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Tuesday, October 18, 2016

Pune flat buyers, how good is your maths?

Help a builder to design the most attractive property price discount offer:

I am one of the most ethical builders in Pune. I am participating in a 'property sale' organized by one of the most ethical, blindly trusted, highly respected & fanatically socially committed media houses in Pune. Along with me there would be 2 more most ethical builders in Pune.

In short, the 3 most ethical builders are participating in the most ethical, highly respected, blindly trusted, & fanatically socially committed 'property sale' in Pune.

"Like any saree sale on Laxmi Road, every flat buyer expects that - 'a property sale' must have some 'discount offer'. Otherwise, the flat buyers say, without discount offer - how can we enjoy the shopping?" - my ad agency told me.

"But there is a huge difference between a saree sale and flat sale! Sarees are actually there. You can pay & and take them home. Flats are not there in the property sale - in fact, the flats are not ready even at the site - we builders only pretended that there is a flat - but actually, the flats are under construction - so what is the point in offering a discount like a saree sale?" - I argued with my ad agency and the sale organizers.

"You know? The visitors also pretend to buy - they never really buy a flat in a property sale" - my ad agency said.

"If the buyers don't buy a flat in a sale - why are we participating?" - I asked my agency.

"How can you prove that you are still in the business - without participating in a sale?" - asked the media house representative.

"I can do that by a paid news in your publication. Can't I?" - I asked the representative of the media house.

"That's what you are doing! This 'flat sale' is only - an add on service - for a paid news in my publication!!" - said the representative of the media house.

"Footfalls! Don't forget the importance of 'footfalls' in real estate marketing!! Along with the 'eyeballs' - the paid news reads - the media house is giving you 'footfalls' for free!! You agree to participate because of their free 'offer'! Remember?" - my ad agency said.

"Footfalls at the site matters - not at some centrally located venue in the city" - I said.

"But do they come to your site?" - asked my ad agency.

"No. No one came to my site in the last 10 months. Not a single foot fell on my site" - I accepted.

"Footfalls! Fight for footfalls!! Just imagine - what will happen if only 2 per cent out of 50,000 sale visitors visited your site?" - asked the media house representative.

"What if - 2 per cent of site visitors booked flats in your project?" - asked my ad agency.

"Can you give me a calculator?" - I asked.

"Big decisions are taken without a calculator" - said my ad agency.

"Give a good offer - give an attractive discount offer - sale can't be without a discount offer - it may be a saree sale or a flat sale" - my ad agency & media house representatives shouted in my both ears.

And I accepted their philosophy and decided to give an attractive discount offer for a flat sale. When I told my ad agency to design the discount offer - they told me - "Involve the flat buyers in designing the offer!"

"Are you serious?" - I asked.

"Yes!' - my ad agency said.

"Is it advisable to let the flat buyers take a calculated decision?" - I asked.

"Yes! Because most of the people are weak in Maths!! Particularly - the property investors are not at all good in Maths!" - said my ad agency.

"That I know. How should I go about it?" - I asked.

"Be discrete. Let someone else do it for you. Tell the people to suggest the offer for some other project. Keep your name & your project's name secret. Offer a prize for the best suggession. Distribute the prizes only at the venue of the sale" - said my ad agency.

"But will they participate if I gave them wrong info?" - I asked.

"Participate? Hinjewadi flat buyers even pay token amount against wrong or no info! They like suspense - mystery - thrill!" - said my ad agency.

I respect creative solutions, public participation & transparency. That's why I have told you this before seeking your help to design an attractive discount offer for the flat sale I am participating in.

Disclaimer - If you find any resemblance to any housing scheme or any flat sale initiative or any builder it is just an unintentional accidental coincidence.

First, let me tell you what I want to do. I have a housing scheme in a not at all far away location from Pune. In fact, tomorrow or a day after tomorrow it is going to be a part of Pune. I hope you know what I mean. This is about location.

Now, about a property. I have 2 BHK Flats. The areas of the flats are king size - from 911 to 1037 sq.ft.. Of course, these are saleable areas.

For the convenience of flat buyers who are familiar with and accustomed to the past practice of saleable area and rate per sq.ft. of saleable area - I give saleable areas in square feet.

Otherwise, I have told you, I am one of the most ethical builders in Pune. In the flat agreement, I mention only carpet area of a flat and a carpet area of a terrace and that too in sq.mt. - square meter.

Not only in the agreement to sale - even on my property price list - I mention carpet area in sq.mt. as well as in sq.ft. - this shows that besides most ethical - I am also most flat buyer friendly builder in Pune.

