Bottom Line: Discounts & freebies on Gudi Padwa are often fancy trap by the developers.
When Navneet Khandelwal bought her first apartment five years back on the day of Gudi Padwa, she thought she had made a killing deal. After all, the kind of freebies that she got with the apartment was something that tempted her to book it on the day of the festival known for the acquisition of new properties. She got an air conditioner and a discount coupon that rewarded her further with some furniture. Isn’t it a grand prize when buying an apartment on the auspicious festive day? It sounds so!
Why then is Navneet apprehensive today when she wants to buy her next house in Vashi? It is true that she religiously believes in the Gudi Padwa and is sure to book the apartment on the day of the festivals only. But then this second time is more matured to understand the value of house hunt and at the same time not get tempted by the freebies. More importantly, she understands the difference between wants and needs; something that can save her from fancy trap in the housing market.
“Though I was happy with the kind of freebies that I got. But it was a few months later that I came to know that some other properties in the same market were offering a better deal with the cash discount as well. My temptation to grab the freebies immediately on offer was something that completely misled me. The value of the stuff that I got in freebies was much lesser than the high price that I paid for the apartment,” says Navneet.
Prabhu Parekh is another homebuyer who was tempted with the marketing offer has a very basic question to ask today. The builder has offered him freebies over and above subvention offer. He nevertheless questions that if the developer can offer him so much of discount and freebies, why can’t the same developer straightaway reduce the Basic Sale Price (BSP) of the project. “These dicey discounts and unwanted freebies clearly suggest there is scope for price deduction,” he points out.
In Parekh’s question is hidden the stark reality of the marketing gimmick of real estate. The developer will continue to bombard with the offers of discounts; giving amenities that a new homebuyer might already be in possession of and even holiday tours but will never reduce his BSP.
Reasons: it hurts his brand reputation (read ego) to have scaled down on pricing due to failure to sell and, equally importantly if not more, is his sales channel of brokers and under-writers who force the developers to do so as they do not want to lose on their commission that is calculated on the BSP.
Added to this market reality lies the fact that the real estate is today groping in dark as far as the new ideas and marketing strategies are concerned. They are hence often going off track to lure the homebuyers with discounts and freebies.
Quick bytes
- There is nothing free in discounts & freebies and the homebuyer has to pay the hidden charges
- Always ask for direct price cut than discount on car parking or club etc
- Evaluate whether the freebies on offer is what you actually need
- Discounts should be cash discounts in flat cost and not add on amenities being discounted
Developers on their part maintain that discounts & freebies are offered to add to the festive spirit. It has been a tried & tested marketing methodology since ages. However, the fact remains that the homebuyers today are more informed and aware about the cost & benefit of the discounts & freebies.
Home ownership has long been a valued tradition across most societies and cultures. Indians traditionally aspire to possess their own homes. The festive occasion like the Gudi Padwa adds zing to the aspiration since it is considered to be auspicious and lucky. And it is here that the gullible homebuyers are prone to make emotional mistakes.
Considering the overall health of an economy is largely influenced by the functioning of its housing market, there is definitely a need to reform the property buying and selling process which allows consumers to be more involved. This is all the more relevant in the present market conditions where, the cost of capital and loans are high and not expected to decrease in the near future – affecting the affordability and availability of homes. Resultantly, the decision to purchase a house is taking place in a highly constrained environment.
Therefore, analysts suggest that as prospective consumers knowing the right questions to ask and engaging expert advice can definitely help one make a sound investment for your future. Whether you are buying a home to live in with family or for investment purposes, understanding your wants and needs is the way to avoid emotional mistakes.
There is no point in getting lured by the discounted freebies like refrigerator or air conditioner. These consumer durables should not be a criterion when you already have it. A gold coin or home furnishing may not be a sound advice when the price of the apartment is too high against the competing projects in the neighbourhood.
Sachin Sandhir, Global Managing Director of RICS says ‘buyer beware’ may sound like a cliché, but it is absolutely essential that homebuyers protect their interests. Therefore, knowing the right questions to ask can definitely help you make a sound investment for your future. It is critical to understand that the decision to buy any property requires a long term financial commitment.
“For all properties, regardless of age and design, basic checks should include the structural condition of the property; electrical wiring; plumbing; insulation; alterations which have been made to the original floor plan and if the same have been approved and assessed by the local development authority. It is also advisable to consider what the immediate and future maintenance requirements of a house might be,” says Sandhir.
The ‘urgency’ factor of moving into one’s home will largely depend on one’s disposable income and the decision to invest either in an under construction or resale property. However, prior to making any such decision, it is always wise for the buyer to consider the associated risks that are involved in buying property and evaluate the same, before making a financial commitment.
Today, when the inventory level is high in Mumbai market, it is advisable to go for a ready to move property than book an under-construction or new launch project in exchange of discount. In the final cost & benefit such discounts & freebies are often more costly.
