If you have to sell your house - or buy one for that matter - you have to get the best price for it. Calling in a broker means you get a reduced price (if you are a seller), since he will have to be paid a brokerage.
That means one or two per cent off from the price the buyer is willing to pay you. Ditto when you buy a house. Your cost goes up by the amount of a brokerage.
Paying several thousands of rupees as brokerage merely because you were introduced to a buyer or seller may sound like a very high price to pay to many people, but before you put in a call to the neighbourhood thug to bump off your broker, here's why you need to think again.
For one, a good broker can be more than just a meeting-arranger with prospective parties. You may, for example, have little idea about what your property may be worth, how you can sell it, and what the legalities involved are.
Having a good broker will help ease all these worries. Then there's the advantage of utilising the broker's existing database of potential buyers and sellers. And don't forget the price negotiations. Having a broker around to negotiate prices helps because he understands a bit more about buyer (or seller) psychology than you do.
If you are in the market to buy, a broker automatically widens your choice; if you are a seller, a broker can amplify the potential list of interested parties. A good broker can also tell you the downside of some deals - the wrong area, water problems, doubtful legal titles, etc - that you may be unaware of as an individual buyer.
But there are equally good reasons why, sometimes, one should not look for a broker. If you are the type who is willing to check things out and trudge on your own from house to house, not only do you save money on brokerage, but you also gain a first-hand assessment of what the property is really worth.
There is plenty of info available from newspapers and property websites. Moreover, remember, you don't need to hire a broker to pump him for information. You can always tap him for information up to a point without paying anything. No broker will deny you information because he knows at some point you may want to hire him or recommend him to a friend.
Moreover, you can always use classified advertising in local newspapers and websites to sell or buy property. It's a lot more cheaper than going to a broker.
If you have the time, and if you are the networking kind, all you need to do is tell everyone you meet about your requirements and soon enough you will have enquiries. And don't forget, a small letter to your own society offering to sell your flat can get neighbours talking to their friends and relatives about it.
As for the legal stuff, you can always bank on your lawyer, if you already have one, or enlist one at a much lower cost.
Moreover, a broker also brings certain risks: his interest is in the deal going through, so that he can collect his brokerage. That doesn't necessarily mean he has your best interests at heart.
Going for broke?
Brokers cost between one per cent and two per cent for property sale and one and two months' rentals for leases - depending on whether your guy is a small-time player or an established international consultant.
It is worth remembering that while all of us love to hate the middleman, his role is important: at a stroke he can widen your options.
On the other hand, if you are willing to invest the time and effort required to do the legwork and spadework all by yourself, you do save a packet. It means you are taking up the middle function. It's your call.
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