Regulating Real Estate Agents
Investments in land and real estate development can be tricky if all the required information is not present at hand. As the sector is marred by a lack of transparency and difficult processes at each stage of buying, selling, and renting of land, the role of real estate agents cannot be understated. A skilled agent not only guarantees correct decision making but also ensures that real estate investments are profitable and safe. This makes the regulation of real estate agents an important aspect due to the high chance of fraud and deception due to general unawareness of real estate among the masses.
The real estate sector can be a complex area for someone unfamiliar with the terminology and processes involved in the buying, selling, and renting of land, homes, and real estate development projects. The sector is further divided into residential, commercial, and infrastructural development, with each area having unique dynamics that make it challenging for the ordinary citizen to grasp the full extent of real estate potential. Therefore, a professional who understands the different aspects of real estate is required to successfully invest in profitable and secure projects. A real estate agent is a licensed professional who arranges real estate transactions by putting buyers and sellers together and acting as a representative on behalf of their client. Since the buyer and seller usually rely heavily on the agent’s expertise in the relative field, it is pertinent to regulate the activities of real estate agents by ensuring that those who are responsible and have the proper understanding of market dynamics make way to client handling. This means that a regulating authority is required that ensures the licensing and audit of real estate agents to safeguard stakeholder interest and promote real estate business. which the Iqbal Institute of Policy Studies (IIPS) discusses in this blog.
Role of Real Estate Agents
Real estate agents assist clients in buying, selling, and renting properties by acting as a representative of the buyer or seller in a negotiated deal. Real estate agents do similar work to a real estate broker, but brokers are licensed to manage their own real estate business. They advise clients about market conditions, conduct walkthroughs, and provide guidance and assistance. When working with sellers, a real estate agent prepares a comparative real estate market research analysis to establish a realistic ask price. They are also responsible for staging the property and list the property on multiple marketplaces. Furthermore, they advertise real estate properties, supervise property showings and open house events, draft and prepare documents, and communicate with government officers, companies, lenders, and banks to ensure a smooth flow of real estate transactions. When working with buyers, they coordinate closely with their clients and oversee market projects, arrange meetings, interview buyers to understand what they are looking for, schedule property showings, coordinate appraisals and inspectors, negotiate property repair requests, draft and view documents, and guide the buyer through the closing process. (Indeed, 2021)
Why Regulation Needed for Real Estate Agents
Real estate agents have a fiduciary duty towards their clients. The term implies the legal responsibility of acting in a way that protects the interests of another party. As real estate agents work closely with their clients on achieving specific targets, private details and the financial conditions of their clients are fully known to them. Therefore, confidentiality is an important right which the agent has to protect and oversee throughout the process. The fiduciary duty of disclosure also requires the agent to be honest and fair. This includes sharing all facts that affect property value and any other issues which prevent the buyer from purchasing at a low price and a seller from selling at a high price. It is also important that the real estate agent is loyal to his clients and takes reasonable care and diligence to keep his client’s interests before his own. Lastly, an agent is also required to follow his client’s lawful instructions while accounting for all the documents required and the transaction process. Therefore, regulations surrounding real estate agent activities can safeguard client and investor interests.
Regulating Real Estate Agents
According to the Islamabad Real Estate (Regulation and Development) Act 2020, no real estate agent can facilitate the sale or purchase of any plot, apartment, or building without obtaining registration from the relevant authority. Every agent shall make an application with the prescribed authority accompanied by some fee and documents, upon submission of which, the authority will grant a license to the said agent or broker. The authority will grant a single general registration to a real estate agent for two years which can be renewed after every two years or grant registration for a single project, or reject the application with reasons recorded in writing, provided that no applicant is rejected without being given an opportunity of being heard in the matter. The agent will be provided with a registration number which is to be quoted in every transaction facilitated by the agent.
If the authority deems that any agent has acquired registration based on fraudulent activity, they have the right to revoke his registration. The act also mentions the functions of real estate agents. They cannot facilitate the sale and purchase of any plot, apartment, or building that is not registered under the real estate regulatory authority. They also have to maintain and preserve books of accounts, records, and documents as prescribed by the relevant authority. If any project is not advertised, it cannot be promoted by the real estate agent. The act summarizes the key roles of real estate agents and also facilitates the processing of complaints made against offenders. It is no doubt that if the act gets materialized in Pakistan, the real estate landscape will change significantly for the better. (Government of Pakistan, 2020)