Now, I know you want to know the carpet areas of these flats which have saleable areas between 911 and 1037. Right? The carpet areas of these flats are between 592 and 622.

Yes! Yes!! You must be curious to know how can a saleable be 1037 if the carpet is only 622!!! Right?

I have given big terraces! I told you my flats are king size!! I have given 146 sq.ft. terrace for a flat which has a carpet area of 622 sq.ft. - so that a flat buyer can enjoy nature - the free gift of god - sun, moon, rains, stars, wind, cool breeze, greenery, etc. - without leaving a home - on his attached terrace!

What is the loading? You may wonder. The loading is only 1.35%. I told you - I am one of the most ethical builders in Pune. Like the builders in Mumbai, I don't add 40 - 45 per cent loading. I follow what my organization tells me. I do what most of the builders in Pune do. I follow the most sacred formula - (Flat Carpet + Terrace Carpet) x 1.35 = Saleable area. Means (622 + 146) x 1.35 = 1036.8 = 1037 sq.ft. saleable area.

Like some notorious builders in Pune, I don't follow [(Flat Carpet x 1.3) + Terrace] formula. Mainly because, this formula doesn't give a joy of owning a king size home to the flat buyers. According to this formula instead of 1037 the flat look of only 955 sq.ft. - [(622x1.3) + 146 = 954.6 = 955] And you know how flat buyer friendly builder I am. For me flat buyer's satisfaction is more important than my profit.

You may be wondering at what property rate I sell the flats! The fact is for a long time I have not sold any flat. But according to my price list - my rate is only Rs. 3366 per sq.ft. Of course, this is only on the paper. If someone had come forward to book a flat and tried to negotiate the rate - certainly, I would have reduced the rate and given him the satisfaction of negotiation. I am participating in this flat sale only to give the satisfaction of getting the best deal to all flat buyers in Pune.

Of course, there is a limit to rate reduction. Why? Because I do not charges "Development Charges - Infrastructure Charges"! It is clearly mentioned on my price list that - One car parking is assigned to each flat!

That's why I can't reduce the property rate and increase the 'other charges'!

Plus, it's my moral responsibility to take care of property investors who have invested in my project some 4 - 5 years ago when the rate was around 3,000 rupees per sq.ft. Their dreams of earning property appreciation will shatter if I reduce the current rate of 3,333.

I can not afford the luxury of reducing my rate to Rs. 2499 like some recently launched projects in the area. I can sacrifice bookings but can not sacrifice my old investors! The investors are the foundation of any real estate developers.

Point is, in these limitations - designing an attractive property rate discount offer is a big challenge. You can design an offer only if you can think like a builder. By seeking your help, I am giving you an opportunity to step into my shoes and become a builder for a moment. So, I request you all to take this challenge.

Tell me how can I give very attractive discount offer which may reduce a little bit profit margin but will finally help me a lot to save interest I pay on construction finance.

Here are some ideas. Use your calculator and tell me in the comments which discount offer you will find attractive.

One sec. Before you start using your brain, please, have a look at these photos. You know that these photos are not of my project - though these photos are of some other project - I am sure - these photos will stimulate your imagination. These photos will touch your emotions and you will start thinking from your heart. Result, you will be able to suggest best discount offer and win a prize. If I really offer.

The ideas are -

1) "Loading" is the key to profit. Should I change the loading percentage?

2) "Loading" has an intellectual appeal. Should I change the formula?

3) "Loading" has emotional appeal. Should I charge loading only on the 50 % of the terrace?

4) Quoting rate on the carpet area is considered as a revolutionary idea. Should I quote the rate on carpet area and give 100 or 200 rupees discount on it.

No. I don't have any more ideas. One thing is for sure - I can't give 25 % discount. If I had not started construction I could have given 25 % discount and then would have cut the corners while construing the building. I could have reduced the specification, eliminated some amenities, would have used inferior materials. But since my project is under construction and amenities are ready - I don't have a freedom to do it.

Of course, the flat buyers won't mind if I reduce the specifications & amenities. For a few years, they will not notice the inferior materials. But what about my fraternity?

Considering the cost of land & construction, I can reduce the rate by 40 per cent and manage to deliver the project. But consider the psychological impact of it on my fellow builders who are ready to go down but not to reduce the property prices. They will go into deep depression. We can not see a few more builders committing suicides. Can we?

So, be rational. Give realistic ideas about property price discount. Show me how good is your maths. I may choose more than one. Because rarely one fits all. Right?

