Before I answer the above question let me first address a common misconception about the term 'Realtor'. If you Google the phrase 'meaning of realtor', the search would mention its meaning as 'an estate agent'. Internationally the term realtor is used only for a real estate agent or broker. A realtor is a terminology trademarked by National Association of Realtors, USA (NAR) who represent over a million realtors as their members. In India the realtor fraternity is organised nationally under National Association of Realtors - India (NAR-India). Locally the realtor association is now called Hyderabad Realtors Association - HYRA (earlier know as APRA). The point I am trying to make is that the term 'Realtor' does not refer to a builder or developer or somebody who develops plots. A realtor is a real estate broker. Period!
Coming back to the above question, my suggestion is "NO". The only reason being, it is a huge conflict of interest if your realtor where to suggest a property and also offer legal opinion about the same. Legal opinion should come from lawyers who specialise in real estate. Alternatively the legal team of your bankers can help in this regards. A professional realtor is the best person to suggest you a property and advice you on where to look for the devil in the details, if any, in the legal papers. He is also the best person to suggest mulitple options in your paperwork to cover your risks and still sign a win-win deal. To be on the safer side clients should seek a proper written legal opinion, before signing up.
I want to share a personal experience on this matter. About 10 years back I used to work with one of the bigger real estate consulting companies, based at their Delhi branch handling Business Development activities. One of our constant endeavours was to generate more business from existing clients. A large multinational company was our client for facilities and project management. We convinced them to give us some transaction management / brokering assignments as well. They gave us an opportunity to get them a large guest house in Delhi. This assignment was handled by our brokerage team and the deal was closed.
A few days later my boss called up to share that the guest house deal had landed our client and us in significant trouble. She wanted me to get to the bottom of the issue and solve it. This client was one of the biggest revenue earners for the company and naturally my boss was worried. I started with meeting our Delhi brokerage team and reading the relevant documents. Basically the client signed a guest house deal with a landlord who himself was a tenant and did not have sub-leasing rights. The original landlord came to know about this deal and informed our client. The strange part was nobody, either on our side or client side, realised this during the course of the deal that they were not dealing with the actual landlord.
I started by asking the clients legal team, who had cleared the deal for signing. I realised that they had not read the documents themselves. Since it was a small deal they just checked with their commercial team who were handling the transaction on a day-to-day basis. The client's commercial team told the legal team that the legal papers were fine; hence the legal team gave the go ahead. I found that the client's commercial team had relied on our brokerage team head, who in turn had relied on his manager, who had relied on his executive to have read the documents and was told everything was fine. I finally realised that the executive had recently joined the brokerage team and had no experience of handling or understanding legal papers. He just felt that legal papers anyways would be fine and sent a "sab theek hai" mail which got eventually passed on to the client. Add to this the obvious paucity of time provided to close the deal helped everybody overlook these important matters.
Actually everything was not fine (theek), basis this wrong assessment a lease deed had been signed, security deposit paid and rental payments started to the wrong lessor. The clients team were clear that our team had messed up and we needed to clear this up ourselves. We had no choice but to get this problem rectified, or lose the client. I decided to pay a visit to the property to meet the wrong lessor, and found the guy absconding. The wrong lessor had actually leased the property to run a guest house on his own, since he could not manage he decided to lease it further as a guest house. All possible vendors be it the vegetable vendor, milkman, newspaper vendor, kiran shop vendor, non-veg supplier etc. had months of payment outstanding and were already at the property fighting for their dues.
The manager of the guest house just shared the wrong lessor's residential address to get rid of everybody. Our team decided to pay a visit to his house somewhere in Ghaziabad. It was quite late in the night but we still went, we did not find him. He had just vanished leaving his family to handle pestering vendors. We realised there was no point in haggling with the family and decided to wait / track him. We waited patiently the whole night in our car on a very cold December night. Early morning we saw him coming home and we got hold of him. He admitted his wrong doing and agreed to co-operate with us to resolve the problem. Obviously he had spent all the money he received from our client.
The actual landlord was from Ahmedabad. We alongwith the wrong landlord travelled to Ahmedabad and after 2 days of discussions got both parties to agree to some workable solution. This solution was conveyed to our client and implemented. All this non-productive work eventually took up almost 2 months of my time. In the end the only satisfaction was that the client was appreciative of our response and a solution was worked out. Our relationship with the client was not affected adversely. It is a different matter that after a month or so our client's commercial team called me urgently on a Saturday afternoon with some interesting news. While all the above hungama was going on, they forgot to inform their accounts team to stop rental payments to the wrong lessor. So while we were working on resolving one mess another mess was being created! I checked with my boss and conveyed to the commercial team that we cannot do anything to help.
The moral of the story is simple, if my brokerage colleagues had initially declined to offer any legal advice to our client then a lot of trouble could have been saved for our company, client and self. Whenever now we get together with my ex Delhi colleagues, we have a hearty laugh about this whole episode, but at that point in time this was a painful episode.
A client should always appoint a professional broker to help him source the right residential or commercial property. Services of a professional broker can save a client a lot of time, effort, money and troubles. Professional brokers can add a lot of value to a client's transaction. Identifying a professional broker could be a challenging work. You could depend on references from your friends, employer, bankers etc. Many a times web search could throw up a lot of options and you could decide by a process of elimination basis your interactions.
Another avenue to identify a professional realtor would be to refer to HYRA (earlier known as APRA) / NAR-India's websites. These websites give a list of their members who are generally the leading / important brokers of their respective market. Associations admit realtors as member's basis business / education criteria plus industry references. These associations also conduct a lot of training activities to help their members conduct their business in a professional manner. The most important aspect of an association is that it is an attempt at self-regulation by the realtor fraternity. The association is also a platform of real time information exchange about the industry / networking activities.
A professional broker invariably gets clients the best deal. I have had developers acknowledge, in private, that they tend to get better pricing from walk-in clients compared to broker clients. This explains why some developers still work in an archaic fashion of avoiding realtors. Using a professional realtor benefits a client in terms of price, paper work, time etc. It also benefits a developer with more sales, nil upfront cost on deploying sales team and payment of fees only on success basis.
The market is poised for better growth and realtor / broker can become a partner in your growth story.