Get the best deal for your dream home

Dos and don’ts of property negotiation

July 03, 2015 03:26 pm | Updated 03:26 pm IST

As home sales continue to remain sluggish in many parts of the country, developers are open to changes in their stated terms. How can you, as a buyer, put your best foot forward at the negotiation table? You should be conversant with comparable sales in the project’s vicinity, and know how long it has been in the market. It is important to establish what the launch rates were, how they have progressed since then, and what the current demand for similar flats is. You should also find out by word of mouth, how much the developer is willing to negotiate.

If you are interested in an apartment but feel you cannot afford it at the quoted price, have no apprehension. Many sale prices today are quoted prices, and there is room to negotiate. While developers today are willing to relent, they are averse to reducing the official quoted price below a certain point. This is partially because they don't want to advertise the fact that certain customers paid less than others. They are often likely to offer freebies or incentives.

If possible, try to find a group of buyers and negotiate for a bulk discount and keep in mind that if you have the ability to pay a larger amount upfront, you have extra bargaining power. Ensure that you have obtained a pre-approved loan from a home finance company, based on your income. Over time, an unsold apartment will cost the developer more, than lowering the price and selling the unit quickly.

Making an offer

Submit an offer to purchase the apartment even if you are unsure whether the developer will accept the offer. Some developers will not begin negotiations until you make a firm offer. The best strategy is to drive around the locality you are interested in and get the best prices from each developer. Then shortlist the options you are really interested in and go on a result-oriented, two-day property safari. Let each developer know that you are looking for the best project at the best price, and that you are definitely buying that weekend. Let them know that that you are weighing their offers against the other ones available.

Remember: without making a formal offer, there is really no way to know how low a developer will go on his price. While making your offer, volunteer information such as where you work and how much you earn, to assure the developer that you can afford the property. Always offer to close the deal fast and ensure that you get the developer to commit first.

A hard bargain

If the developer remains firm on his price, negotiate for what you estimate to be a realistic price. If the developer refuses, don't be surprised if you hear back from him a few days later, willing to reconsider your offer. There is greater flexibility in negotiating the extras versus the base sales price.

Your goal is to purchase a home, not to beat the developer down. Know when to walk away. Always remember that price isn’t the only negotiable instrument in your hand. Remember 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 the 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.

There are many factors that will influence the developer’s lowest acceptable price — the prevailing market conditions, his financing pattern, whether he is in a rush to sell or happy to wait for a higher offer and how much he paid for the land. If you think the price is far higher than current market prices, it is possible that the developer purchased the land during the market peak. In such a case, he will remain inflexible on his rate since he will not want to sell at a loss.

The writer is COO — Business and International Director, JLL India.

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