A Property Portal is an open market place i.e. free for all. Though a property portal selectively verifies the listed properties. Practically, it is impossible to verify or certify each and every property listing. Similar to the matrimonial portal, it provides an opportunity to deceivers to trick the potential buyers. The real estate agents and builders misuse this fact and are using a property portal only for a lead generation. Here by lead generation, the objective is to bring a potential buyer to the property site. This type of marketing is FREE of cost and some of the real estate agents are using it quite effectively. Recently, One of my acquaintance was also trapped while searching a property in Mumbai. I cannot name him for obvious reasons and will refer him as a Person A. When he shared his experience and feedback with a leading property portal, the representative of a property portal were pretty cool about it. In this ballgame, only the buyer suffers in terms of time and money. Sometimes he is trapped.
How Real Estate Agents and Builders trap Buyers through Property Portal?
The modus operandi is very simple. Real Estate agents and builders will post misleading advertisements on a property portal. In the case of Person A, he was looking for a property in Lodha Palava City in Mumbai. This project is huge in terms of scale. The feedback from market suggests that prices have corrected considerably in last year or so. Some of the readers reported that the builder has officially corrected prices in last one year. Based on the comments of readers, the current prices are same as in 2013. I consider it to be good as some of the micro markets have corrected up to 30% compared to rates in 2013. The best example is of Dwarka Expressway in NCR. This observation is based on the fact that i keep receiving buyer’s query on project prices. In 2013, prices on Dwarka expressway stretch was Rs 5000 psf but few months back some of the clients reported that builder/resale properties are available for Rs 3500 psf.
After i interacted with Person A, i did some research on my own to verify the claims of Person A. It is quite astonishing that psf rates for Lodha Palava City on online portal vary from Rs 4800 psf to Rs 7500 psf. Some of the real estate agents have listed 2BHK of 1000+ sq ft between 48L to 50L. Similarly, 1BHK and 1.5BHK are listed between 33L to 42L. These rates are around Rs 4800 psf. It is not possible to find out all inclusive price from property portal listing. On the contrary, the properties listed with all inclusive price are at a disadvantage as the probability of a buyer query is negligible. It is human tendency to sort prices from low to high. The worst part is that a property portal will not allow you to check sellers details without mobile no verification through SMS or Call. Therefore, the buyer is trapped on two fronts i.e. lead generation for property portal and for real estate agents. Because of this reason property portal is cool about the misuse of their portal by spurious real estate agents.
After that i was bombarded with calls and when i checked with one of the real estate agents from where he got my no. He told me that he bought a database of potential buyers from a leading property portal. On top of it, when i insisted on all inclusive price, it was approx 25% to 30% more than the price listed on a property portal. We can safely assume that all the leads generated through the portal are SOLD. I am not sure whether it is sold by the property portal or some agents are involved in data mining. If the property portal is indulging in such a practices then people who think that a property portal is doing a free public service are wrong. As a buyer, you will regret why you shared your mobile no. It is advisable for a buyer to buy a separate mobile connection for property purchase. Once the deal is done, deactivate the SIM and LIVE peacefully.
The Mystery of Base Selling Price (BSP)
During my research, the biggest confusion was whether the price listed on a property portal is Base Selling Price or All inclusive Final Price. During my research in 90% cases, the price listed was Base Selling Price. One of the leading property portal list all inclusive price with break up of Resale Price, Brokerage and Registration Charges. The best part is that these properties are verified on physical site by the portal. When i checked with the agents, i was told that prices listed are exclusive of Builder NOC charges. On portal B, i found a little star at the bottom and a disclaimer mentioning that prices listed are Base Selling Price and other charges may apply.
Typically, the other charges may vary from 7L to 15L. There is no sanity to these charges and charged arbitrarily by the builder or seller to push up the property price. The other charges include Electricity and Water charges, Parking, Society formation, Club Membership, PLC, Grill Charges, Floor Rise, Maintenance etc. It is totally insane. In one of the case, electricity and water charges were Rs 250 psf i.e. 2.5L for 1000 sq ft flat. The best part is that initially builder was charging Rs 150 psf. I was not sure about the special service to the late comers by the builder. When i dig deep, i found that as the property is ready to occupy therefore builder is partially adjusting VAT and Service Tax in Electricity and Water charges. In some cases, the misc charges can be as high as 25% to 30% of Base Selling Price.
On the condition of anonymity, some of the real estate agents told me that reason for listing a property on base selling price is only to generate leads. In current market conditions, a conversion of 5% property portal leads is good enough. After the lead is generated, a good agent or builder can convince these 5% buyers to pay 10L more as they are serious buyers. According to them, lead generation means half the battle is won :).
Another most common hidden charge is Builder NOC. It is not disclosed to a buyer through property portal ads. Normally it is disclosed after the token money is paid. Builder NOC is required for the transfer of under construction property. It is mandatory to obtain builder NOC if you are buying under construction property. In states like Maharashtra, the concept of Builder NOC is misused by the builder to blackmail a seller or a buyer. As per the mandate of Govt of Maharashtra, Builder NOC is not required once the property is registered in the name of a buyer irrespective society is formed or not. After registration, the owner can freely sell the property even if the society is not formed. In short, builder NOC is not required after property registration. Unfortunately, banks also demand builder NOC after registration and in case the society is not formed. The state govt should strictly enforce the rule to stop harassment of buyer/seller.
Recently, i visited a project in Mumbai after going through Ad on a property portal. The builder is intentionally delaying the society formation. The builder NOC charges were not disclosed even though the property was verified on site by the property portal. Interestingly, i observed prominent notices posted on each floor/lift of the society by the builder. It reads that owners cannot sell the property without builder’s permission. The general practice in Mumbai is that these charges are equally borne by the buyer and the seller. In some case, these charges are insane i.e. 5L or more. It is important to clarify this point if you are searching a property on property portal.
Words of Wisdom: It is important to understand and research about various charges applicable for property purchase. The heads of these charges may vary from state to state. In my post, Negotiate Property Deals i shared 9 imp tips for a buyer. All the negotiation will go for a toss if you miss out on any of the hidden charges not listed on a property portal. The best examples are builder NOC or nitty gritty of calculations like Base Selling Price. Online advertisement on a property portal can be deceptive in nature. In my opinion, it is important to list properties with All inclusive price. After all, as a buyer, i am concerned how much i need to shell out to buy a property. A buyer can plan his finances accordingly. A buyer may be in a bigger trouble in case of a home loan. Base Selling price is a marketing gimmick to project that property is available at a low price. The reality is completely different and it comes as a shocker for a buyer in most of the cases. I hope real estate bill will address this concern and will regulate listings on property portal.
Copyright © Nitin Bhatia. All Rights Reserved.
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