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Friday, December 2, 2016

Renegotiate the agreement value of your flat

After the demonetisation of 500 & 1000 notes,
wise flat buyers in Pune are postponing the registration of agreement &
are trying to renegotiate the property price with the builder!

Renegotiate the agreement value of your flat

The property rates in Pune are going to go down.
Those who want to book a flat & those who have already booked
- both are sure about the property rate correction in Pune real estate market.

But you know what?
Those who have booked the flats but as yet have not signed & registered their agreements
also believe that the property rates in Pune will go down.

These guys believe that the agreement value of their flats
which they have agreed to pay while booking a flat
are not valid any more.


These guys want to renegotiate their property prices!

What if your builder refuses to renegotiate? I asked one of them.

I will cancel my booking! The flat buyer said.

Really!? I asked.

Yes! I am ready to cancel. But I know - I don't have to cancel. The flat buyer said.

Why? I asked.

My builder can not afford my cancellation! My builder knows that he is not going to get new bookings for a while. That's why he can not let me cancel my booking. He has no option but to renegotiate. The flat buyer said.

Sounds logical! What is your expectation? 25% price reduction? I said.

25% is good! More than percentage - I want to make sure that I am paying the right price! The flat buyer asked.

Right price means? I asked.

When I booked the flat - I was blind. Yes, I negotiated. But the basis for negotiations was the current market rate in the area - the comparison - not his actual costs. Now, I am going to ask questions about his costs & pricing. He has to convince me with the proof. The flat buyer said.

Do you expect the salesperson to know all these things? I asked.

No. I am going to negotiate only with the builder. The flat buyer said.

Perfect! I said.

If the builder refuses to negotiate or fails to justify the price - I have made up my mind to cancel the booking. You know? Because of this demonetisation I have realized my mistakes. My builder's booking terms are completely unfair and may be illegal. The flat buyer said.

Such as? I asked.

If I cancel the booking - I have to pay 5% of the agreement value of the flat as - cancellation charges! In my case - 5% means 7 lakhs! Is this legal? The flat buyer asked.

Are you asking me - Can a builder charge percentage of the agreement value as 'cancellation charges'? I said.

Yes! The flat buyer said.

What if the answer is 'yes'? I asked.

I will go to court. I will file case against the builder. Cancellation charges is an exploitation - unfair - abusive term. The flat buyer said.

Demonetisation has really opened your eyes! The builders days are numbered!! I said.

What say you?

Are you renegotiating the agreement value of your flat?

Share your experiences in the comments, please.

Related Stories:

2) How to survive the sinking Pune real estate market

1) Pune property rates will keep on going down

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  1. "Demonetisation has really opened your eyes! The builders days are numbered!! I said."
    - Better late than never. Hopefully, buyers will stop paying illogically high prices for buying property.
    Whether those who are yet to do agreements will be able to negotiate, get refund of booking amount or not is different issue but certainly those who are at "prospective buyer" stage will surely stand to benefit a lot.

    What will be fun to watch is about those hoarders who purchased few years back thinking of doubling their money in 3 years ! Now property may not be worth even 40% ! And Benaami property act, RERA action is still to come.

    The new, harsh realty -

    It is said “nothing lasts forever,” and the everlasting belief of real estate being a great investment now turns out to be a myth. The self-made rules of investing in this asset class are about to change which will change the financial landscape of real estate investment.

    For instance, you own a 1000 sq. ft. house whose market value had been ruling till recently at Rs.5,000 per sq. ft., making the valuation as Rs.50 lakh. Now, the same could be valued much lower assuming the government notified prices are Rs.2,500 per sq. ft., taking the valuation down to Rs. 25 lakh; half of what it was assumed to be.


    1. What if builder association holds on to rates irrespective of market sentiment?

      After all, needy people would end up buying home; not for investment but for own purpose. I have heard many people saying that "Owning home provides sense of Security". This emotion is so dominant that rationalism is overwhelmed & people land up into sales offices no matter what macroeconomic view.

      I am regular follower of Ravi Sir's blog & have learned that RE prices are going to collapse. But emotions may play major role in purchase. Isn't it?

    2. "I am regular follower of Ravi Sir's blog & have learned that RE prices are going to collapse."
      - This is from analysis & not by emotions, right ? So just kick emotions out of the window.
      Problem with these emotionally driven people also happens to be lack of patience. No one is saying don't buy for life. It's just that don't buy in current times. No wonder then how third class saas bahu serials go on & on in India.
      When it comes to money, one has to be stone cold. There is no other option. Even Lord Brahmadev can't help those who make financial decisions based on emotions, LoL.

