The present slowdown has given you a good opportunity to own a house. Use it to your advantage
Amidst uncertain global economic conditions and unfavourable domestic conditions, the real estate market is facing a tough time.
This is clearly reflected in the absorptions of office space in most of the micro-market including the Delhi NCR.
According to real estate consultant DTZ, the Delhi NCR witnessed substantially lower take-up in July-September quarter of 2011. The overall take-up stood at 1.02 million sq ft, which was 48% less than the previous quarter and 25% less than the same quarter last year. At the same time, supply side of the office space also got affected in the NCR. The new supply in Q3 2011 reduced by 19% against the previous quarter due to the liquidity crunch, triggered by increasing interest rates and cost of construction. Approximately 1.6 million sq ft of new supply came to the market in Q3 2011, taking the stock to 62.6 million sq ft.
DTZ in its report said that the momentum in the Delhi NCR, both in commercial and residential real estate, is expected to slow down for a couple of quarters as a result of the current economic conditions, both globally and in the country. However, the slowdown in the realty market has given a good opportunity to end users to buy houses at competitive price provided they know how to negotiate with a developer. “Yes, it is possible to negotiate with residential property developers. As home sales continue to look sluggish in many parts of the country, developers are becoming more open to a bit of creativity on their stated terms,” said Ramesh Nair, the managing director (west) of Jones Lang LaSalle India. Developers want to clear as much of their unsold stock as possible, especially in the festive season, so that they can start other projects.
However, before approaching a builder to buy an apartment, do your homework to find out the credentials of the builder. First of all, find out whether he will be able to complete the project. For this, it is always advisable to approach reputed banks and finance companies like HDFC Ltd, for a loan to fund the purchase of the apartment.
Remember, if you go for an apartment which is under construction, you will be able to get higher discount than for one which is already completed. Many a times, the discount is more than the rental that you need to pay for your accommodation during the period.
Nair says that one way to get a good discount with a developer is to try to organize a group of buyers and negotiate for a bulk discount.
At the same time, one should try to obtain a sanction letter for a loan for which he or she is eligible, to buy a house. A loan pre-approval will show the developer that you are serious. Let him know that you are pre-qualified for the amount you are offering.
Nair says that if sales have dropped and there are many unsold apartments in the vicinity, one must use the fact to one’s advantage. An unsold apartment will cost the developer more over time than lowering the price and selling the unit quickly.
But you must remember that your goal is to purchase a house — not to beat the developer down. Know when to walk away.
Always remember that a price is not the only negotiable instrument in your hand. One must bear in mind that most developers hate to haggle; so, gather all your negotiating points into a single offer and position it as a take-it-or-leave-it proposition. At the end of the day, there may be some projects where the developer is simply not in a mood to negotiate. If he remains adamant and you cannot agree on a better price for a flat for which you have other options, walk away, Nair suggests.
“A good negotiator does not allow the desire to own a certain property obvious during the negotiation process. Also, he or she does not take anything personally and can therefore see opportunities objectively. Finally, a good negotiator always has other options, never reveals weaknesses, plays his or her cards close to the chest and does not take trust for granted.
