Lichfl projct


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sip project of project finance in LIC HFL by Lav Chaudhary

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Lichfl projct

  1. 1. Introduction & Scope 1 Page
  2. 2. INTRODUCTIONThe purchase or sale of a home or investment property is not only one of the mostimportant financial events in peoples’ lives, but also one of the most complextransactions. As a result, people usually seek the help of real estate agents andbrokers when buying or selling real estate.Real estate agents and brokers have a thorough knowledge of the real estatemarket in their community. They know which neighborhoods will best fit clients’needs and budgets. They are familiar with local zoning and tax laws, and knowwhere to obtain financing. Agents and brokers also act as an intermediary in pricenegotiations between buyers and sellers. Real estate agents are usuallyindependent sales workers who provide their services to a licensed broker on acontract basis. In return, the broker pays the agent a portion of the commissionearned from the agent’s sale of the property.Property Service Division of LIC Housing Finance Limited deals with the samebusiness of real estate. The need of entering in this field was felt by LIC HousingFinance Ltd due to increasing prospects in Real Estate business. There are manybig brands namely ICICI realty, HDFC Realty, Axis Bank Realty etc.A new line of business by the name Property services Division is being launchedacross the country in selected centers. The function of the Property servicesDivision includes all activities involved in enabling a prospective homebuyerselect the property up to taking the possession of the same. It is thus conceived tobe a one-stop-shop for all the advisory services related to the above. Propertyservices division, which offers investors and builders a single transparent platformto buy/sell office and commercial spaces and residential apartments/flats. 2 Page
  3. 3. Scope of Property Service DivisionThe Real Estate Investment Scope In India- A Lucrative And SafeOptionRealty sector is one of those sectors that have always yielded high percentage ofcapital gain for the investors. Whether be it in the case of the developed countriesor developing nations, each and every economy tries to maintain its financialinfrastructure as sound as possible so that they can easily attract more number ofinvestors and business personnel to involve with their economy. Real estate sectordepicts the true economic development of a particular nation. India, one of thefastest developing nations in this world since independence; has successfullyemerged as one of the lucrative destinations to reap assured benefits on real estateinvestment in almost all the states and cities of the nation. The modern amenitiesand infrastructural facilities as good connectivity roads, green environment, bettertransport; secured power supply are some of the standout features that have luredthe attentions of investors from all across the globe towards India real estateproperties.In India real estate properties can be broadly categorized mainly into two distinctgroups, namely the commercial property and the residential property. Theunderlying line of distinction between a commercial property and residentialproperty is noticed while noticing the use and purpose of that property.Commercial properties are commonly used as office buildings, malls, retailoutlets, etc. and residential property is mainly used for personal use only.Due to the development of industries in the NCR region, more and more numberof people have started to earn huge amounts of return from their jobs andbusinesses. Now they want to invest their earnings in more lucrative as well as 3 Pageless riskier investments that would give them more benefits as compared to the
  4. 4. other options. The Indians look at the business as the more profitable option withgreater dividends on investments. This in turn has led to the increase in theamounts of foreign investments in business in India. And real estate markets inIndia are growing continuously at the rate of 30% each year.Turning our looks towards the state of the residential properties in Gurgaon andthe neighboring NCR cities, with the fast expansion of population in northernIndia aided by the recent boom in the jobs sector, the demand for residentialproperty for such a large population has seen a good amount of surge. The recentsurveys that have been conducted India have strongly indicate India has thesecond largest population in the world and china has the largest population in theworld. The study also reveals that with in the next decade India will cross Chinesepopulation and will be on the top for having largest population.Commercial as well as real estate sector has witnessed a real boom in the NCRregion in India. Since the liberalization of the Indian economy, real estatebusiness has seen an upward trend in the last fifteen two decades. The advent ofthe multinational companies to India in order to set up a viable industrial base,especially the IT sector, which has seen a phenomenal growth, the demand forspace has risen up and with that the prices have also been touching sky heights.The major source of the thrust is mostly due to favorable economic policies, theconstant rise in the purchasing power, new growth of customer friendly banksprofessionalism in real estate. 4 Page
  5. 5. Brief Introduction Of LIC HFL 5 Page
  6. 6. LIC Housing Finance LimitedLIC Housing Finance Ltd. is one of the largest Housing Finance Company inIndia.It provides Housing Loan for long term Finance with low Home Loan InterestRates. You can take a Home Loan either for purchasing a plot or for houseextension or for repair & renovation.Vision: Complete Financial Solutions to secure your future. 6 Page
  7. 7. Mission: To grow steadily and sustainably in our customers’mind and money space.History Of LIC Housing Finance:Launched in 1989 as per Companies Act, 1956 lic housing finance has grown tobe one of the largest lender in home-finance marketPromoted by LIC that helped in initial business functions. Finally after beingpromoted as a company offering housing finance by lic it went public in 1994.LIC Housing Finance news state that its authorized capital stands at Rs.150 croresor Rs.150 million.Its shares are trade only in dematerialized form at both NSE and BSE.Its GDRs are traded at Luxembourg Stock Exchange.Presently, according to lichousing finance news there are over 158 marketingunits; along with a wide network of 6 regional offices and over 13 back-offices.1989 - The Company was incorporated on 19th June as a public limitedcompany. It was promoted by LIC of India. The Company provide housingloans to individuals, builders, development authorities, employers organisationetc. - The Company has started various schemes: Griha Prakash a general scheme,Griha Tara under which it accepts only Bima Sandesh Plan as Life InsuranceCorporation, Griha Shobha for NRIs and Griha Lakshmi for people to have asecond house. 7 Page
  8. 8. 1994 - 3,00,57,900 No. of equity shares were issued at a premium of Rs 50 pershare through public issue on 15th November 1994. The allotment was asfollows; 10,82,000 shares to LIC on firm allotment basis and the balance189,75,900 shares to public (all were taken up). 1996 - The Company has decided to carry out fund based and one-fund basedactivities, viz., debt securitisation, lease and hire purchase, renting of propertiesand giving guarantee to co-operate bodies. 2000 - Crisil has assigned a AAA rating to the issue of mortgage backed passthrough certificate backed by mortgages orginated by the company. 2001 - The Company has launched its new scheme, Griha Vikas. 2002 - LIC Housing Finance Ltd has informed BSE that the Company hasforfeited 1,25,300 equity shares due to non payment of allotment/call monies. -LIC Housing Finance has approved for the take over of Individual Housingloan portfolio of GLFL Housing Finance. -Around 25 investors subscribed to the issue of confidentially placed debenturesfor a total amount of Rs.392 cr of LIC Housing Finance Ltd. -LIC Housing Finance Ltd has decreased its interest rates on housing loans by25-50 basis points. 8 Page
  9. 9. -Financial Institutions have increased their stake from 0.01% to 1.96% andMutual Fund companies have increased their stake from 0.35% to 1.06% in LICHousing Finance. -LIC Housing Finance Ltd has decreased the floating rate of interest underindividual loan scheme to 9.5% from 11%. -LIC Housing Financee signed a deed of assignment to take over individualhousing loan portfolio of Citibank N A. -UTI and IFCI has been removed from the list of promoters of LIC HousingFinance. 2003 - LIC Housing Finance has unveiled a new project for elderly peoplecalled LIC HFL Care Homes .-LIC Housing Finance Ltd has sanctioned 84,126 loans worth Rs.3265.78cr anddisbursed 76,663 loans worth Rs.2941.24cr under its Individual Loan Scheme.-LICHFL has mobilised Rs.280cr for 15 years at 7% rate of interest throughprivate placement.-Lic Housing Finance Ltd has informed that the shares of the company havebeen delisted from The Stock Exchange - Ahmedabad w.e.f December 08, 2003.2004 -Merill Lynch Capitat acquires LIC housing stake of 0.39%-Templeton Asset Management buys 37,52,362 equity shares, representing5.01% of LIC Housings total paid-up capital of Rs 74.9 crore 9 Page
