Checklist to buy a property: Santhosh Kumar, CEO Operations, Jones Lang LaSalle India
Nov 12, 2013
Source : The Economic Times
DELHI: The current slowdown in the Indian economy has impacted several sectors, including real estate. Apartment sales volumes have plummeted and inventories have piled up, creating an ideal environment for buyers to negotiate with developers.

However, successful negotiations need to have a firm foundation of information and strategy

1. Knowledge of the current market situation

Currently, the biggest indicator one should be informed of is inventory levels, which play and important role in the dynamics of bargaining power across various cities. However, one must also understand how prices have moved in the recent past in order to keep flamboyant expectations in check.

u High inventory levels

As per our proprietary REIS database, developers in Mumbai are holding on to inventory levels of close to 48 months. That is quite significant, considering that a comfortable level of inventory is around 12-15 months. Other tier 1 cities such as Delhi (with 21 months), Bangalore (with 25 months), Chennai and Kolkata (both with 17 months) are in a relatively more comfortable state when compared to Mumbai, although there are signs of pressure to sell in these cities as well.

u Rates have not risen much versus inflation

Property prices have not risen much over the last 19 quarters (from 3Q 2008 until 2Q 2013) across major metros in India. In Mumbai, residential apartment prices have risen at a modest compounded annual growth rate of 4.3% during this given period. If we compare this with the wholesale prices inflation rate, which averaged over 7.0% during the same period, we realise that prices have actually fallen marginally. The situation in other metros such as NCR-Delhi (1.4%), Chennai (3.8%), and Bangalore (5.5%) is not too different. Therefore, it is imperative to keep expectations from a negotiation at a rational level.

2. Convert meaningless offers into meaningful cash discounts

In order to attract buyers in the currently difficult market, several builders are resorting to offers and freebies. Some of the recent examples of such offers include free 10-gram gold coin, waived floor-rise charges, free stamp duty registration, free memberships to club houses and amenities, free modular kitchens, international holidays, free cars, etc. Negotiators who do not see value in such offers can and should negotiate for better prices instead.

3. Enlist the help of an expert

Typically, buyers seek to avoid brokers because they wish to avoid brokerage fees. However, not all buyers are in a position to strike a good deal with builders or landlords. They could risk paying more than required, or winding up with an apartment in a bad locality and by a less-than-reputable builder. Buyers should explore all channels of transacting - brokers, online information sources as well as direct contact with owners, if possible. This will help evaluate one's on-ground ability to strike a good deal. It may emerge that a good broker is actually a better bet.

4. Express interest

This is probably the most misunderstood aspect of a negotiation. It is a myth that expressing their interest in purchasing a flat puts one at a disadvantage at the negotiation table. In fact, buyers should clearly express their desire to purchase so that developer can seriously consider offering them a better deal. Builders treat genuine buyers very differently from idle information-seekers. Buyers should approach the negotiation table with their chequebooks, ready to pay a token amount and every assurance of serious interest if a good deal is offered.5. Don't attempt to time the market

There have been far too many victims of this syndrome in the past, both in the financial markets and in real estate. Builders are currently willing to offer good deals to serious buyers. Armed with sufficient knowledge about the current market situation and honed negotiating skills, buyers can leverage the current opportunities to purchase a house at good prices. While prices will correct to some extent in certain cities, no one can precisely predict the bottom.



Latest Realty News

What to do in case of theft of property documents
Nov 12, 2013
DELHI: The loss, theft or misplacement of property documents is a cause of concern forproperty owners since no transaction can be completed without checking the original sale deed.
Top realtors rush to hills to tap holiday home demand
Nov 12, 2013
DELHI: Luxury holiday homes in the hills are once again becoming an object of desire and India’s top real estate companies are ready to meet this demand, especially as the slowdown has eroded sales in urban markets. Entrepreneurs, retired industrialists and top executives are all looking to pick up a second home to get away from the hassles of city life.
Harsh realty for builders as banks tighten lending rules
Nov 11, 2013
DELHI: The real estate sector, accounting for the maximum number of new projects — 53 of 173, each above Rs 250 crore, in April-September this fiscal — is facing difficulties in achieving financial closure for these projects.
Essential questions that home buyers must ask their real estate developer
Nov 11, 2013
DELHI: Buying an apartment is fraught with risks. From choosing the right builder to ensuring that he is the actual owner of the land on which he is developing the project, there are many issues that you need to look into before deciding to put your life's savings in a builder's project.
How to improve your credit history and score
Nov 09, 2013
DELHI: An individual’s CIBIL report and score, other than his/her income, is the single most important tool used by a lender to evaluate application for any loan or credit card. It is therefore important for you to check your credit report and score before applying for a loan, so that it is viewed favourably by lenders.
Luxury is the way of life for young home buyers
Nov 09, 2013
DELHI: In India, real estate industry is bringing ample investment opportunities in the market. With improving standard of living, changing demographics and better availability of loans, demand has undoubtedly grown in the last five years.
Be smartly lazy with interactive ACs and door locks
Nov 09, 2013
DELHI: Trane, a heating, ventilation and air-conditioning systems company, has launched an online campaign, “Be Smart, join the Lazy Revolution” to inform consumers about its interactive air-conditioners and door locks. The teasers started on October 24 and went live from October 31.
Make your home a work of art
Nov 09, 2013
DELHI: Afraid that flooring will be too bland? Or those painted walls will fade away the festive bling in your room? Stop worrying! To cut the monotony NITCO introduces its Grandeur collection which helps you bring home the stories of African, Spanish, Italian and Mediterranean art while it stuns your guests.
It costs to maintain your property
Nov 09, 2013
DELHI: Buying a house is a cumbersome task. Some people may feel overwhelmed even after the purchase, thanks to hefty maintenance bills that can make a hole of up to Rs 4,000-5,000 per month in the pocket. Of course, the amount varies from building to building, but can become aburden for a person who is also bearing the burden of the home loan.
Top realtors like DLF, Tata Housing, Fire Capital rush to hills to tap holiday home demand
Nov 09, 2013
DELHI: Luxury holiday homes in the hills are once again becoming an object of desire and India's top real estate companies are ready to meet this demand, especially as the slowdown has eroded sales in urban markets. Entrepreneurs, retired industrialists and top executives are all looking to pick up a second home to get away from the hassles of city life.

Latest Realty News Of State

Realty Talk's