Photos for emotional stimulation:

Related Stories:

3) 8 Signs You Are a Hopelessly Ignorant Pune Flat Buyer

2) 8 Questions every flat buyer in Pune should ask a builder

1) Investing in DSK Dream City Pune

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  1. Replies
    1. LoL !! Hahaha.
      First comment itself shows priority of people (including myself) is good quality, hygienic vada than to buy flat.

  2. "I am one of the most ethical builders in Pune."
    - This builder - Mont Vert, is so ethical that he is role model for Raja Harishchandra !

    "one of the most ethical, blindly trusted, highly respected & fanatically socially committed media houses in Pune."
    - This media house - Sakal is as much ethical as the irrigation works dept/ministry of the previous state Govt & builders are so honest that in their office, people couldn't recognize whether they are builders or some Sadhus from Haridwar.

    This should not be surprising since builders belong to Sat-yug while projects launched in Treta-yug are still going on in Kali-yug.
    Jai Ho Baba credaidanand !

    Builders have developed attitude of not fulfilling promises:SC


    1. "This should not be surprising since builders belong to Sat-yug while projects launched in Treta-yug are still going on in Kali-yug.
      Jai Ho Baba credaidanand!" - I liked this.

  3. Very true Ravi Sir. Thanks again for the blog.

    The pics are from Pirangut right ?
    Its the fringe village where so called developers are looting people by showing false promises.

    I had went to Kalash builder from Pirangut last October(2015) , the cost sheet he gave said that the Rate Per SqFt is 3100 and for Diwali offer he'll give for 2700 rate psqft. But in October 2016 its now 2500 !!! ha ha ..Sad for all those who booked in Pirangut and especially with this builder named KALASH , near KasarAmboli , Pirangut.

    Ravi Sir ,
    Can you please tell me answer for below 2 things please ?


    Near MontVert , Pirangut/Urawade ... there was another construction planned by Calyx-Earthern Life (not Calyx - Navyangan,kasar amboli).

    Has the construction started sir ? Calyx told construction will start in Jan-2016


    Pandit Javdekar had also started construction - Red Earth in Pirangut .
    Has the construction started sir ?

    Have they got EC ?

    Thanks & Warm Regards,

  4. Has anyone of you ever noticed the chai walla that sells chai in trains ? He makes almost 10 to 15 rounds of the same compartment i.e up and down shouting "chaiyaaaa". What they are actually doing is implanting the word "chai" in your mind ... so much that you will start wanting it. This is similar to what newspapers do today when they have the first 5 pages full of advertisements for sales and offers. Do you see what the chai wallas have been doing for years ? they have implanted an idea in your head... they have performed inception... something which dom cobb did in that cristopher nolan film.

    So stop dreaming, free your mind from the cage which you cannot smell or see or touch and realize that there really are no rules in RE.

  5. Ek ke badle mai do offer: Buy 1BHK flat, and get a 2BHK flat for free!

    Pssst! The 2BHK has saleable area of 350sqft!!

  6. I entirely agree with Monk about the condition of the market.It is STILL very high and is going to fall.How much it will fall is anybody's guess but the crash will be severe.Builders will definitely get burned, but so will many investors and individual buyers get a bamboo.The sharpness of this bamboo will be more severe for all those who hv taken loans.The best thing to do today is NOT BUY.IN FACT IT IS BETTER TO SELL AND KEEP THE RECEIPTS INTHE BANK.WAIT FOR CRASH AND THEN BUY. Don't believe builders and brokers who will try to part you from your cash by showing you a rosy picture.market is in the doldrums.be careful.Ravi Karandikar is a very studious and INDEPENDENT ANALYST.HIS INDEPENDENCE IS TOTALLY PRICELESS.HE IS NOT A SOLD OUT GUY. KEEP UP THE GOOD WORK SHRI KARANDIKAR.ONE OF THESE DAYS IWOULD LIKE TO MEET YOU.GOD BLESS YOU

  7. Nice Article ,
    Message Was Clear ..
    Flat buyers don't attract to these fancy builder offers... other wise they will fry you and make your VADA :-D

  8. Currently most builders (including ethical,reputed, small,big, international etc) are reeling under severe recession.This situation is likely to get worse before it gets better.Many builders in North India are in jail ---E.g. UNITECH.WESTERN INDIA WILL FOLLOW.S o buyers have a good chance of squeezing the builders to get a good negotiated bargain.Make hay while sun shines.Buy ONLY READY POSSESSION FLATS.REFUSE BOOKING FLATS.YOU WILL GET MUCH BETTER PRICES THAN YOU IMAGINED.