Buying Real Estate Can Be Traumatic

By: Prof. Enrique Soriano

JAKARTA, INDONESIA – Unofficial statistics with first-hand buyers pegs the attrition rate at an average of 30 percent meaning three out of ten homebuyers discontinues his or her purchase from a developer. Out of the three, one points primarily to poor customer service. This is the alarming state in the sector that must be addressed and resolved otherwise this can compromise the industry. 

Customer Service is in such a tragic state that unknowingly developers bottom line has been affected. The desirable attrition rate of the property sector in advanced economies in Asia hovers within the 8% to 12% average. Unknowingly developer neglect in handholding homebuyers ends up with sales not pushing through and poor service translates to buyer exasperation, frustration and for some on the verge of hopelessness.

Homebuyers based overseas are the biggest loser. When frustration hits these buyers aggravated by the developer’s callous nature of addressing homebuyer concerns, it will just be a matter of time that an exodus of these homebuyers discontinue their purchase. With pressures mounting primarily because of online rants, we can expect many of them pulling the plug (foregoing their reservation deposit and amortization).  

What are the issues related to customer service?

• After closing the deal and getting their fat commissions, sales agents virtually abandon the service process. Additionally, they leave their company so naturally service to homebuyers abruptly ends 
• By default, developers look at customer service as an added cost center and dismally brushes it aside despite appeals from the front lines to invest on a holistic and integrated service development process
• Generally, frontlines are poorly trained, ill equipped and compensated less to manage customer complaints. Naturally, attrition can be expected. 
• Further aggravating the situation is the limited number of front line personnel managing the customer service department
• Managers also consider managing customer service as a side dish and ignore the incessant complaints. That passive mindset is a reflection of top management’s heartless and callous culture of apathy
• I consider the Real Estate Accounts department as the most stressful department in the company’s ecosystem and they are considered the least respected and underpaid in the organization 

The mishandling of a service concern aggravated by managers and front liners that are poorly trained to handle situations, can backfire as the problems will eventually build up and you can almost predict back outs and attrition happening. 

Why am I passionate in pushing for reforms? For one I have been in this industry for more than three decades. Next is I had the opportunity to co-author a book on Service as a Strategic Initiative. And lastly, I wish all developers pivot to a client-driven model and abandon their disastrous cost-centric approach. Presently, there are literally so many hopeless buyers that now range in the thousands but continue to suffer in silence. 

For the skeptics and unbelievers, see for yourselves the voluminous court cases docketed in many trial courts in the country and various cases of unresolved homebuyer complaints in the Sala of HLURB legal officers.  In short, this is a serious structural defect that is predictable and can be resolve with proper planning. It is therefore tragic.

This problem has plague the industry a good 20 years now and any intervention is long overdue. It is 2019 and it is time to right what ills the industry.  When developer’s margins have been compromised due to a high attrition rate, perhaps this will compel them to act!  My advise is simple, invest on people development and capacity building and reinforced it with technology and ERP initiatives. That way post sales customer service can move forward without any hitches. 

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Prof Enrique Soriano is a World Bank/IFC Governance Consultant, Senior Advisor of Post and Powell Singapore and the Executive Director of Wong + Bernstein, a research and consulting firm in Asia that serves family businesses and family foundations. He was formerly Chair of the Marketing Cluster at the ATENEO Graduate School of Business in Manila, and is currently a visiting Senior Fellow of the IPMI International School in Jakarta.

He is an associate member of the Singapore Institute of Directors (SID) and an advisor to business families worldwide, a sought after governance speaker, book author and have written more than 200 articles and publications, including two best-selling Family Business books (Ensuring Your Family Business Legacy 2013 and 2015). You can read Prof Soriano’s business articles for free at www.Faminbusiness.com