Understanding and Solving the Sales Riddle to Clean-Up the Mess
In school days we used to listen to our parents talk – Koile Ki Dalaali Mein Munh Kala. And in 2003, when I initiated my real estate journey, my family and friends in the IT space (since I am a computer engineer) used to say with contempt – Real Estate Mae Sab Chor hain. But contarary to this, my 20 Year journey of real estate has been a successful demonstration of how real estate can be handled, keeping one’s value system intact. Of course, a lot also depends upon the people you work with, their ethos & their values. I was lucky that I found the right people on the realty path.
I started my career in a small (start-up) company in terms of size of business, team strength and infrastructure. But that provided me an opportunity to get involved in all kinds of operations, starting with land purchase to liaisoning and from design to development and finally from marketing to selling. My core KRA was Marketing – Sales – 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 blame on the sales staff. To get over this, I devised a strategy of selling directly to customers which put the entire community of realtors against me. But then later on I changed my strategy of real estate selling by adopting a collaborative approach. In the recent years, I have been collaborating with relators to expand reach and in turn increase sales volumes. Trust me no broker has ever bribed me or asked me to do anything unethical. Nor did I get any complaint of any of my team members resorting to corrupt practices.
Why is it that sales team members are looked with suspicion or are believed to be colluding with brokers to make that extra buck. I dived deep into the process of sales through realtors or brokers or channel partners to get a clear understanding and to further tabulate my findings for developers, sales team members and brokers, as to what needs to be done to make the whole process transparent and clean up the image of sales team members and brokers. In order to understand the process, we need to look into the entire process with the profile of both the sales team members and brokers in detail, with their role and responsibilities.
Sales Team Member (Employee of the Organization)
#. Managing the Site: Customer Visits, Sample Flat Tour & Project Detailing, Facilitating Home Loan
#. Maintaining Collaterals, Brochure, Price List
#. Keeping knowledge of the competition
#. Being fully aware of the credentials of the organization, its past, present and future initiatives
# Having completely knowledge of the promoter(s) credentials
#. Maintaining the site office facility
Brokers
#. RERA registered to be legally compliant for the business
#. Having proper knowledge of the project / product being sold
#. Seeking and preserving a set of all approvals and collaterals from the developer of the project being handled
# Skilled and well trained
#. Generating lead (prospect)
#. Conducting site visit and introducing to the sales team of the developer
#. Facilitating transaction and hand holding the customer till all the paper work is complete
#. Facilitating 30 % payment
9. Raising the bill
Corruption in the System
But then if the process is so well defined, what is it that leads to corruption? The underlying reason is that compared to the broker who typically gets 3 – 5 % brokerage on the transaction value, the salary of the sales team staff is several times less than the fee earned by the broker. Let me detail this – Assuming that the cost of the apartment is Rs. 1 Crore and the developer is passing 5 % fee to the broker, a broker typically gets Rs 5 lakh fee. Compare this with the salary of the sales staff at site which will be of the order of Rs. 50k to Rs. 75k a month. The broker might do just 2 sales in a month. He has all the time at his disposal and is not stuck with one project one territory and earn a fee of Rs 10 lakh. Setting aside all the expenses, he still makes at least Rs 5 lakh to Rs 7 lakhs. The sales staff gets only salary and sometimes incentive which is small compared to the hefty commission that a broker earns. Obviously, a sales staff member gets frustrated for he attends the customer and puts all his heart and soul to convince him to buy the property but the broker takes the big share of the cake.
This is the starting point of corruption in sales transactions. The sales staff member strikes a deal with the broker to pass on a part of his commission to him. On his part, the sales staff member agrees to not only put extra effort to clinch the deal but also to give direct visit leads to the broker, besides other support. Both are happy. The developer has to accept that his landing is defined and so he doesn’t care. But the matter does not end here. Since the customer knows that the broker gets handsome commission, he demands a pass back. At the end of the day, the brokerage is shredded into pieces. Further, the broker has a task of raising the bill, getting it approved and processed for payment. The entire process also has milestones of paybacks to be made by the broker. The whole system that involves the splitting of the broker’s fee from one point to another is ruthlessly unethical. And in this process, misrepresentations, miscommitments and frauds happen with the developer and with the customer
This Who is responsible for all this? How do we correct this anamoly? This whole business of real estate sales has brought much shame to the sales personnel and broker community. The corruption is so deeply entrenched that sales persons and brokers with ethics and values are grinded to fail.
Next: Read all about the resolution of this vexed sales problem.in Part -2 of the article.
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