Now I got the case
1) First you are not legal owner properly , Since Agreement is not registered nor stamp duty paid so transcation is not maintainable in court. But various state law help flat owner if you claim you are cheated. So inspitre of non registration your rights can be secured. But you are on high risk , this I can assure. Every paper you need to preserve properly.
2) It seems now instead of transfering flat to you by paying stamp duty and registration fee you want that flat to be sold to third party. Here be practical you are saving stamp duty , registration fee. Plus you will be confirming witness in Agreement of sale between builder and third party. Since this transcation is not legal he is expecting 1% of the market value (So he too get more from transcation and you avoid your stamp duty and registration fee)
3) Whether it is right for him to ask? ---- When transcation is bad in law then his more expectation are justified (All are after money , no one want other to earn more )
4) If you want legal ---- Pay stamp duty then pay registration fee get document registered . After that you can sell the flat to third party but some time even before society is formed Builder expect some thing from third party.
5) If you got buyer ready---- Better compromise with 1 % sign . tell builder to sign agreement to buyer you become confirming party . With this you are saving more stamp duty and registration fee. (Whatever is applicable to you as per state law)