When you are out in market looking for the property, you are the King. You are treated as one the most important person by the builders as well as the brokers. From home pick and drop to meetings at coffee shops, everything is on the house. While it is Ok to walk the red carpet laid down by the builders, one must keep in mind the tricks builder and brokers play to lure you into the purchase.
Artificial shortage of inventory
Remember this, if there was really something called sold out, you would not be getting the kind attention of the builder staff. The moment you sit on the table, you shall be told that project is 90% SOLD OUT. You may often find them telling you that, SIR, book it by next week else we may not be able to guarantee you the unit. This is one of old tricks to create some sort of panic. Buyers have the tendency of feeling being left out. This feeling pushes them to make hasty decision. Keep following things in mind before you make the decision:
- If there was no inventory, you wouldn’t be treated as king.
- The fact is that today developers are more desperate to sell than buyers are eager to buy.
- No projects are 100% sold out at initial stage.
- There will be units available in resale at lower price than builder.
Sometime there is actually a shortage of inventory but this is usually when the project is relatively old. But this is not the case all the time and a trap in 90% of the cases.
Prices will increase from next week
It’s the favorite trick used by almost every builder to entice buyers. Builder are answerable to investors. There is immense pressure to hike basic sale prices every quarter. This artificial increase is done even if there is no demand in market. To create false sense of increasing rates, builder keep telling new buyers to book at earliest or else the prices will increase. You may have noticed that as per the marketing people, prices are always going up from next week. Well, to be frank, in all practical probability, that next week doesn’t really come. How do you really bargain then?
- Don’t be too eager. The moment builder sense that you are already sold for their gimmicks, you shall loose the bargaining power.
- Indirectly tell builder that you are considering other properties in the same area.
- Tell them that their units are available at much lessor prices in resale market and you shall be more inclined to resale if not offered best rates.
- Resist from giving any advance / token amount unless you have done full research about ongoing rates in area.
Most of the time these prices going up tag lines are tricks to trap home buyers, you should not delay your decision beyond a point. As soon as builder find someone willing to pay higher, he shall not come back to you.
Discounts and Credit Notes
We all love discounts and when it comes to real estate, we don’t want to let go the opportunity. While there is no harm in accepting discounts, your decision should not be entirely based on discount. A builder offering more discount than others in same area may not always be a better choice. Look at important parameters like Carpet Area, FAR etc before giving discounts a preference.
One should avoid taking Credit Notes (A discount promised by brokers, to be paid after few installment). Brokers has a history of running away from their promises and there is a surge of complaints related to credit note not honored. You should push for upfront discount that is adjusted on booking form at the time of booking only. Even if builder discount is 1-2% lower than brokers, you should opt for this option.
Finally, a term that your wife loves? Well, sample flats are designed to take over your conscious mind and trap you in imaginary world. Sample flats are biggest scam of real estate industry and must be avoided. We did a story specifically on sample flats. Same can be referred here : Sample Flat – the scam of Indian Real Estate
Free! Free! Free!
Are you offered free modular kitchen or free AC or free woodwork? Don’t get too emotional about such small items being offered as gifts. In all practicality, an items worth 25 to 50 thousand rupees doesn’t make sense when purchasing homes above 50L.
However, one must not leave these freebies too. Once all other things are finalized and you are satisfied with all other important parameters, you can think about anything that comes as rider.
Throw away those fancy brochures
Birds flying over high rises, lush green jungles and firangs sunbathing next to swimming pool. Are these things even real? Brochures are most carefully crafted instrument of marketing. Big PR firms are roped in and international designers works on these carefully Photoshop images. Pictures of amenities are not even related to projects are Photoshop for the liking of your eyes. 50% of the facilities projected in marketing material does not even feature in agreements and most of the time not delivered. Instead of paying attention to Brochures , pay attention to basics like number of lifts, flat density etc.
Look for Project and bank approvals
First and most important step in home buying is the verification of approvals from various authorities. Understand what all approvals are mandated by local government and authorities. If you are not in the position of checking these approvals, see if any big bank has approved the project. Banks, before approving the projects do their due diligence and bank verified projects are usually safe. If there is no bank approval yet, something is definitely fishy.
Don’t be emotional about future development
Authorities are hand in gloves with home developers. Big schemes are launched every weekend to fool buyers. From Tram service to Forest Safaris, Golf Courses to Airports etc are planned and scrapped everyday. While location of the property matters a lot while investing in real estate, one should not get too emotional about such announcement. We have seen that SEZ are converted into residential and industrial sectors are scrapped and turned into Group Housing plots. Your focus should be on basics of home buying.
Few other things
- Read how not to get cheated by builder and brokers here : how NOT to get cheated by builder and brokers
- Avoid buying in soft launch. Read more here: Soft launch projects and the risk associated
- Builder don’t like to clarify on carpet area, do a simple calculation of the same.
- Check penalty clause. There are hidden sub conditions on penalty clause.
- Ask for exit conditions.
- Ask when would you get your papers.
The Logical Buyer suggest that home buyers use their mind and not heart while purchasing homes with their hard earned money. One should learns the basics of home buying before getting out looking for houses.