  10. 10. -LIC Housing Finance Ltd has informed that the shares of the Company hasbeen voluntarily delisted from the Delhi Stock Exchange (DSE) w.e.f. January23, 2004.-LIC Housing Finance shares delisted from Madras Stock Exchange-Mr D Krishnan appointed as Chief Executive Officer- LIC Housing Finance Ltds (LICHFL) one-crore global depository receipts(GDR) issue opened on August 27.- Lists its maiden global offerings worth .85 million at the Luxembourg StockExchange successfully. -Introduces new product that starts as a fixed rate loan but contains an option toconvert it to a Floating rate loan at the end of five years, at the then prevailingrate.2005 -Delist from The Calcutta Stock Exchange Association Ltd (CSE) witheffect from December 09, 2004.-LIC Housing Finance launches loan product that eliminates the requirement ofcharge on house financed.-Goldman Sachs acquires share in LICHFL2007 -LIC Housing Finance to launch FD scheme -LIC Housing Finance toenter into reverse mortgage product. 10 Page
  11. 11. 2008 - LIC Housing Finance Ltd has informed that the Board has appointed thefollowing persons as Directors on the Board of the Company on May 20, 2008-Name of the Director : Shri. D K Mehrotra For the Position of : ManagingDirectorChange effective from : May 20, 2008.- LIC Housing Finance Ltd has informed that the Board of Directors of theCompany has appointed following person as Director on the Board of theCompany on July 01, 2008.- Name of the Director : Shri A S Narayanamoorthy- For the position of : Additional Director- Change effective from : July 02, 2008-LIC Housing Finance launches Reverse Mortgage for senior citizens2009 - LIC Housing Finance cut interest rates for new loans by 0.5% where forcustomers opting for floating rate loans between Rs 30 lakh and Rs 75 lakh, thenew rates will be 8.755 against 9.25%. 11 Page
  12. 12. Company ProfileLIC Housing Finance Ltd is one of the•largest Housing Finance company inIndia. The company is engaged in the business of providing loans for purchase,construction, repairs and renovation of houses/flats to individuals, corporatebodies, builders and co-operative housing societies and has its operations withinIndia. They provide loans for homes, construction activities, its corporate housingschemes. Around 89% of the loan portfolio derived from the retail segment andthe rest from large corporate clients. The main objective of the company isproviding long term finance to individuals for purchase / construction / repair andrenovation of new / existing flats / houses. The•company also provides financeon existing property for business / personal needs•and gives loans toprofessionals for purchase / construction of Clinics / Nursing Homes / DiagnosticCentres / Office Space and also for purchase of equipments. The companythrough their subsidiaries LICHFL Care Homes Limited, is engaged in thebusiness of setting up, running and maintaining assisted living communitycentre/care homes for senior citizens; LICHFL Financial Services Ltd, is engagedin the business of marketing various financial products and services, and LICHFLAsset Management Company Ltd is engaged in business of managing, advising,administering mutual funds, unit trusts, investment trusts and to act as financialand investment advisors and render financial advisory services. The companypossesses one of the industrys most extensive marketing network in India. Thecompany is having their registered and corporate office at Mumbai. They have•7regional offices, 13 back offices and 190 marketing units across India. In additionthe company has appointed over•1241 direct sales agents (DSAs),•6535 homeloan agents (HLAs) and•782 customer relationship associates (CRAs) to extendtheir marketing reach. They have set up a representative office in Dubai and 12Kuwait to cater to the non-resident Indians in the GLCC countries covering PageBahrain, Dubai, Kuwait, Qatar and Saudi Arabia. LIC Housing Finance Ltd was
  13. 13. incorporated on June 19 1989. The company was promoted by LIC of India andwent public in the year 1994.• The company is recognized by National HousingBank and listed on the National Stock Exchange (NSE) & Bombay StockExchange Limited (BSE) and its shares are traded only in Demat format. TheGDRs are listed on the Luxembourg Stock Exchange. In the period of 2001, thecompany launched their new scheme called Griha Vikas. In the year 2002, thecompany signed a deed of assignment to take over individual housing loanportfolio of Citibank. In the year 2003, they unveiled a new project for elderlypeople called LICHFL Care Homes. The company launched their maiden GDRissue in the year 2004. Also, they introduced flexi-fixed scheme offering fixedrate of interest for first five years and variable thereafter. In October 2005, thecompany started offering of New Griha Laxmi housing loans against the securityof certain approved financial assets like Bank Fixed Deposits, National SavingsCertificates and Life Insurance Policies. In the year 2006, the company introducednew Griha Jestha for senior citizens for buying unit of LICHFL Care Homes Ltd.In May 2007, the company launched maiden Fixed Deposit Scheme. In October31, 2007, the company incorporated LICHFL Financial Services Ltd forundertaking non fund based activities like marketing of housing loans, insuranceproducts, credit card, mutual fund, personal loan etc. In February 2008, theylaunched reverse mortage for senior citizens above 60 years of age. In February14, 2008, the company incorporated LICHFL Asset Management CompanyPrivate Limited for undertaking the business of managing, advising, administeringventure funds, unit trust, investment trust in India as well as abroad. In March 5,2008, the company incorporated LICHFL Trustee Company Private Limited forundertaking the business of trustees of venture capital trust, funds - in India andoffshore fund. In March 12, 2008, they launched a new venture capital fund forrealty projects. During the year 2009-10, the company was awarded the SecondBest Home Loan Provider award by Outlook Profit. During the year 2010-11, the 13company launched a unique interest rate scheme namely, MINI 5 to cater to Page
  14. 14. housing finance needs of the priority sector population residing in Tier II and TierIII cities.Various Products Offered By LIC Housing Finance:As per various LIC Housing Finance news, there are many products that areoffered by the company ever since it was launched way back in the year 1989.These include both deposits as well as advance schemes that work as tools ofhousing finance by LIC:Reasons for Home Loans:To own a home is everyones dream. From a single room to multi-storeyedapartments, private villas, holiday homes, second homes - the Housing market iswell developed in most towns.Home loans help you realize your own home dream, even when you are young.We help you plan your dream home as you start your working life, by offeringvarious options of easy installments, Income Tax benefits and more . . .Loans: Loans are offered as per different target groups of consumers. Thus, thereare lic housing finance schemes offered as loans according to different borrower-category, such as:i) Corporate loansii) Loans meant specifically for builders as well as real estate developers 14iii) Home-loans Page
  15. 15. iv) Loans aimed at professionalsDeposit schemes: Deposit schemes were first launched by the company on 10thMay 2007 and may be accepted as both cumulative as well as non-cumulativedeposit schemes. Terms of deposit may range from 1 year; 18 months; 2 years; 3years as well as 5 years.Interest under non-cumulative deposit schemes would be distributed twice a year;whereas interest on cumulative deposit schemes would be calculated as per bi-annually compounding.Loans:Housing Finance By LIC :Loan-schemes available with lic housing finance are customized to suit variedrequirements as per individual borrower-profile. As per official website andlichousing finance news following loans are available:Home loans: Are offered at easy rates to both residents as well as non-residentIndians. Step-up facility in terms of amount of EMI amount is also available forthose who wish to opt for a steady increase in their repayment capacity duringtenure if loan.Corporate loans: Aimed at corporate employees who have been approved byLIC and include employees of PSUs, reputed public as well as private limitedcompaniesHousing finance by LIC loans to professionals: Aimed at non-salariedprofessionals. 15 Page
  16. 16. Taking a home loan is a major decision, involving a large investment. Though the availability of easy financing, innovative products and other value-added services by Home Loan companies have made the home buying process relatively easy, for a customer it is still a challenge to decide which home loan works best for him.LICHFL is the best choice because:• LIC HOUSING FINANCE LIMITED is one of the largest Housing Financeproviders in India, which has provided finance for almost 9,50,000 houses inthe country.• LICHFL is a single-product company with its core business being HomeLoans, and has about two decades of experience and in-depth knowledge of thereal estate market dynamics. 16• LICHFL provides: Page
  17. 17. • Lowest Interest Rates• Easy application, quick approvals.• Largest Network.• No Hidden Costs.• The Company has been rated as FAAA/Stable by CRISIL.Reasons to buy from LICHFL?They operate in the Financial Services industry with you as the center of Weoperate in the Financial Services industry with you as the center of focus. Weprovide complete, holistic financial solutions to meet all your financial needs. Weensure well-trained, professional financial planners at your service, as well asprovide you with personal finance education and money management tools, tohelp you make the right decisions for your secure future. Competitors in the MarketState Bank of India: 17SBI offers its customers exclusive packages of mortgage loans at lowest rates. PageOne such service includes Reverse Mortgage Loan that enables house-owning