      Please forward this link to glycerine type people ! It will help them become atleast a bit emotional atheist.

      How Emotions Drive Bad Financial Decisions (and How to Take Control) -


  2. The builder will definitely receive a rude shock if the customer goes to re-negotiate, but if RE was to really go down, builder should professionally re-assess & discuss the reduction in prices.
    Few builders may try to forfeit the amount paid until agreement or levy a huge penalty or simply bully the customer since he has already had plenty losses in terms of old currency.
    Now, such builders will eventually get marginalized & will incur even more losses in the long term once the word spreads about how they are troubling their customers. I would rather pay a little more to a professional builder than a bully. If there are any REAL "experiences" of such reduction by anybody, then it would be prudent to post & share.

  3. Ravi, Hereby I would really like to share my story reading above article. Im looking for a 2bhk for a long time almost 2 years now ridiculous isnt it?Finally I made up my mind buying second hand flat in the city limit to also enjoy infra and community and pay little more for as area premium fearing not be cheated by some builder. In Baner the flat i was interested in was quoted initially around 75 Lacs base price + (8-9%) = total Package. Finally the negotiation reached 71 I expected it to go till 65. But I wasn't convinced as I felt it was overpriced and as per ready reckoner calculation the cost of flat sum up to 63. Meanwhile the seller had multiple buyers so wasn't interested in my offer to do it with Ready Reckoner. But the property is still available. And with demonetization my decision firm than ever I will only ask for Government rates to be applied for agreement then it can be higher or lower. I know it will be lower that is the plus point.

    I hope the owner agrees my offer before market plunges more fearfactor#. I like it now fear is with sellers now whether builders or owners that rates are going down. Earlier it was there USP (Unique selling point) rates will increase buy it now. Buyer can now exploit the fact now.


    I'm not against anyone but I support fair trade practices and doing so everyone is happy isn't that what we all want?

    1. How come you got so high rate as per ready reckoner rate in Baner ?
      This rate is not calculated on salable area but carpet x 1.2 in sq mt. No terrace, parking & other stuff is included.

      Eg. If carpet area is 1000 Sq ft.
      Built-up = 1000 x 1.2 = 1200 sq ft
      In Sq mt 1200/10.76 = 111.52 sq m

      Now multiply 111.52 by ready reckoner rate, which is the Govt value of the flat on which stamp duty needs to be paid.
      Hope this clears your doubts. Now recalculate & post what shall be Govt rate of your flat as mentioned in your post. This will be useful to all readers, buyers.

  4. Basically trying to understand why there was such a robust growth of IT in Pune.
    1. Because of telangana issue Hyderabad was ignored by the IT and hence development haulted
    2. There was no city in north India that was ready to get developed rather politicians were dumb to understand IT growth
    3. Law and order situation in north indian states and earlier Andhra Pradesh.

    Now in 2017 see the situation
    1. Telngana issue is sorted Hyderabad is looking more attractive than ever before.
    2. New capital amaravati is getting developed near vizag where few IT companies already operating.
    3. Jaipur has developed a lot. Metro is running ...IT has chance to look for expansion here...advantage near to delhi...airport available
    4. Lakhnow grown faster in recent 2 yrs ...tcs already has off there. Airport available. Metro started.
    5. Indore lot many small companies operating. Tcs n infy work is going on but at slower space. Metro work is going on. Has good domestic airport which can b converted into international.
    4. Nagpur infrastructure is developing on war footing. Metro n mihan development underway.
    5. Ahmedabad is already developed a lot . Lot many IT companies has presence here.
    With all these factors i am just thinking what would be d probability to attract investment in this garbage city.
    Gavathi chap builder's are still flying high in air and sharing articals in local zumala news papers.

    1. U please go to other city... we dont want people like u who dont respect the.city..... dont forget it was a village turned to.city in just 7 to 10 years and development will take time to grow this city....

  5. Have you read today's newspaper. Interestingly CREDAI don't feel that RE prices will collapse. In fact with reducing IR, they are expecting soaring sales.


  6. what are the options available to one who had done registration recently, in last 1 month?

    1. u can cancel Aditya even after registration but read refund terms; even if u lose 6% of stamp duty & u are sure u will get better deal saving 25% u still are in win win situation!

    2. If the agreement is cancelled via cancellation deed, then government refunds the stamp duty after deducting 10%. You can consult an advocate regarding this.

  7. if the govt doesnt change the ready reckoner price and one expects only builders to reduce the price there would be a total mismatch.