How to Negotiate a Good Deal while Buying a new Flat in Pune
Here are some excellent tips to negotiate while buying a new flat in Pune:
- Don’t be emotional – emotions could make you overlook or ignore critical aspects. It may be dream for you to buy the property, but don’t let that dream hijack negotiation power. Even if you are emotionally attached to the property , “DON’T show it”.
- Don’t think that this is your last opportunity – opportunities will keep coming – don’t be under pressure to close the deal. Be prepared to walk away. If they there is flexibility in prices, they will come back to you. It is recommended that you short list 2-3 properties and then get into negotiations so that you know there are other options vs. doing it sequentially.
- Don’t commit to the deal in the first meeting even if you are ready to commit – that way you get chance to think more and change your terms if needed. One way to control this is don’t go with cheque-book or cash for negotiation.
- Builders or developers need your money badly, more so in this economy, so do not think it is one sided negotiation, you have money and so do you have negotiation power. It is not a easy task to sell all the available inventory, in many cases the price tags are around Rs. 80 lakhs, that makes it harder for them to sell it in large quantities.
- Ask for draft of agreement prior to committing, sometimes rate may be attractive but agreement would make it costly. If seller is not giving you draft agreement, probably they got something that they don’t want you to know before you book the property. Walkaway from such situations.
- Make sure you clearly understand how builder has arrived at saleable area, what is loading factor, are terraces, balconies charged at 50% or 100%. Terraces charged at 100% could make about 30% increase in the effective rate depending on total terrace area, so keep those things in mind. Beware of bigger terraces, lower per square foot rate does not mean anything unless you factor in impact of terraces and how saleable area is calculated. It is highly recommended that you understand various area definitions and methods used to arrive at saleable area.
- Do not believe builder claims that all units are sold except a few, and they are going to increase price – those are techniques to put pressure on you.
- If builder is not ready for any other reductions, try for no floor rise and go for higher floors, there is chance that they will not insist on floor rise.
- Research comparable projects going on around and their respective rates, find out if anybody has recently closed deals in project you are interested in or nearby projects. That will give you idea of actual situation vs. asking rate.
- Try to find out how is builder or developer doing financially, status of their other projects. If they are in need of cash, they will settle at lower rates.
- Don’t go with rates quoted over phone or advertisements, those are always higher, there should be scope for about 10% reduction in quoted rates (that does not mean rates quoted originally were 10% higher), point is you should aim at least 10% reduction in quoted rates. Few builders are exceptions, they have no rate reduction policy and they stick to it.
- Try to avoid booking in crowd situations (e.g. opening day, roadshows) where there are few guys from builder and hundreds of potential buyers. That situation is not healthy for any kind of negotiations. Don’t buy because everyone else is buying.
- Do not trust your agent/broker too much, they often join hands with builders/developer to jack up prices. Avoid letting them participate in negotiation talks, discourage them if you see them talking points that are favorable to the builder.
- Check official status of the project – is it approved by corporation, collector or local authority, else rates should be significantly lower (like pre-launch status). Keep in mind that the risk is higher in such cases because they don’t have official approval.
- At the end, try to negotiate for rounding off reductions. Example: agreement value comes to Rs. 45,75,780. Try for Rs. 45 lakhs, this is on top of already negotiated rate. There is good chance that they will agree to such a adjustment.
- Try to negotiate on payment schedule, try to make it favorable to you. For example, reaming 10% on possession instead of 1% on possession. Pay as late as possible, saves interest cost.
- If your friends are interested, try for group booking rate. Negotiate your rate first and then get additional discount for group booking.
- Take your trusted friend, etc with you for negotiation, even if they were to keep quite it gives comfort and confidence that you have someone you trust with you. Avoid going all by yourself for negotiation. Typically they will have 1-2 persons negotiation with you (their sales guy and MD, partners).
- Keep in mind project completion status, typically you would get better rates if project is in initial stages and phases.
- If you are in position to make higher down payments (i.e. more cash upfront), demand lower rates, because this is interest free loan for builders/developers (they otherwise pay at least 15% on their borrowings).
- Keep in mind other charges such as electricity meter charges, society formation charges, legal charges, parking space, health club membership charges, maintenance charges, and any other payment that you are expected make. Getting lower base rate should not be at the cost of paying higher rates for other things not included in the base rate. Ideally, find out what is your net effective rate, and compare it with other properties or market practice.
- Interest % for late payments legally to cannot be more than interest % that developer/ builder is going to pay for late possession or booking cancellation. For example, builder can’t ask you to pay 15% interest for late payments and give you 10% interest for late possessions or booking cancellations attributed to the builder.
Hope this article helps all the new buyers to get their desired flat in Pune at the best possible price. Our best wishes to you all New home buyers out there!!!