  18. 18. Senior Citizens having inadequate income to meet their financial needs forrenovation/repairs to house, medical & other personal purposes.Bank of Baroda :The Bank of Baroda is reputed for providing very high quality financialproductspertaining to home loans and loans for household purposes. It offers a flexibleapproach to the customers to deposit , withdraw and repay installments as perneed and enjoy low mortgage rates combining it with the loan and over draftfacility.United Bank of India :United Bank Of India has been around in the financial sector from more than 50years and the mortgage scheme offered by the bank is one of the most importantpart of its financial portfolio. The loan caters the basic need of the borrower tomeet any personal/ business requirement at affordable rates.ICICI Home Finance : 18 Page
  19. 19. Part of the ICICI Group , ICICI HFC is one of the leaders in the Indian mortgagefinance and realty space following just after HDFC. Its various business offeringsinclude, Home loans, Loan against property, Home search, Construction Financeand so on.PROPERTY SERVICE DIVISION Property Service Division is a new division which was introduced two years back in LIC HFL. Property services division, which offers investors and builders a single transparent platform to buy/sell office and commercial spaces and residential apartments/flats. A new line of business by the name Property services Division is being launched across the country in select centers. The function of the Property 19 services Division includes all activities involved in enabling a prospective Page homebuyer select the property up to taking the possession of the same. It
  20. 20. is thus conceived to be a one-stop-shop for all the advisory services related to the above. Said C J George, managing director, Geojit, "Real estate has emerged as an important asset class for retail investors. Through this initiative, Geojit plans to move up the service-value ladder to include new asset classes that require advice and service." PSD is mostly found in metros. According to the Head of PSD in LIC HFL, Lucknow, property services is an unexplored profitable field whose value has not been yet recognized. At Home Search, one have access to the entire real estate market, under one roof. When the customer choose to avail LICHFL’s PSD Home search service, they are assured themselves a relaxed search experience. PSD assist them at each step, irrespective of whether the customer want to buy, sell, lease or even take property on rent. Quite simply, it is the attempt at simplifying the process of buying that dream home by ensuring that the customer doesnt need to run from pillar to post. . It focuses on providing customers with a one-stop shop for acquiring their new home or finding a buyer or lessee for their property.Brief Introduction: Brokers are independent business people who, for a fee, sell real estate owned by others; they also may rent and manage properties for a fee. When selling real estate, brokers arrange for title searches and for meetings between buyers and sellers where details of the transactions are agreed upon and the new owners take possession. A broker’s knowledge, resourcefulness, and creativity in arranging favorable financing for the prospective buyer often mean the difference between success and failure 20 in closing a sale. In some cases, brokers and agents assume primary Page
  21. 21. responsibility for closing sales; in others, lawyers or lenders do this.Brokers supervise agents who may have many of the same job duties.Brokers also manage their own offices, advertise properties, and handleother business matters. Some combine other types of work, such as sellinginsurance or practicing law, with their real estate business.There is more to an agent or broker’s job than just making sales. Theymust have properties to sell. Consequently, they spend a significantamount of time obtaining listings—owner agreements to place propertiesfor sale with the firm. When listing a property for sale, agents and brokerscompare the listed property with similar properties that have recently soldto determine its competitive market price. Once the property is sold, theagent who sold the property and the agent who obtained the listing bothreceive a portion of the commission. Thus, agents who sell a property theyalso listed can increase their commission.Most real estate agents and brokers sell residential property. A smallnumber, usually employed in large or specialized firms, sell commercial,industrial, agricultural, or other types of real estate. Every specialtyrequires knowledge of that particular type of property and clientele.Selling or leasing business property requires an understanding of leasingpractices, business trends, and location needs. Agents who sell or leaseindustrial properties must know about the region’s transportation, utilities,and labor supply. Whatever the type of property, the agent or broker mustknow how to meet the client’s particular requirements.Before showing residential properties to potential buyers, agents meet withbuyers to get a feeling for the type of home the buyers would like. In thisprequalifying phase, the agent determines how much buyers can afford tospend. In addition, they usually sign a loyalty contract which states theagent will be the only one to show them houses. An agent or broker uses a 21computer to generate lists of properties for sale, their location and Pagedescription, and available sources of financing. In some cases, agents and
  22. 22. brokers use computers to give buyers a virtual tour of properties in which they are interested. Buyers can view interior and exterior images or floor plans without leaving the real estate office. Agents may meet several times with prospective buyers to discuss and visit available properties. Agents identify and emphasize the most pertinent selling points. To a young family looking for a house, they may emphasize the convenient floor plan, the area’s low crime rate, and the proximity to schools and shopping centers. To a potential investor, they may point out the tax advantages of owning a rental property and the ease of finding a renter. If bargaining over price becomes necessary, agents must carefully follow their client’s instructions and may have to present counteroffers in order to get the best possible price. Once both parties have signed the contract, the real estate broker or agent must see to it that all special terms of the contract are met before the closing date. For example, if the seller agrees to a home inspection or a termite and radon inspection, the agent must make sure this is done. Also, if the seller agrees to any repairs, the broker or agent must see they are made. Increasingly, brokers and agents handle environmental problems by making sure the properties they sell meet environmental regulations. For example, they may be responsible for dealing with problems such as lead paint on the walls. While loan officers, attorneys, or other persons handle many details, the agent must check to make sure that they are completed.Working Conditions Increasingly, real estate agents and brokers work out of their homes 22 instead of real estate offices because of advances in telecommunications Page and the ability to retrieve data on properties over the Internet. Even with
  23. 23. this convenience, much of their time is spent away from their desk— showing properties to customers, analyzing properties for sale, meeting with prospective clients, or researching the state of the market. Agents and brokers often work more than a standard 40-hour week; nearly 1 out of every 4 worked 50 hours or more a week in 1998. They often work evenings and weekends, and are always on call to suit the needs of clients. Business is usually slower during the winter season. Although the hours are long and often irregular, most agents and brokers also have the freedom to determine their own schedule. Consequently, they can arrange their work so they can have time off when they want it.Employment Real estate agents and brokers held about 347,000 jobs in 1998. Many worked part time, combining their real estate activities with other careers. More than two-thirds of real estate agents and brokers were self- employed. Real estate is sold in all areas, but employment is concentrated in large urban areas and in smaller, but rapidly growing communities. Most real estate firms are relatively small; indeed, some are a one-person business. Some large real estate firms have several hundred agents operating out of many branch offices. Many brokers have franchise agreements with national or regional real estate organizations. Under this type of arrangement, the broker pays a fee in exchange for the privilege of using the more widely known name of the parent organization. Although franchised brokers often receive help training salespeople and running their offices, they bear the ultimate responsibility for the success or failure of their firm. Real estate agents and brokers are older, on average, than most other 23 workers. Historically, many homemakers and retired persons were Page attracted to real estate sales by the flexible and part time work schedules
