Marketing practices in the real estate sector are sometimes brazen, scandalous and are very far from being ethical. A buyer must be aware of such selling gimmicks and should try not to become a victim.
I have tried to list down few tactics used by real estate firms to attract buyers:
1. Builders try to impress prospective buyers by building a very impressive sample flat. However, the walls of the sample flat are kept thinner and ceiling is kept higher than what the drawings mention. This is done to create an illusion of much larger rooms and a more spacious flat than what the reality is. No-one is really interested to measure the sample flat.
2. The use of high quality paint, tiles and furniture installed in the sample flat gives the impression of high end property. Please don’t get hooked by the stunning decor of a sample flat.
3. People are often asked to show urgency to book the flat by claiming early bird offer and builders keep repeatedly saying only a few flats are available. This is a pressure tactic as the most of the sales are on paper only.
4. Prices are going to increase in the future hence please buy as soon as possible is another ploy to make customer think. However, given the over supply and huge inventory across all the market in India I wonder how prices can rise from these levels.
5. Developers offer foreign trips, cars as a gift for booking the flat within stipulated time limit. Please understand the cost of the flat runs into at least about a crore in big cities. If you are offered foreign trip costing 1-1.5 lakh, it is only 1℅ of cost incurred by you for buying a flat. Hence don’t get excited with such offers. In fact these offers show desperation of the builder to sell his flats.
6. Home buyers are attracted with schemes such as Zero Loan EMIs till completion or the 20:80 formula. However costs are already marked up and the offer will be for very limited period of 2-3 years. If the builder defaults to pay to the bank, ultimate responsibility is yours.
7. In India, home loan borrower can claim tax deduction for repaying principal and interest during the financial year.
However, this is an overrated deduction. We are making an expense and saving a tax unlike the options like PPF or ELSS.
Please understand house is bought for living or as an investment and not for claiming tax deduction by availing loan.
Be advised and informed before buying real estate.
Happy Investing !!