REALTY TRENDS - A FESTIVE TRAP?01 Apr 2016
With Gudi Padwa knocking on our doors, a lot of developers are offerings freebies and discounts to lure home buyers. We decode the true reason behind such marketing gimmicks, so that a potential home-buyer makes a sound home buying decision
When Navneet Khandelwal bought her first apart ment, five years back on the day of Gudi Padwa, she thought she had made a killer deal. After all, the kind of freebies that she got with the apartment were something that tempted her to book it on the day of the festival known for the acquisition of new properties. She got an air conditioner and a discount coupon that rewarded her with some furniture as well. It appears as a grand prize while buying an apartment on the auspicious festive day? It sounds so! Why then, is Navneet apprehensive to day, when she wants to buy her next house in Vashi?
It is true that she religiously believes in Gudi Padwa and is sure to book the apartment on the day of the festival only. But then, this second time, she is more matured to understand the value of a house hunt and at the same time, not get tempted by freebies. More im portantly, she understands the differ ence between wants and needs; some thing that can save her from the fancy trap in the housing market. “Though I was happy with the kind of freebies that I got, it was a few months later that I came to know that some other properties in the same market, were offering a better deal with cash discounts as well. My temptation to grab the freebies immedi ately on offer, was something that com pletely misled me. The value of the stuff that I got in the freebies was much lesser than the high price that I paid for the apartment,“ says Navneet.
Prabhu Parekh is another home-buyer who was tempted with the marketing of fer and he has a very basic question to ask today.
The builder has offered him freebies over and above the subvention offer. He nevertheless questions that if the developer can offer him so much discount and freebies, why can't the same developer straightaway reduce the Basic Sale Price (BSP) of the project? “These dicey discounts and unwanted freebies clearly suggest that there is scope for further price deduction,“ he points out.
In Parekh's question, is hidden the stark reality of the marketing gim micks of real estate. The developer will continue to bombard the home buyer with offers or discounts; giving amenities that a new home-buyer might already be in possession of but will never reduce his BSP.
Reasons: It hurts his brand reputation to have scaled down on the pricing due to the failure to sell and equally important if not more, is his sales channel of brokers and under-writers who force the developers to do so, as they do not want to lose out on their commission that is calculated on the BSP.
Added to this market reality lies the fact that real estate is today, groping in the dark as far as new ideas and marketing strategies are concerned. They are hence, often going off-track to lure the home-buyers with discounts and freebies.
Developers, on their part, maintain that discounts and freebies are offered to add to the festive spirit. It has been a tried and tested marketing methodology since ages.
However, the fact remains that the home-buyers today, are more informed and aware about the cost and benefits re lated to discounts and freebies.
THE CULTURAL HISTORY
Home ownership has long been a valued tradition across most societies and cultures. Indians traditionally, aspire to possess their own homes. Gudi Padwa adds a zing to the aspiration, since it is considered to be auspicious and lucky and it is here that the gullible home-buyers are prone to make emotional mistakes. Considering the overall health of an economy that is largely influenced by the functioning of its housing market, there is definitely a need to reform the property buying and selling process which allows consumers to be more involved. This is all the more relevant in the present market conditions where the cost of capital and loans are high and are not expected to decrease in the near future affecting the affordability and availability of homes. Resultantly, the decision to purchase a house is taking place in a highly constrained environment. Therefore, analysts suggest that as prospective consumers, knowing the right questions to ask and engaging in expert advice can definitely help one make a sound investment for their future. Whether you are buying a home to live in with your family or for investment purposes, understanding your wants and needs is the way to avoid emotional mistakes. There is no point in getting lured by the discounted freebies like a refrigerator or an air-conditioner. These consumer durables should not be the criterion when you already have them. A gold coin or home furnishings may not be a sound advice when the price of the apartment is too high against the competing projects in the neighbourhood.
Sachin Sandhir, global managing director, RICS says, the line 'buyers be ware', may sound like a cliché but it is absolutely essential that home-buyers protect their interests. Therefore, knowing the right questions to ask can definitely help you make a sound investment for your future. It is critical to understand that the decision to buy any property requires a long-term financial commitment. “For all properties, regardless of age and design, basic checks should include the structural condition of the property; electrical wiring; plumbing; in sulation; alterations which have been made to the original floor plan and if the same have been approved and assessed by the local development authority. It is also advisable to consider what the immediate and future maintenance requirements of a house might be,“ says Sandhir. The 'urgency' factor of moving into one's home will largely depend on one's disposable income and the decision to invest either in an under-construction or a resale property. However, prior to making any such decision, it is always wise to consider the associated risks.
Credit - Ravi Sinha,
Apr 01 2016 : The Times of India (Mumbai)