  24. 24. characteristic of this field. They could enter, leave, and later reenter the occupation, depending on the strength of the real estate market, family responsibilities, or other personal circumstances. Recently, however, the attractiveness of part time work has declined, as increasingly complex legal and technological requirements raise startup costs associated with becoming an agent.Training, Other Qualifications, and Advancement In every State real estate agents and brokers must be licensed. Prospective agents must be a high school graduate, at least 18 years old, and pass a written test. The examination—more comprehensive for brokers than for agents—includes questions on basic real estate transactions and laws affecting the sale of property. Most States require candidates for the general sales license to complete between 30 and 90 hours of classroom instruction. Those seeking a broker’s license need between 60 and 90 hours of formal training and a specific amount of experience selling real estate, usually one to three years. Some States waive the experience requirements for the broker’s license for applicants who have a bachelor’s degree in real estate. State licenses typically must be renewed every one or two years, usually without reexamination. However, many States require continuing education for license renewal. Prospective agents and brokers should contact the real estate licensing commission of the State in which they wish to work to verify exact licensing requirements. As real estate transactions have become more legally complex, many firms have turned to college graduates to fill positions. A large number of agents and brokers have some college training. College courses in real estate, 24 finance, business administration, statistics, economics, law, and English Page are helpful. For those who intend to start their own company, business
  25. 25. courses such as marketing and accounting are as important as those in realestate or finance.Personality traits are equally as important as academic background.Brokers look for applicants who possess a pleasant personality, honesty,and a neat appearance. Maturity, tact, trust-worthiness, and enthusiasm forthe job are required in order to motivate prospective customers in thishighly competitive field. Agents should also be well organized, detailoriented, and have a good memory for names, faces, and business details.Those interested in jobs as real estate agents often begin in their owncommunities. Their knowledge of local neighborhoods is a clearadvantage. Under the direction of an experienced agent, beginners learnthe practical aspects of the job, including the use of computers to locate orlist available properties and identify sources of financing.Many firms offer formal training programs for both beginners andexperienced agents. Larger firms usually offer more extensive programsfor both beginners and experienced agents. Larger firms usually offermore extensive programs than smaller firms do. Over 1,000 universities,colleges, and junior colleges offer courses in real estate. At some, astudent can earn an associate or bachelor’s degree with a major in realestate; several offer advanced degrees. Many local real estate associationsthat are members of the National Association of Realtors sponsor coursescovering the fundamentals and legal aspects of the field. Advancedcourses in mortgage financing, property development and management,and other subjects are also available through various affiliates of theNational Association of Realtors.Advancement opportunities for agents may take the form of highercommission rates. As agents gain knowledge and expertise, they becomemore efficient in closing a greater number of transactions and increase 25their earnings. Experienced agents can advance in many large firms to Pagesales or general manager. Persons who have received their broker’s license
  26. 26. may open their own offices. Others with experience and training in estimating property value may become real estate appraisers, and people familiar with operating and maintaining rental properties may become property managers. (See the statement on property, real estate, and community association managers elsewhere in the Handbook). Experienced agents and brokers with a thorough knowledge of business conditions and property values in their localities may enter mortgage financing or real estate investment counseling.Job Outlook Employment of real estate agents and brokers is expected to grow about as fast as the average for all occupations through the year 2008. However, a large number of job openings will arise due to replacement needs. Each year, thousands of jobs will become available as workers transfer to other occupations or leave the labor force. Not everyone is successful in this highly competitive field; many beginners become discouraged by their inability to get listings and to close a sufficient number of sales. Well- trained, ambitious people who enjoy selling should have the best chance for success. Increasing use of electronic information technology will increase the productivity of agents and brokers as computers, faxes, modems, and databases become commonplace. Some real estate companies use computer-generated images to show houses to customers without leaving the office. Internet sites contain information on vast numbers of homes for sale, available to anyone. These devices enable an agent to serve a greater number of customers. Use of this technology may eliminate some marginal agents such as those practicing real estate part time or between 26 jobs. These workers will not be able to compete as easily with full time Page agents who have invested in this technology. Changing legal requirements,
  27. 27. like disclosure laws, may also dissuade some that are not serious about practicing full time from continuing to work part time. Another factor expected to impact the need for agents and brokers is the ability of prospective customers to conduct their own searches for properties that meet their criteria by accessing real estate information on the Internet. While they won’t be able to conduct the entire real estate transaction on-line, it does allow the prospective buyer the convenience of making a more informed choice of properties to visit, as well as the ability to find out about financing, inspections, and appraisals. Employment growth in this field will stem primarily from increased demand for home purchases and rental units. Shifts in the age distribution of the population over the next decade will result in a growing number of persons in the prime working ages with careers and family responsibilities. This is the most geographically mobile group in our society, and the one that traditionally makes most of the home purchases. As their incomes rise, they also may be expected to invest in additional real estate. Employment of real estate agents and brokers is very sensitive to swings in the economy. During periods of declining economic activity and tight credit, the volume of sales and the resulting demand for sales workers falls. During these periods, the earnings of agents and brokers decline, and many work fewer hours or leave the occupation altogether.EarningsThe median annual earnings of salaried real estate agents, including commission,in 2011 was around Rs. 15,28,020. The middle 50 percent earned between11,9,060 and 6,46,360 a year. The lowest 10 percent earned less than 1,13,800and the highest 10 percent earned more than Rs.8,36,330 a year. 27 Page
  28. 28. Commissions on sales are the main source of earnings of real estate agentsand brokers. The rate of commission varies according to agent and brokeragreement, the type of property, and its value. The percentage paid on thesale of farm and commercial properties or unimproved land is usuallyhigher than the percentage paid for selling a home.Commissions may be divided among several agents and brokers. Thebroker and the agent in the firm who obtained the listing usually sharetheir commission when the property is sold; the broker and the agent in thefirm who made the sale also usually share their part of the commission.Although an agent’s share varies greatly from one firm to another, often itis about half of the total amount received by the firm. Agents who both listand sell a property maximize their commission.Income usually increases as an agent gains experience, but individualability, economic conditions, and the type and location of the property alsoaffect earnings. Sales workers who are active in community organizationsand local real estate associations can broaden their contacts and increasetheir earnings. A beginner’s earnings are often irregular because a fewweeks or even months may go by without a sale. Although some brokersallow an agent a drawing account against future earnings, this practice isnot usual with new employees. The beginner, therefore, should haveenough money to live on for about six months or until commissionsincrease. 28 Page
  29. 29. Types of services that a PSD can provide:Since each states laws may differ from others, it is generally advised thatprospective sellers or buyers consult a licensed real estate professional.Some Examples:Comparative Market Analysis (CMA) — an estimate of the homes valuecompared with others. This differs from an appraisal in that property currently forsale may be taken into consideration (competition for the subject property).Exposure — Marketing the real property to prospective buyers.Facilitating a Purchase — guiding a buyer through the process.Facilitating a Sale — guiding a seller through the selling process.FSBO document preparation — preparing necessary paperwork for "For SaleBy Owner" sellers.Full Residential Appraisal — but only, in most states, if the broker is alsolicensed as an appraiser.Home Selling Kits —guides to how to market and sell a property.Hourly Consulting for a fee, based on the clients needs. 29Leasing for a fee or percentage of the gross lease value. PageProperty Management.
