Sri Lanka real estate brokers, agent certification should be formalized: RIU

Jan 06, 2016 (LBO) – Sri Lanka’s real estate brokers and agents need to professionalize their services and initiatives to bring about change in the sector, a recent report says. “Sri Lanka does not have a formal system of registration of certification for real estate brokers and agents,” Research Intelligence Unit, a firm which specialize in real-estate market studies said in its quarterly report. “This topic is one that is currently under discussion and debate and we expect some initiatives to be made from within the industry, sometime in the next few years.” In the developed countries it is a legal requirement that all practitioners of the real estate business must be registered and there are legally binding responsibilities that go with the profession. RIU says that as a result of the unregulated environment, it is widely recommended that a great deal of care is exercised before a landowner enters into any agreement with an agent or with multiple agents. “In the absence of agent certification, the land owner should check the agent’s credentials.” This can be done by verifying their credentials; by checking up on their online presence and track record, conducting a formal interview with the agent  and ask for references, ensuring that they have local expertise in the area of the property being considered and establishing clearly the commissions that are to be paid, in writing. In the Sri Lankan context, landowners do work with multiple brokers but this approach can be problematic. Appointing a single entity/broker is advisable the report says as the ideal broker for such properties will know where to pitch and whom to contact even without advertising. “However, the landowners may be advised to place a time-limit on the period of exclusivity.  If the agent fails to deliver within that stipulated time, the owner can consider his options with more agents,” “As a market that still lacks maturity, Sri Lankan brokers do not charge upfront fees from landowners and they also do not charge fees from the buyer, unlike in India for example.” The standard commission payable by the sellers is three percent of the deal price in the case of residential properties. On occasion, if the price of the property is very high, the rate can be negotiated down to around two percent, the report says. However, some brokers also bargain for a higher price than the seller’s minimum price and ask the seller to pay the negotiated amount. At times this fee is higher than the brokerage. The only additional charge that an agent may request for is to advertise the property in the national papers.  This would be a matter for mutual consent and agreement between the seller and the agent.