During the last three years real estate sector had a windfall, with all stake holders making a lot of money. The channel partners especially had a rocking time as the sales were booming. Handsome commissions were doled out, both in cash and kind as regional developers stepped up their efforts to offload inventory to create a healthy cashflow and sustain the organization from construction delays and financial defaults which could lead to insolvency.
During this period one thing which was slowly transiting in the developer space was that the share of national level industrial developers had been consistently increasing and that of regional developers continuously going down. The reason is clear- the big brands like DLF, Godrej, Tata command much greater credibility compared to regional players. Hence, these branded developers command price premium. However, their brokerage percentage is small compared to regional players.
Today, real estate is following the path of “FMCG” sales. Retailers, wholesalers, and C&F agents, all are queuing up to get inventory-sales funnel is always ready. But, here, the catch is that the transaction fee or the commission pay out in this case is extremely small. Like oil marketing companies, our real estate channel partners will soon encounter this, impacting their P&L. In this emerging scenario, in order to keep the business intact and grow the Contract of Purchase and Sale (CPs), brokers need to have professionally compliant set up with educated and skilled staff. They need to use digital tools extensively. Moreover, they have to go beyond vanilla brokerage operations and offer collateral assistance for home loans, legal matters, interiors, asset audit etc. Realtors will also have to focus on allied business-like land sourcing, change in land use, approval facilitation, architectural help, sales strategy & training.
Realtors can take cues from above and plan their future course of action. The idea is not to scare them but to make them aware and cautious of what lies ahead so that they can make most of the challenges which they might have to encounter due to business transitions in the coming times.
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