  30. 30. Exchanging property.Auctioning property.Preparing contracts and leases. (Not in all states.)These services are also changing as a variety of real estate trends transform theindustry.Services provided to both buyers and sellers In addition to the services to sellers and buyers described below, most real estate agents coordinate various aspects of the closing. Real estate brokers (and their agents) typically do not provide title service such as title search or title insurance, do not conduct surveys or formal appraisals of the property such as those required by lenders, and do not act as lawyers for the parties, although they may "coordinate" these activities with the appropriate specialists. Some real estate brokers may be associated with loan officers who may help to finance buyers to make their purchase. For ex: LICHFL Regardless of whether a real estate agent assists sellers or buyers of real estate, negotiating skills and knowledge of financing options are important.Services provided to seller as client Upon signing a listing contract with the seller wishing to sell the real estate, the brokerage attempts to earn a commission by finding a buyer for the sellers property for highest possible price on the best terms for the seller. In Canada, most provinces laws require the real estate agent to forward all written offers to the seller for consideration or review. 30 To help accomplish this goal of finding buyers, a real estate agency Page commonly does the following:[citation needed]
  31. 31. Listing the property for sale to the public, often on an MLS, in addition to any other methods. Based on the law in several states, providing the seller with a real property condition disclosure form, and other forms that may be needed. Preparing necessary papers describing the property for advertising, pamphlets, open houses, etc. Generally placing a "For Sale" sign on the property indicating how to contact the real estate office and agent. Advertising the property. Advertising is often the biggest outside expense in listing a property. In some cases, holding an open house to show the property. Being a contact person available to answer any questions about the property and to schedule showing appointments Ensuring buyers are prescreened so that they are financially qualified to buy the property; the more highly financially qualified the buyer is, the more likely the closing will succeed. Negotiating price on behalf of the sellers. The sellers agent acts as a fiduciary for the seller. This may involve preparing a standard real estate purchase contract by filling in the blanks in the contract form. In some cases, holding an earnest payment cheque in escrow from the buyer(s) until the closing. In many states, the closing is the meeting between the buyer and seller where the property is transferred and the title is conveyed by a deed. In other states, especially those in the West, closings take place during a defined escrow period when buyers and sellers each sign the appropriate papers transferring title, but do not meet each other.Several types of listing contracts exist between broker and seller. These may 31be defined as: PageExclusive right to sell
  32. 32. In this type of agreement, the broker is given the exclusive right to market the property and represents the seller exclusively. This is referred to as seller agency. However, the brokerage also offers to co-operate with other brokers and agrees to allow them to show the property to prospective buyers and offers a share of the total real estate commission.Exclusive agency An alternative form, "exclusive agency", allows only the broker the right to sell the property, and no offer of compensation is ever made to another broker. In that case, the property will never be entered into an MLS. Naturally, that limits the exposure of the property to only one agency.Open listing This is an agreement whereby the property is available for sale by any real estate professional who can advertise, show, or negotiate the sale. Whoever first brings an acceptable offer would receive compensation. Real estate companies will typically require that a written agreement for an open listing be signed by the seller to ensure the payment of a commission if a sale should take place. Although there can be other ways of doing business, a real estate brokerage usually earns its commission after the real estate broker and a seller enter into a listing contract and fulfill agreed-upon terms specified within that contract. The sellers real estate is then listed for sale, frequently with property data entered into an MLS in addition to any other 32 ways of advertising or promoting the sale of the property. Page
  33. 33. Net listings: Property listings at an agreed-upon net price that the seller wishes to receive with any excess going to the broker as commission are not legal in most, if not all, states.Brokerage commissions In consideration of the brokerage successfully finding a satisfactory buyer for the property, a broker anticipates receiving a commission for the services the brokerage has provided. Usually, the payment of a commission to the brokerage is contingent upon finding a satisfactory buyer for the real estate for sale, the successful negotiation of a purchase contract between a satisfactory buyer and seller, or the settlement of the transaction and the exchange of money between buyer and seller. The median real estate commission charged to the seller by the listing (sellers) agent is 6% of the purchase price. Typically, this commission is split evenly between the sellers and buyers agents, with the buyers agent generally receiving a commission of 3% of the purchase price of the home sold. Local real estate sales activity usually dictates the amount of commission agreed to. Real estate commission is typically paid by the seller at the closing of the transaction as detailed in the listing agreement.RESPA Real estate brokers who work with lenders may not receive any compensation from the lender for referring a residential client to a specific lender. To do so would be a violation of a United States federal law 33 known as the Real Estate Settlement Procedures Act (RESPA). Page Commercial transactions are exempt from RESPA. All lender
  34. 34. compensation to a broker must be disclosed to all parties. A commission may also be paid during negotiation of contract base on seller and agent.Lockbox With the sellers permission, a lockbox is placed on homes that are occupied and, after arranging an appointment with the home owner, agents can show the home. When a property is vacant or where a seller may be living elsewhere, a lockbox will generally be placed on the front door. The listing broker helps arrange showings of the property by various real estate agents from all companies associated with the MLS. The lockbox contains the key to the door of the property and the box can only be opened by licensed real estate agents (often only with authorization from the listing brokerage), by using some sort of secret combination or code provided by the brokerage or the issuer of the lockbox.Shared commissions with co-op brokers If any buyers broker (or any of his/her agents) brings the buyer for the property, the buyers broker would typically be compensated with a co-op commission coming from the total offered to the listing broker, often about half of the full commission from the seller. If an agent or salesperson working for the buyers broker brings the buyer for the property, then the buyers broker would commonly compensate his agent with a fraction of the co-op commission, again as determined in a separate agreement. A discount brokerage may offer a reduced commission in the event no other brokerage firm is involved and no co-op commission is paid out. 34 Page
  35. 35. If there is no co-commission to pay to another brokerage, the listing brokerage receives the full amount of the commission minus any other types of expenses.Potential points of contention for agents Controversy exists around how commissions paid to real estate agents are disclosed to buyers and the effect additional seller incentives may have on the negotiation process and final purchase price. If a listing agent sells a property above the listed price, they make additional income. In theory, this motivates them to get top dollar for the seller. However, if an agent representing a buyer obtains a lower sales price for their client, then they make a lower commission. Thus, it could be considered to be in the agents best interest to advise his client to purchase the property at a higher price. Another potential conflict of interest exists when a listing agent in a very active real estate market sells properties quickly at low prices to benefit from high sales volume.Buyers as clients. Some brokerages represent buyers only and are known as exclusive buyer agents (EBAs). Consumer Reports states, "You can find a true buyers agent only at a firm that does not accept listings." The advantages of using an Exclusive Buyer Agent is that they avoid conflicts of interest by working in the best interests of the buyer and not the seller, avoid homes and neighborhoods likely to fare poorly in the marketplace, ensure the 35 buyer does not unknowingly overpay for a property, fully informs the Page buyer of adverse conditions, encourages the buyer to make offers based on
  36. 36. true value instead of list price, which can sometimes be overstated, and works to save the buyer money. A buyer agency firm commissioned a study that found EBA purchased homes were seventeen times less likely to go into foreclosure.A real estate brokerage attempts to do the following for thebuyers of real estate only when they represent the buyers withsome form of written buyer-brokerage agreement: Find real estate in accordance with the buyers needs, specifications, and cost. Takes buyers to and shows them properties available for sale. When deemed appropriate, prescreens buyers to ensure they are financially qualified to buy the properties shown (or uses a mortgage professional, such a banks mortgage specialist or alternatively a Mortgage broker, to do that task). Negotiates price and terms on behalf of the buyers and prepares standard real estate purchase contract by filling in the blanks in the contract form. The buyers agent acts as a fiduciary for the buyer. Due to the importance of the role of representing buyers interests, many brokers who seek to play the role of client advocate are now seeking out the services of Certified Mortgage Planners, industry experts that work in concert with Certified Financial Planners to align consumers home finance positions with their larger financial portfolio(s).Buyers as customers In most states, until the 1990s, buyers who worked with an agent of a real estate broker in finding a house were customers of the brokerage, since the 36 broker represented only sellers. Page
