The theory of system justification mentions that people are motivated to rationalise the status quo as legitimate, even if it goes directly against their interests. For people status quo serves as a soothing function. This theory mentioned in the book 'The Originals' aptly reflects our real estate market's state-of-affairs till 2016. We did not want to change and loved the status quo since it was convenient. In this case the status quo was severely against the interest of the customers especially in the residential market. All that seems set to change in 2017. In 2016 Clinton might have been the more desirable / status-quo candidate but Trump the new default setter got elected who in 2017 is changing the rules of the game at a hectic pace.

This year the status-quo of our market would be changed dramatically by a plethora of new rules and regulations which include the benami act, real estate regulation bill and recent changes in the occupancy certificate (OC) guidelines which basically does not allow partial OC's to be issued. Add to the above, the demonetisation effect and any likely impact on the residential market due to changing business environment in the US for the Information Technology market, would make 2017 a very important year to watch for in Hyderabad's real estate history.

The most important change in 2017 would be the implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA), by all states, by May 1, 2017. A lot of the commentary around this act has been on how the builders / developers business would be affected. An important component of the markets are Realtors or real estate consultants or brokers. Realtors is a globally patented term used to define only real estate consultants or brokers and not developers / builders.

Some of the main points to be noted for the real estate consultant's under RERA are as follows:

• The objective of the act is obviously to facilitate the growth and promotion of a healthy, transparent, efficient and competitive real estate sector. For real estate consultants one of the biggest impediments was the non-recognition of their business / profession by the government. In this regards the National Association of Realtors - India (NAR-India) has played a pivotal role to bridge this gap within the RERA framework. Upon their suggestions, Section 32(a) was amended as "... protection of interest of the allottees, promoter and real estate agents". The implication of this amendment is far reaching. Government has given this profession identity, recognition and respect through this clause of protection of interest of real estate (RE) agents.
• The initial draft proposed that RE agents register with the authority for every project they wished to sell. Here again, basis NAR-India's suggestions, the government has taken a pragmatic view and amended Section 9 to state that every RE agent shall make an application to the Authority for registration accompanied by fee and relevant documents. The Authority shall grant a single registration to the real estate agent for the entire state of union territory, as the case may be;
• Process of registration of RE agents has been simplified. If the applicant does not receive any communication within specified period, he shall be deemed to have been registered. Every real estate agent shall be granted a registration number by the Authority, which shall be quoted by the agent in every sale. Every registration shall be renewable after a certain prescribed period.
• Where any registered RE agent commits breach of any of the terms and conditions specified under this Act or any rules, the Authority may revoke the registration or suspend the same for such period as it thinks fit.
• No registration application of RE agent shall be rejected unless the reasons are recorded in writing by the authority or unless applicant has been given an opportunity of being heard in the matter
• Do's for RE agents: Section 10 states that every real estate agent registered under section 9 shall sell properties registered with authority, maintain books of account, records & documents and facilitate the possession of all the information and documents to allottee at the time of booking of any property
• Don'ts for RE agents: Section 10 states that every real estate agent registered under section 9 shall not involve himself in any unfair trade practices like false representation of services (E.g.: gym, club, modular kitchen etc. not present in the project). False statement on approvals by Promoter or Agents (E.g.: selling pre-approved projects). Publication of false advertisement whether in any newspaper or otherwise of services that are not intended to be offered
• Punishment and Penalties for RE agents are covered under Section 62, 65 & 66. These range from Rs. 10000/- per day upto 5% of the cost of property and in some cases upto 10% of the cost of property or imprisonment upto one year.
• RE agents have to ensure the that they get themselves registered, sell only registered projects, be honest and transparent with customers, share information with customers only as per approved prospectus of project and do not oversell, be careful about information in advertisements.

Understanding the above compliances is a must for realtors going forward. It is also good for customers to also understand these compliances so that service expectations as per law is clearly understood and demanded.

The RERA act leaves a lot of questions unanswered for RE agents, which hopefully will get addressed in future. It is strange that RE agents do not have any law to protect their revenue stream or even prescribe that they need to be paid. Not sure of any other business model where revenue maximum could be max 2% of the cost of the property but liability could range from 5-10% of the cost of the property plus jail term.

The Realtors business in Hyderabad will witness a sea change in 2017. Current models of selling residential space, for most realtors, is to get their 100% fee at the stage when their client pays 20% of property cost to the developer and enters into an agreement of sale. Post this, the realtor has no role to play irrespective of clients getting the residential unit in time or not or any other dispute with the developer. Post RERA this model will need to be updated to ensure realtors give service to clients for a longer period of time. Realtors will have to keep track and get involved on need basis incase future installments are not paid / delayed or any dispute between developer and client or possession getting delayed.

RERA will come into action on May 1, 2017 but most of the constituents of the market be it developers or brokers are yet to start their homework on how to change as per the new upcoming rules. The state government should implement RERA at the earliest so that enough time is given to all constituents to prepare well in advance. The draft of this important act should be well discussed and address all issues concerning the buyers. We hope the act would include all under construction projects also otherwise RERA will loose its meaning.

We feel RERA is another opportunity for this industry to get its act back in order and earn its lost credibility. Once these two things are in order the market would automatically improve with better sentiments.