Growing role of channel partners in real estate

June 12th, 2017

Affordable Housing in Bangalore

Real estate agents have always been an integral part of the realty sector. They don’t just endorse real estate projects but also underwrite them and get paid by developers for the services rendered. Today, one can also argue that the role of online marketing portals such as www.magicbricks.com, www.Commonfloor.com, www.99acres.com etc, are akin to those played by traditional channel partners, as they not only have a wider reach but also have advanced features. Some of these include 360-degree home tours, construction updates, and complete information of the property at a click of a button. The age-old interdependency between channel partners and developers have increased manifold in the present times.

Unification of Builders and Channel Partners – a new age amalgamation

With the proliferation of Indian Real Estate, developers have been rapidly engaging with Channel Partners. By adopting this mutually benefitting association, builders and developers are able to enjoy:

  1. Immediate funding: With channel partners underwriting property, builders are able to use this amount to fund instantaneous cash necessities. It is similar to funding received by a financial institute, but with a relatively lesser cash. This comes as huge relief to the builders at a time when they often run pillars to post to arrange cash to meet their daily business demands.
  1. Assured trade of the property: Once a real estate player associates itself with channel partners, it is assured of selling its property. This assured trade of the property makes these channel partners stand tall among real estate agents/brokers. It can also be noted that many a times, the developers hold the right to claim the interest for the property not sold. Since channel partners promise guaranteed sale of property, builders and developers go with them instead of brokers/agents. This is because of the fact that brokers are not liable to either sell or promote the property. 
  1. Promotions and Marketing: Furthermore, as most of the marketing and promotions activities, such as property listings, lead generation, digital marketing and so on, are also handled by channel partners. This helps reduce unwanted pressure on developers and allows them to concentrate on their core business of offering quality construction to prospective customers.

Channel partners and brokers – what makes them unlike?

Despite similar functions, brokers/agents and channel partners have vast differences in their styles of working. Brokers/agents are not entitled to liabilities, whereas channel partners take liabilities of the property to be sold. This makes real estate agents less reliable compared to channel partners.

Real estate brokers/agents are usually entitled to small pay cheques whereas channel partners get a handsome share, as they underwrite the property and also spend on the promotional activities from their own pocket. Channel partners operate in a disciplined structure and are highly networked, brokers/agents, on the other hand, have limited network due to scarcity of resources.

Channel Partners and Real Estate (Regulation and Development) Act, 2016 (RERA)

Earlier, small-time brokers had an unobstructed participation in the Indian residential real estate marketplace, and many of them grew on misguiding or under-informing their customers.

With the implementation of Real Estate (Regulation and Development) Act, 2016 (RERA), equations are set to change in real estate and all the parties involved in it. Under the new Act, 5% of the total cost of a project will be levied to channel partners if wrong information is shared with homebuyers.

RERA is expected to bring more transparency in the sector and improve buyer confidence. This will help boost the sector and strengthen the economy further.

With the emergence of organised players in the real estate sector, the need for channel partners is at its peak. Channel partners act as a bridge between real estate companies and property seekers. With the collaboration of developers, channel partners have gained immensely from increased sales. Tier-2 cities like Pune and Vadodara are witnessing improved growth of channel partners, as they have better understanding of the region’s requirement.

With introduction of Real Estate Regulation Act (RERA), prospective buyers seem to have more faith in buying the property through channel partners. This is because of the fact that the channel partners will be penalized if they mislead buyers.

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3 Comments

  • sanjay magoo

    May th, 2018 8:24 AM Reply

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  • Daryl Barak

    Jul th, 2019 9:25 AM Reply

    Great info, thanks for sharing this!

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