  37. 37. Today, state laws differ. Buyers and/or sellers may be represented. Typically, a written "Buyer Brokerage" agreement is required for the buyer to have representation (regardless of which party is paying the commission), although by his/her actions, an agent can create representation. Find real estate in accordance with the buyers needs, specifications, and affordability. Take buyers to and shows them properties available for sale. When deemed appropriate, prescreen buyers to ensure they are financially qualified to buy the properties shown (or uses a mortgage professional to do that task). Assist the buyer in making an offer for the property.The impact of globalization on real estate brokers activities Globalization has had an immediate and powerful impact on real estate markets, making them an international working place. The rapid growth of the Internet has made the international market accessible to millions of 37 consumers. A look at recent changes in homeownership rates illustrates this. Minority homeownership jumped by 4.4 million during the 1990s, Page
  38. 38. reaching 12.5 million in 2000, according to the Fannie Mae Foundation.Foreign direct investment in U.S. real estate has increased sharply from$38 billion in 1997 more than $50 billion in 2002 according to U.S. 2000Census data.Most local real estate agents view the foreign market as a significantrevenue potential and may have already worked with international clientsin their local market, new immigrants or more sophisticated investors fromdifferent cultures and from other countries. For example, they providevalue-added services that help overseas relocation employees figure outwhich inoculations their children need and how to register a car in theUnited States. Real estate brokers want to keep central to the transaction,protect the best interests of their members and address the unique needs ofeach multicultural global client by acquiring specialized training anddesignations.In 2007 the Mexican Association of Real Estate Professionals in Mexico,AMPI, and the NAR, National Association of Realtors in the UnitedStates, signed a bilateral contract for international real estate businesscooperation. Also at the local level, many other state and localassociations are helping other countries achieve the same result. Forinstance, in New Mexico, a historically multicultural state, under theRANM, Realtor Association of New Mexico and the Presidents AdvisoryCouncil, is looking into forming an ambassador association to help aforeign country into signing a bilateral agreement with the NAR. In NewMexico, there are 4500 licensed real estate professionals and only 14 or 15CIPS designees, out of whom, only six speak a language other thanEnglish.A "Management Guide For Real Estate Associations" exists, which is apublication of the International Real Property Foundation (IRPF), which 38was funded by the National Association of Realtors (NAR) and the PageReaume Foundation.The IRPF, in its Web site, regarding The Caux Round
  39. 39. Table (CRT) principles, states that: "Ethical perceptions and internationalbusiness is highly influenced by cultural differences. Because of culturaland ethical relativism, real estate business that is conducted acrossnational boundaries may discover ethical conflicts. Major ethical issuesthat complicate international business activities include sexual and racialdiscrimination, price discrimination, bribery, harmful products, andtelecommunications (enforcement of country-specific laws, copyrights,and questionable financial activities). A good document for reference indeveloping an association Code of Ethics in conjunction with suchprinciples is "The Caux Round Table Business Principles of Ethics"(1995).Because of the particularities and the nature of international transactionsbetween real estate agents of different countries, the Real Estate Code ofEthics of each country are excellent to regulate the ethics of each memberin its own jurisdiction, but in the case of complex international real estatetransactions were sometimes ethical conflicts arise, there is a need to havea group of principles more adjusted to international transactions were twoor more real estate agents of different countries participate in real estatebrokerage businesses. For example, in the NAR-FECEPAC memorandumof understanding of February 2003, a commitment was set to promote andadopt the respective code of ethics,standards and norms, but there isnothing specific mentioned for complex ethical matters in internationaltransactions. There was surely a commitment to cooperate with a foreignagent to work in local markets different from the foreign agents market.As an example, it can be noticed that the NAR-CSBR BilateralCooperation Agreement of November 12, 2001 also created a commitmentto promote and enforce mutually acceptable codes of ethics (Code ofEthics meaning those that been promulgated by the cooperating 39associations for use in their respective countries, each of which is Pageacknowledged to be acceptable to the other). Again, as the IRPF says
  40. 40. "Ethical perceptions and international business is highly influenced bycultural differences. Because of cultural and ethical relativism, real estatebusiness that is conducted across national boundaries may discover ethicalconflicts". There is also nothing specific mentioned for complex ethicalmatters in international transactions, whilst the agreements do provide toseek to facilitate business opportunities for members of the cooperatingassociations who may be working in each others markets, and alsoinitiating and hosting trade missions. The bilateral agreement betweenNAR and CSBR also states that both parties agree to enforce theirrespective codes and advice the other of subsequent modifications to itscode of ethics.Some association members of Central American Real Estate Associationswho are practicing agents and are involved in real life transactions on adaily basis have expressed their concern in the sense that at the moment ofethical conflicts with foreign colleagues, they have not had at hand anypractical instrument that can serve to resolve ethical conflicts (even thoughagreements that make reference to code of ethics do exist).Because the Caux Round Table principles are designed by corporateleaders and provide a model of how a good corporate citizen behaves inthe countries and markets where it penetrates being a foreign entity, thisprinciples could serve to reduce the fear of local brokers to foreigncompetition, provide an ethical framework against asymmetry ofparticipants in free trade of services in our industry, and will permit thatCentral American association members that see an advantage in openingtheir country markets to competition, and that see advantages in havingforeign strategic partners to work our their own local markets (e.g.: localCentral American brokers partnering with United States brokers to workCentral American Markets), keep promoting competition, globalization of 40business, and free trade of services. Page
  41. 41. A person may attend a pre-license course lasting 60 hours and then betested by the state for a real estate agents license. Upon passing, the newlicensee must place their license with an established real estate firm,managed by a broker. Requirements vary by state but after some period oftime working as an agent, one may return to the classroom and test tobecome a broker. Brokers may manage or own firms. Each branch officeof a larger real estate firm must be managed by a broker.States issue licenses for a multiyear period and require real estate agentsand brokers to complete continuing education prior to renewing theirlicenses. Many states recognize licenses from other states and issuelicenses upon request to existing agents and firms upon request withoutadditional education or testing however the license must be granted beforereal estate service is provided in the state. 41 Page
  42. 42. A Day in the life of a Real Estate Agent/BrokerBuying or selling a house or apartment is one of the biggest decisions of aperson’s life, and real estate agents and brokers help people negotiate what can bea confusing process. Though both are often called real estate agents, agents andbrokers have different roles. The broker has more administrative responsibility.There is usually one broker per estate, but often many agents are working withclients who are interested in the property. When someone wants to sell or rent hisproperty he usually calls a real estate agent. A large chunk of the agent’s day maybe spent on the phone obtaining listings for her agency. The agent also arranges toadvertise the properties she is showing, and may visit each property before it isshown to clients. She needs to know about everything from floor plans to heatingsystems to cesspools-she’s a matchmaker, and she’s got to know both sides of theequation. It’s also important for an agent to be familiar with the neighborhoodsshe works in, so she can counsel her clients about a property’s fair market value.A good real estate agent is informed about things like schools, tax rates, andpublic transportation systems, and should be aware of going mortgage rates. Areal estate agent must manage delicate price negotiations when an interestedbuyer and seller hook up. ―Negotiating skills are not just important but critical forreal estate agents,‖ as one respondent put it. The agent also coordinates the―closing‖ when a property is sold, which means the actual signing of papers andtransfer of a property’s title. Networking is a big part of the job-most real estateagents develop a group of attorneys, mortgage lenders, and contractors to whomthey refer their clients. Finally, a real estate agent should be able to discern and besensitive to a client’s needs during what may be an uncertain time. In order to beavailable when their clients have free time, real estate agents work many eveningsand weekends. An experienced agent will sometimes avoid some of the weekendhours by having an ―open house‖ and drafting a new agent to go and answerpotential buyers’ questions. Commercial real estate agents’ jobs involve more 42research on market trends and an even more detailed attention to the needs of Page
