September 1, 2023. Without this badge of approval, no agent would be allowed to carry out their business.

However, as only 3,400 agents managed to clear the exam, the regulatory body is considering extending the deadline to clear the exam by six to seven months, and an order to that effect will be issued next week.

In a first, as exam prep, real estate agents went through many workshops where they were explained the preamble, purpose and objectives of RERA Act. They participated in virtual tours of the MahaRERA portal to familiarize themselves with the basics of the trade -- how to verify promoter identity and project details, access legal titles of the property, calculate the RERA carpet area, access the building approvals like commencement certificate, the financial information about the project, any litigations against the project etc. This was followed up with the deal-breaker online test where they had to answer 50 questions in one hour. “The most important part of the question paper are the responsibilities of each of the three stakeholders – the promoter, the allottee or home buyer, and the real estate agents. Each question carries two marks,” said Maria Coelho, assistant vice president, Culture, Real Estate Management Institute.

Sanjay Deshmukh, nodal officer of MahaRERA said, “The entire process has been formalized. The government has also put the key responsibility on real estate agents under the Prevention of Money Laundering Act (PMLA) and we will update this in the curriculum before the next exam.” Under these guidelines, real estate agents need to keep identification and verification records of their transactions, which would help law enforcement agencies trace the records when required.

When Pune-based agent Amit Phadke, 44, first heard about the licencing process, he was relieved – the sector had finally managed to find a way to sift the grain from chaff. “It was finally a recognition of agents as an entity that played a crucial role in real estate transactions. The certification process underway takes it further towards making it an organised industry,” said Phadke from his Erandwane office where he markets residential and commercial properties in central, western and southern Pune.

The body’s first ever exam in May saw participation from development havens such as Mumbai, Thane, Pune, Nagpur and Aurangabad. Of the 423 candidates who appeared for the exams in May 2023, 405 qualified with a 96% result. For the second exam conducted in August, the participation went up seven-fold from 17 cities of Maharashtra. Out of 3,010 candidates who took the exam, 2,812 passed with a 94% result.

“It is an encouraging move. It would be nice if an exam could be conducted every month to cover the backlog in seven to eight months,” said Phadke.

Vinita Saxena, an independent broker from Mumbai, who specialises in big-ticket luxury and heritage properties, recalled how the industry was unorganized when she started her career 20 years ago. “There was no respect for brokers. That is changing. Now, both buyers and developers will take the certified real estate agents seriously. Already, landlords have begun asking brokers if they are certified,” she said.

She added, the strict compliances on ongoing projects have infused “fear among developers as the agency is protecting the buyers”.

Sarang Metkar, 42, who secured 88th rank in the exam in August, said the 20-hour mandatory training educated him about many aspects of RERA. “That a developer cannot hold back or cut a substantial part of the booking amount, if the buyer changes his mind was one. Now, the rule clearly states that only a certain percentage can be cut and the developer has to return the remaining amount within a stipulated time,” said the Nashik-based agent who caters to customers who go for plotted developments in and around the district.

While agents are gung-ho, some, like urban housing activist Chandrashekhar Prabhu, are critical of the new mandate. Prabhu underlined the powerful grip Mumbai’s builders have on policies governing the housing sector, and said the professional licencing process is not likely to improve transparency. He called it an eyewash as RERA “as a law is a toothless piece of legislation”.

He argued that despite a Supreme Court mandate, builders and their lawyers continue to draft one-sided agreements for sale and home buyers have no choice but to sign. “MahaRERA has not been able to enforce the model RERA agreement. Educating real estate agents may enhance their knowledge of RERA but it can’t bring transparency and accountability to the industry,” said Prabhu, who has long been a proponent of self-development model that eliminates unbridled profiteering by developers and played a key role in Maharashtra government’s support to the model.

Meanwhile, for more transparency, MahaRERA went a step a further and implemented a Quick Response (QR) code regime making it mandatory for developers to market projects only with a dedicated QR Code. On August 21, the Authority also made it mandatory for real estate agents to ensure that while marketing the inventory, they have to ensure that the project’s QR codes are displayed on marketing material and any promotional advertising of the project. It also imposed a minimum penalty of ₹10,000 for any violations which could extend up to ₹50,000.

Women lead the change

Although less than 10 per cent of the 2812 candidates who cleared the exam last month are women, they are clearly the harbingers of change. Neha Agrawal and Bela Shah, both in their early 40s, are seasoned professionals already logging substantial business for leading developers such as Oberoi Realty and Rustomjee when they appeared for the exams and topped the merit list.

A Lady Shri Ram College graduate who also has an MBA in finance from Management Development Institute, Gurgaon, Agrawal worked in the fund management team of Birla Sun Life before she co-founded the real estate consultancy firm, OpenMinds, with her husband Deepak Agrawal in 2012.

“In the early days, I found that women were not taken seriously. They did not think that a woman could lead property transactions worth ₹8-9 crore. They would discuss the specs with me, only to later tell me that they were comfortable speaking to my husband for the final decision. I found that very demotivating, and I restricted myself entirely to back-office operations,” said the Goregaon East-based Agrawal.

She said the certification process for real estate agents has brought a grain of trust in the ecosystem. “In pre-RERA days, as brokers, we were not sure if a builder’s claims would fructify. Now, the entire data of the project is on MahaRERA portal including its carpet area, layouts, down to how much of the inventory has been booked. With apps like Zapkey and Indextap, we can show which flats have already been booked. This kind of transparency was missing earlier,” she said.

Bela Shah, who has already done about ₹200-crore worth real estate business for top developers, said she was aware of RERA provisions, but unclear of the nuances and finer details. “The 20-hour training sharpened our skills. It was an enriching experience, and enhanced our knowledge of the regulatory mechanisms,” said Shah, who started out marketing luxury real diamond jewellery to NRI clients before switching to luxury real estate for an Ahmedabad-based real estate firm. “I was already comfortable dealing with HNIs and UHNIs. I like meeting and interacting with people and the switch to real estate was easy,” she said. She set up Ekashaa Realty Advisory in January 2023. Her firm deals with mid-luxury and luxury housing segment in south Mumbai.

Shah said MahaRERA’s insistence on compliances by the developers will automatically trickle down to the consumer. “Unless the project is RERA registered, real estate agents cannot even send a WhatsApp message to customers or officially exchange any promotional material. Earlier, a developer would promise ‘ABC’ and easily add a ‘D’ of amenities. Now he prefers to hold back than give a promise he cannot honour,” said Shah, who believes that improved compliances will bring transparency and boost buyer confidence in real estate.

“The pre-RERA trust deficit has reduced, and the earlier apprehensions about under construction projects have gone. Birla Estates unveiled a project in 2022 with delivery timelines going up to 2028, but people bought homes because of this transparency. Today all documents are on the MahaRERA portal. With the end user demand strong, the residential sector is going to witness a strong growth,” said Shah.

Shah suggested that when MahaRERA unveils a rating system for best projects by developers, they should create a rating system for real estate agents as well. “That will help the buyer make an informed choice,” she said.