It used to be the rule that Mumbai residential property transactions would be conducted by a broker. Today it’s still very common to use a broker but not the rule. Websites like nobroker.in and housing.com will assist through the entire process from advertising the property to sorting the landlords out with the necessary paperwork.
The typical real estate fee in Mumbai for leasing a property is one month’s rent (and it is generally 1.5-2 months if the lock in period is 3-5 years plus) and for sale it is 1% of the property’s value.
If you are a landlord or someone looking to lease or buy a property and have time on your hands. Try not using a broker. It could work well and you could save 1% or one month’s rent.
However, since housing.com and nobrokers.in have appeared in India. We have noticed a trend. It’s the less expensive properties that sometimes opt to go the no broker route and there hasn’t been really any disruption to brokers for the expensive residential properties or commercial properties. Now why would this be?
These “nobroker owners” have the time and desire (largely to save money & possibly a guttural distain for real estate professionals – someone had to say it!) to market their own properties. If the expected time & effort to close the deal from your marketing efforts is worth less than the money saved, then you may opt to not use a broker. What is simple to calculate is the money saved from not paying broker fees, but what is more difficult is to calculate the value of your time & effort. How long will your property stay on the market? Will you be able to appropriately market my property thru a sufficient amount of channels? How much time and energy will this take? Will you be able to secure a quality tenant?
If you decide to not use a broker, you can do one of two things:
1) Price your property below market and then you will reduce the time of you property on the market. Your USP is that you are selling/leasing at discounted rate.
2) Price your property at market rates and hope that it gets rented or bought in a timely fashion. This would work very well if your property is truly unique & stands head and shoulders above other comparable properties.
If you’re a property owner and you have time, desire to save money from brokerage & not in a rush to lease or sell your property then I would suggest opting to being your own broker. However, as hard as it is to stomach paying the brokerage fee, it very well will save you money let alone time and energy.
We do think the no brokerage model will continue to gain in popularity for the lower market and the middle market in Mumbai. However, given the above, we don’t foresee any meaningful impact on brokers when it comes to higher end real estate let alone commercial properties for the foreseeable future for these 3 Reasons:
1) The commissions paid to brokers tend to be a smaller percentage of these landlords’ net worth/salary.
2) Individuals in this segment usually don’t have a considerable amount of free time
3) Those that do have the free time, tend to have enough money to not want to deal with the tension.
Then again being a real estate broker for one transaction could be an enlightening experience! Give it a shot, let us know how it goes at [email protected]
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