  43. 43. buyers. Since they work longer on each deal, commercial agents and brokersmake fewer sales than residential agents but receive higher commissions.About the only things real estate agents have in common in terms of preparationare high school diplomas and communication skills. More and more people areentering the field with college degrees, however, and some colleges even offercourses in real estate. These may be helpful, as would other business courses, butmost of the learning takes place after you’ve entered the field. In fact many realestate agents come to the field from other, unrelated careers, attracted by theflexible hours or the potential for part-time work. Before you can use the title―Realtor‖ or become a member of the National Association of Realtors you musthave a real estate license. Every state requires that a broker or agent undergo aseries of examinations and log some experience before she is granted this license.Many real estate boards offer preparatory classes. Once you have the license, it’susually renewed yearly without your having to repeat the tests. But each state hasits own test, so if you want to work in a different state you’ve got to pass theirexam.Associated CareersCareers associated with real estate often involve working with realtors. On themortgage end, loan officers arrange the conditions for financing home purchasesand act as liaisons between buyers and banks. Another possibility is the field ofreal estate law, which requires going to law school. Agents seeking furtheropportunities within the field have a few options, most of which involve settingup shop independently of brokers. Appraisers, for example, assess the fair marketvalues of properties. Real estate counselors, likewise, are independent advisorswho offer advice to buyers about the suitability of properties they are interestedin. 43 PageWhat Real Estate Brokers and Sales Agents Do
  44. 44. Real estate brokers and sales agents help clients buy, sell, and rent properties.Brokers and agents do the same type of work, but brokers are licensed to managetheir own real estate businesses. Sales agents must work with a broker.Work EnvironmentA majority—about 57 percent—of real estate brokers and sales agents were self-employed in 2010. Although they often work long and irregular hours, many areable to set their own schedules.How to Become a Real Estate Broker or Sales AgentIn every state and the District, real estate brokers and sales agents must belicensed. To become licensed, candidates must be high school graduates, be atleast 18 years old, and complete a particular number of hours of real estatecourses.Functions of PSDThough there are different types of consultants/intermediaries for propertyservices, there is no integrated approach to the various ancillary services that acustomer needs. There is thus a need for an integrated player and to bridge thatgap, LIC Housing Finance Ltd have opened its Property Services Division, whichshall be a "one-stop-shop" to provide RELIABLE advice, services and assistanceto prospective property buyers in an INTEGRATED, CUSTOMISED and TIME-BOUND manner. LICHFL Property Services will provide its services for the 44following :- Page
  45. 45. Assisting the customer in selecting the property (Marketing & Sales of properties;either residential or commercial).Organising site visits and Booking of Properties.Assisting the customer in completing the documentation and legal formalities likedrawing up the agreements, registration etc.Assisting the customer in obtaining a home loan from a financial institutiondealing with Home Loans.Assisting the customer in possession/registration/housewarming of the property.Assisting the customers in selection of professionals/sourcing of materials forinteriors.Organizing site visits and meeting with the developers/builder to complete thetransaction.Assisting the customer in obtaining a home loan from LICHFL or from a lenderof their choice.Assisting the customers in selecting the property which suits their requirementsand budget.Assisting the customer in completing documentation & legal formalities likeagreements, registration, etc.Monitoring the stage of construction and advising the customer for makinginstallment payments.Assist in placing the property on rent, if the customer so desires.Assist in selling the property if desirous.Assisting the customer in selection of professionals/ sourcing of materials forinteriors.Assisting the customer in possession / housewarming.Tips for Customers 45 PageThere are two aspects of Home Buying: Property Search and Home Loan
  46. 46. 1. Property searchSome of the primary concerns of Home Buyers are matters pertaining to thepropertys title, its pricing, the developer’s track record, and so on.2. Home Loan After spending time and effort to research and find your dream home, selection of a Home Loan company and the loan product should not be a hasty decision. The main issues besides the rate of interest offered, would be the company’s loan procedure, product range, quality of services offered and safe retrieval of the Title Deed of the property deposited as a security for the housing loan, on completion of the loan tenure. You should also be aware of how you can enhance your loan eligibility without the burden of a higher EMI. LICHFL offers flexibility to customers, enhances their loan eligibility, helps them optimize tax benefits and customize EMIs according to their repayment capacity, so the customer is able to repay the loan comfortably. Further, when you take a home loan you enter into a long-term financial commitment, as home loans are long-term loans where the commitment is for a period of 15 to 20 years. In case of any unforeseen event during this period, it is better to make sure that your family is not burdened with the loan liability. Hence, to take care of uncertainties during such a long period, it is better to take a Home Loan Insurance. And finally, it is best to go with companies that have established 46 themselves over the years, as they are more flexible and will be able to Page offer you customized services. The other advantage is this will also help
  47. 47. you to encash on the vast pool of knowledge that comes with their experience.The LICHFL AdvantageOrganized, Integrated and Professional Approach.Strong Brand - Synonymous with Transparency, Trust and Credibility.Experience in the field of real estate and financing.Vast Network of Agency Force and Branch Network.Large pool of experienced staff.Additional in-house facility & expertise to provide home finance to customers.Reliable advice as per requirements and budget of customer at the best terms andprice.Highly experienced team of Over 773 Direct Sales Agent (DSA’s),3400 HomeLoan Agents (HLA’s) and 615 Customer Relationship Associates.Existing network & relationship with service providers.In-house facility to provide home finance.Expertise in Legal and Technical Scrutiny of PropertyRelationship with leading Developers across the country.Thorough understanding of processes.Punchline - "Are you sure that you will get the desired loan, after you have 47booked the property? Now, book your property through LIC HFL Property Page
  48. 48. Services and have peace of mind." All services - from booking of property till possession; under one roof. Fair and transparent deal. Reasons for Choosing LICHFL PSD Home Search Facility: • Employ a comprehensive database of builders, development projects and available real estate to identify properties that will meet your individual requirements. • Regularly update our database to ensure that you are constantly filled in real estate opportunities. • In depth cognizance of various builders & real estate projects empowers us to fine tune your search. We work within the budget and area specified by you. • Offer unbiased advice. • Offer special schemes and attractive rates, help you negotiate the best price and advise you on payment schedules. • Assist to get the best deals on Home Loans. The working of Property Service Division depends on the following three steps:1. Tie up with the builders.2. Customer make-up3. Documentation A 7-step Process of Identifying a Property for Purchase or Rent 48 • Step 1: Register with them, free of cost Page
  49. 49. • Step 2: Describe your requirement, budget and preferred locality• Step 3: They will match your requirements with properties in our database.• Step 4: Their counselor would then fix an appointment with you and take you to the property sites short-listed by you.• Step 5: After visiting the sites if one finalise a property, they would assist to negotiate the best terms and price• Step 6: They will also assis in completing the registration formalities for acquiring your property• Step 7: And also assist to get the best deals on home loans. The company would not enter into property development and construction of buildings but would take care of all the requirements of the customers including valuation, arranging loan, and registration. LICHFL-A one-Stop –Shop for services Assistance in analyzing the requirements. Selection of property at reasonable/ affordable price.( for Individual/ Group) Completing the Transaction. Guiding for Best Home Loan and assistance in providing loan. Help in arranging Legal and Technical Services. Help in Selection of Professionals/ material/ interior. Help in taking Possession. Help in letting out the property. 49 Page
  50. 50. Services Offered:Select the property of your choice.Obtain a home loan from the lender of your choice.Assistance in completing the documentation and legal formalities.Monitoring the stage of construction and advising the customer in makinginstallment payments.Assistance in selection of professionals/sourcing of materials for interiors.Possession/housewarming of the property.Letting out the property on rent. Research Methodology 50 Page
  51. 51. Research MethodologyStatement of The ProblemThis Study will help us to understand the consumer’s satisfaction about LIC HFLservices and products. This study will help the company to understand, how aconsumer selects, organizes and interprets the Quality of service and productoffered by them. 51 Page
  52. 52. The market is more aware and realistic about investment and returns fromfinancial products. In this background this study tries to analyze the customersatisfaction towards services in general and LICHFL in particular.Need for The StudyThe deeper the company understands of consumer’s needs and satisfaction, theearlier the product or service is introduced ahead of competition, the greater theexpected contribution margin. Hence the study is very important.This study will help companies to customize the service and product, according tothe consumer’s need.This study will also help the companies to understand the experience andexpectations of the existing customers.Scope of the StudyThis study is limited to the consumers with in Lucknow city. The study will beable to reveal the preferences, needs, satisfaction of the customers regarding thereal estate, It also help them to know whether the existing products or servicesthey are offering are really satisfying the customer’s needs.Objective Of The Study To have an insight into the attitudes and behaviors of customers. To find out the differences among perceived service and expected service. 52 To produce an executive service report to upgrade service characteristics. Page To understand consumer’s preferences.
