Bottom Line: It is not just marketing exaggerations that can dupe a homebuyer, even the silent or misleading clauses can be taxing.
Shweta Jha, a journalist was on a house hunt in Bangalore. After much research on the housing market, upcoming locations and price comparison, she finally decided to buy an apartment on the Outer Ring Road where the developer has been openly advertising the lowest BSP (Basic Sale Price). With the budget constraints that she had, it came out as an ideal solution to buy a house that was cheapest one. Not really!
Fortunately, she came across an informed lawyer who opened her eyes with comparative price chart and additional loading by the respective developers in the market. She got to know that the developer had so much additional loading that it was actually the costliest project in the region.
“While as a journalist I am conscious of the fact that there are exaggerations with claims in the marketing brochure of all the developers, my property hunt also taught me what all they try best to conceal. The worst part is that there is a conspiracy of silence by the collective consciousness of builders against the additional hidden loading on the homebuyers,” points out Shweta.
A closer look at the sales methodology of the developers suggests while they exaggerate some USPs of the project, they very smartly conceal the information to make their offer look very lucrative to homebuyers. These are:
Lower BSP: This sounds like the most affordable to the ears of homebuyers. But in reality it amounts to additional charges like PLC, Club Membership, Parking, Electricity Fittings, Sanitary Fittings, and many others. They deliberately keep the BSP lower not only to sound as the cheapest offering, but also the fact that the brokers’ fee that they pay is subject to BSP only.
Loading Percentage: No builder would like to ever advertise the loading percentage. This amounts to the actual carpet area to be used as against the super built-up area that one is paying for. This includes even stairs and other common facilities. In many cases the loading is astronomically high to the extent of even 40-50% of the apartment cost.
Amenities challenges: It sounds reasonable to offer the project with amenities like swimming pool, kids’ play area, gym, tennis court etc. However, in reality the developers are silent over the density of the project versus the amenities on offer. In many cases, facilities like swimming pool etc are too cramped, if even 10% of the residents want to use it at a time.
Cost of facility management: The marketing brochure more often than not says the facility management charges will be decided at the time of possession. The builders prefer to be silent on this because many of the facilities, like Amphitheatre etc are great selling propositions for a select set of buyers but not worth usable for the most. However, the cost of facility management has to be borne out by one and all.
The question is how can the homebuyer make safe investments by doing their own due diligence before making a purchase decision. Surabhi Arora- Associate Director, Research at Colliers India suggests one should always do a location visit before making any financial commitment. She recommends to check the status of various infrastructure projects that the marketing brochures mention; for example, the future metro connectivity, flyovers, etc.
“One should ask about the amenities that the project will provide in the name of green, luxury, smart homes, etc. Ask for the total cost of the project, including all the other charges, stamp duty, etc. If you are considering more than one projects, compare the project offerings like flooring type, doors, windows, sanitary fittings, electric fittings, various provisions, etc. and the amenities like play area, garden area, car park, club house, temple, etc. It is also important to check the built up and super built up area,” recommends Arora.
Considering that due diligence is a highly challenging job in the information-starved Indian housing market, this conspiracy of silence on part of the developers is a real challenge for the homebuyers. Yet, some of these key issues can at least goad them to make an informed choice.
By: Ravi Sinha