Congratulations! You have shortlisted your dream home. You and your family are very happy with the location, design, amenities, and builder pedigree. However, If an apartment ticks all the boxes, then pricing becomes the main constraint. So how do you ensure you get your dream home at the right price?
Here are a few tips we have developed based on seeing how 100s of homebuyers negotiate over the last decade.
- The first mistake anyone makes is showing extreme excitement about the property in front of the sales person.
- This is a cue for the salesperson to hold on to his price as you are already sold to the property. Don't do that. Also, if you and your spouse are together on a site visit, reserve your comments till later.
- Take a video of the sample flat so that u can discuss it in detail at home. But never in front of the salesperson.
- The other mistake is that people do not ask for the all-inclusive price and only negotiate on the base price. Once that is over they are in for a rude shock when they see the all-in price. Always ask for the all-in price first and then work backward.
- Compare prices across projects on an apple to apples basis. Just comparing properties on base price on saleable area, or ticket price is not enough.
- Different developers show different pricing to suit their marketing pitch. So you need to have a common denominator against which u measure each of the price sheets.
- At Propsoch we always show pricing on the RERA carpet area. This removes all the fluff in the price sheet and tells u how much you're paying for the space u will live in. The carpet area changes a lot between projects. Say a 1000 sqft home can have a carpet area of 650 sqft in one property, and 700 sqft in another. That's a straight 5-7% difference! And that has a massive impact on the pricing.
- If you have figured out some challenges in the location, neighbourhood, masterplan or unit plans basis the frameworks we shared with you earlier, use them to the maximum during your negotiations. Do not hesitate to tell the developer that you are ok to compromise on the challenge but not on the price. Developers typically know all the challenges and are flexible on pricing on specific units which might be affected.
- Put the cheque on the table when you are in the final negotiation meeting. Also, indicate that you have to decide between this project or another depending on the price. Never say that you want a flat in this project only.
If you have a broker in between, you can use him to negotiate on your behalf. Pass tough messages and anchors thru him to the developer without revealing the actual price you want to close at. Use the broker effectively throughout your negotiations instead of haggling with them on petty matters like passback. Passbacks are counterproductive as you lose your ability to push the broker and are at his mercy by the end of the transaction.
More importantly, the broker usually does not process the passback at all!
Keep in mind that these tips work in certain situations only. If there is a hot selling project or a new launch which is in the EOI stage, there is little or no scope of negotiations. You can only negotiate on which unit gets allotted to you at that stage.
Check the resale market and also if the landowner is selling his share in case of a JDA. Typically the prices in these cases are slightly lower than that of the developer and the choice of units might be better.
Do not drag the negotiations beyond 2-3 discussions as there is a chance that the developer might sell the unit you liked and then you are back to square one. This happens typically when there is good demand for the property.
Finally, Understand the payment plan before you agree on pricing - payment plans have a huge impact on your cashflows and as a result, your interest cost or opportunity costs on your capital. In the famous subvention schemes, the builder typically has 2 pricings- Units with subvention and units without. The price for the units without are typically lower. So depending on your cash flow position, you might be paying a higher or a lower price eventually.
That's it! If you enjoyed this blog and found it useful in your homebuying journey, you will enjoy speaking to our Property specialists even more!
Connect with us at +91 90358 90858
