Want A Better Bargain From Your Developer? Consider these Four Points..

Mr. Santhosh Kumar, Jones Lang LaSalle

The current slowdown in the Indian economy has impacted many sectors, including real estate. Flat sales volumes have plummeted & inventories have piled up, creating an ideal environment for buyers to negotiate with developers or promoters.

However, successful negotiations need a firm foundation of strategy.

1. Knowledge and Awareness..

Awareness of the current market situation is vital. The biggest indicator that one should be informed about is inventory levels, which play an important role in the dynamics of bargaining power across various cities.

 

Santhosh Kumar,
Jones Lang LaSalle India

However, one must also understand how prices have moved in the recent past in order to keep flamboyant expectations in check. Keep an eye on inventory levels.

Second, keep an eye on the price graph. Property prices have not risen much versus inflation over the last 19 quarters (from 3 Q 2008 until 2Q 2013) across major metros in India.

In Chennai, residential flat prices have risen at a modest compounded annual growth rate of 3.8 % in this period. If we compare this with the wholesale price inflation rate, which averaged above 7% over the same period, we realise that prices have actually fallen marginally.

The situation in other metros like NCR-Delhi (1.4%), Mumbai (4.3%), and Bangalore (5.5%) is not too different. Therefore, it is imperative to keep expectations from negotiations at a rational level.

2. Cash Discounts..

Learn to convert meaningless offers into significant cash discounts. To attract buyers, builders or promoters are resorting to offers & freebies. Some recent examples of such offers include 10 gram gold coins, waived floor-rise charges, free stamp duty registration, free memberships to club houses &  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 Expert Helf..

Typically, property 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 /promoters 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 as well as direct contact with owners.

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 an apartment puts one at a disadvantage at the negotiation table.

In fact, property buyers should clearly express their desire to purchase so that developer / promoter can seriously consider offering them a better deal. Builders treat genuine buyers very differently from idle information seekers.

Promoter 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.

About the author..

Mr. Santhosh Kumar, CEO-Operations, Jones Lang LaSalle

Santhosh Kumar
CEO – Operations
+91 124 460 5000

santhosh.kumar@ap.jll.com

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