  53. 53. To access the degree of satisfaction of the consumersResearch Methodology A descriptive study tries to discover answers to the questions who, what, when, where, and, sometimes, how. The researcher attempts to describe or define a subject, often by creating a profile of a group of problems, people, or events. Such studies may involve the collection of data and the creation of a distribution of the number of times the researcher observes a single event or characteristic (the research variable), or they may involve relating the interaction of two or more variables. Organizations that maintain databases of their employees, customers, and suppliers already have significant data to conduct descriptive studies using internal information. Yet many firms that have such data files do not mine them regularly for the decision-making insight they might provide. This descriptive study is popular in business research because of its versatility across disciplines. In for-profit, not-for-profit and government organizations, descriptive investigations have a broad appeal to the administrator and policy analyst for planning, monitoring, and evaluating. In this context, how questions address issues such as quantity, cost, efficiency, effectiveness, and adequacy. Descriptive studies may or may not have the potential for drawing powerful inferences. A descriptive study, however, does not explain why an event has occurred or why the variables interact the way they do.Sample Size 53 Page
  54. 54. Sample size denotes the number of elements selected for the study. For thepresent study, 100 respondents were selected at random. Out of these 100 some ofthem were LIC’s Leading agents, development Officers, teachers, staff of LIC etc.Sampling MethodA sample is a representative part of the population. In sampling technique,information is collected only from a representative part of the universe and theconclusions are drawn on that basis for the entire universe.A convenience sampling technique was used to collect data from the respondents.Method OF Data Collection To know the response, the researcher used questionnaire method. It has been designed as a primary research instrument. Questionnaires were distributed to respondents and they were asked to answer the questions given in the questionnaire. The questionnaires were used as an instrumentation technique, because it is an important method of data collection. The success of the questionnaire method in collecting the information depends largely on proper drafting. So in the present study questions were arranged and interconnected logically. The structured questionnaire will reduce both interviewers and interpreters bias. Further, coding and analysis was done for each question’s response to reach into findings, suggestions and finally to the conclusion about the topic. 54 PageTypes of Data
  55. 55. Every decision poses unique needs for information, and relevant strategies can be developed based on the information gathered through research. Research is the systematic objective and exhaustive search for and study of facts relevant to the problem Research design means the framework of study that leads to the collection and analysis of data. It is a conceptual structure with in which research is conducted. It facilitates smooth sailing of various research operations to make the research as effective as possible. Primary Data Primary data are those collected by the investigator himself for the first time and thus they are original in character, they are collected for a particular purpose. A well-structured questionnaire was personally administrated to the selected sample to collect the primary data. Limitations of the Study Although the study was carried out with extreme enthusiasm and careful planning there are several limitations, which handicapped the research viz,1. Time Constraints: The time stipulated for the project to be completed is less and thus there are chances that some information might have been left out, however due care is taken to include all the relevant information needed.2. Sample size: Due to time constraints the sample size was relatively small and would definitely have been more representative if I had collected information from more respondents. 55 Page3. Accuracy:
  56. 56. It is difficult to know if all the respondents gave accurate information; some respondents tend to give misleading information.4. It was difficult to find respondents as they were busy in their schedule, and collection of data was very difficult. Therefore, the study had to be carried out based on the availability of respondents.The working of Property Service Division depends on the followingthree steps:1. Tie up with the builders.2. Customer make-up3. DocumentationTie up with the builders:PSD of LICHFL have tie ups with many known and unknown builders. They have avery good relationship with Ansal –Api shushant City, DLF, Parsvanath, VirajConstructions, Omaxe, Eldeco.Before tying up with the builder or a customer a memorandum of understanding issigned between both the parties. 56 Page
  57. 57. Report on the construction companiesCompany Name: ANSAL APIProject: Sushant Golf CityAddress: Sahid Path, Sultanpur Road, Lucknow.Details: Providing Villas, 2BHK, 3BHK, 1BHK flatsPresent Condition: Construction on phase one is still going on.Availability: Almost all the sites are sold out, presently the construction is goingon Sushant Media Enclave but there are availabilities.Rate: Ranging between Rs 2400 per square feet to Rs 2700 per square feetdepending upon the floors.Total Cost: About 42 lacs for a 3 BHK, 35 lacs for a 2 BHK, 30 lacs for 1BHK For villas it starts from 52 lacs o 1 crorePossessions: For Media Enclave, its about 4 yrs to 5 yrs and 3 yrs for celebritiescities and others.Analysis: Ansal city on Sahid Path is going to start soon. As per now there is notany kind of work or development in their nearby surroundings but there are fullchances of possible development in recent years. There Media Enclave in 57Sultanpur Road presently no construction work is going on but going to start Pagesoon. There is a great chance of development in that surrounding as U.P.
  58. 58. Government has proposed an I.T. Park in Gajaria Farm which is adjacent to thesites.Possible Demerits: Any of the phases is fully completed, only construction workis going on in phase one and two. Railway line is going through the city. Thewhole site is situated in high flood prone area due to the presence of Indira Canaland Gomti River.Financial Tie-ups: Their main financial tie-up is with LICHFL and they are ingreat favor of LIC. They are providing 80% to 85% finance and they are giving1% discount on the total cost to the customers. 58 Page
  59. 59. Company Name: ELDECOProject: EterniaAddress: Sitapur, Lucknow-Details: 2BHK, 3BHK, 4BHK flatsPresent Condition: Construction on all the three towers is going and up to 6thfloor it is completed.Availability: Tower no 2 is sold out, some flats are available in tower 1 and 3Rate: Ranging between Rs 3500 per square feet to Rs 3700 per square feetdepending upon the floors.Total Cost: About 44 lacs for a 3 BHK, 35 lacs for a 2 BHK, 52 lacs for 4BHKPossessions: They will give the possessions in 2 yrs to 3 yrs.Analysis: Eldeco Eternia on sitapur road is going to start soon. Nearbysurroundings are fully developed as eternia is in city only. One of the advantage isvery near to engineering college and L.U.Financial Tie-ups: Their main financial tie-up is with Banks Mainly SBI andother govt. banks. They are not favoring LIC HFL or any other housing financialcompany as in case if we take loan from housing finance then they will notprovide 4% discount to the customers ( they provide 4% discount if we take loanfrom banks). They are providing 80% and they were ready to give 4% + approx 596% discount on the total cost to the customers. Page
  60. 60. Company Name: ELDECOProject: Eldeco CityAddress: IIM Road, Lucknow-Details: Duplex and simplex villas + 2bhk and 3bhk flats.About: Eldeco city is spread over 113 Acres with a large portion dedicated togreenery more than 1000 independent villas and 1500 apartments.Present Condition: Construction on phase 1 is going on almost 50%completed, work on apartments is yet to start. Construction on phase 2 will bestart in 1 year. Now they are booking for phase 1 onlyAvailability: All duplex are sold out, 5 simplex villas are available. Out of 165apartments 65 are sold out.Rate: Ranging between Rs 1700 per square feet to Rs 2200 per square feet forvillas and Rs 3100 per square feet for apartments depending upon the floors.Total Cost: About 63 lacs to Rs 1 Crore for a duplex villas (vary as per thelocation and size), approx 47 lacs to 67 lacs for a simpex villas (vary as perlocation and size), 35 lacs for 2BHK and about 43 lakh for 3bhk (vary as perfloors)Possessions: They will start their possessions from august 2012. And forCurrent booking (villas) they will give the possession in 1 year. For Apartments 60they will give the possessions in 2 to 3 years. Page
  61. 61. Analysis: Eldeco City is on IIM road is going to start soon. As per now there isnot any kind of work or development in their nearby surroundings but there arefull chances of possible development in upcoming years. City is located nearbyIIM lucknow.Possible Demerits: There major drawback is that site is located very far fromcity.Financial Tie-ups: Their main financial tie-up is with Banks Mainly SBI andother govt banks. They are not favoring LIC HFL or any other housing financialcompany as in case if we take loan from housing finance then they will notprovide 4% discount to the customers ( they provide 4% discount if we take loanfrom banks). They are providing 80% and they were ready to give 4% + approx6% discount on the total cost to the customers. 61 Page
  62. 62. Company Name: OMAXE Ltd.Project: Omaxe Residency LucknowAddress: Gomti Nagar Extension , Shaheed PathDetails: Providing 2BHK,2BHK+ Servant room and 3BHK,Present Condition: Construction is still going on and may be complete in theone year.Availability: Many flats are sold out only few are remaining .flats are alsoavailable in resaleRate: Rs 2400 per square feet .Total Cost: About 26 lacs for 2 BHK, 28 lacs for a 2 BHK + Servant room, 33lacs for 3BHK ( These are cost if we are purchasing on Cash down Payment) . Incase of Installment Plan Cost will be 6% more.Possessions: Possession time 18 months to 36 months.Analysis: Omaxe residency is on Sahid Path, gomti nagar extension is going tostart soon. As per now there is not any kind of work or development in theirnearby surroundings but there are full chances of possible development in recent 62years. Presently a small village is adjacent to the site. Page
  63. 63. Possible Demerits The whole site is situated in high flood prone area due to thepresence of Indira Canal and Gomti River.Financial Tie-ups: Their main financial tie-up is with all the Banks and housingfinance companies. They are providing 80%. They are giving 2% discount on thetotal cost to the customers. Discount may be more in further stage.Company Name: RG Infracity (p) ltd.Project: RG EUPHORIA LICKNOW.Address: Vrindavan Youjna , Shaheed PathDetails: Providing 2BHK, 3BHK and 4BHK,Present Condition: No construction work is going on. Only land is there.Availability: Few are sold out . Many flats are remaining.Rate: Rs 2500 per sqft .Total Cost: About 24 lacs to 27 lakh for 2 BHK, 32 lacs to 35 lacs for a 3 BHK,44 lacs to 47 lacs for 4BHK ( These are cost if we are purchasing on Cash downPayment) . In case of Installment Plan Cost will be 10% more.Possessions: Possession time 36 months.Analysis: Euphoria is on Sahid Path, Vrindavan youjna of awas vikash. Noconstruction work is started till now. As per now there development in theirnearby surroundings and there are more chances of possible development inrecent years because of nearness of airport and Kanpur road. 63 Page