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Wednesday, March 22, 2017

Buying a resale flat? Beware of flat owner - broker nexus

After searching for a new property in Bavdhan, Pashan, Baner & Kothrud area, and finding the property rates unbearable,
I decided to go for a resale one.
But on the contrary it was more 'haunted' experience!
The resellers greed and selfishness let not compromise them on their 3rd class property rates which are almost equal to new ones:

Buying a resale flat? Beware of flat owner - broker nexus

Folks !!!! Sharing my wonderful experience while searching for a resale flat in Kothrud Depot and Bavdhan Area !! Its fresh, brand new and 100% true.. !!

Read it and if you are planning to purchase, then get ready for humiliating experience while dealing with the indecent Nexus between flat owners and crook middlemen.

Here we go !!

Today I sat for a deal ( luckily not happened ) with an owner of 10 year old 1050 sq ft flat near Bank Of Maharashtra and with an illiterate and crook middleman (owner's friend) and my uncle who is a bank manager and has handled Loan department as well.

I hoped that considering the correction of 10 to 15% for new flats and some extra for resale flats and considering the age of building and other factors and confirmed the total cost including everything from bank's loan department and from some agency; prices of resale property could be affordable and may get the good deal.

Initially we started pitching with this evaluated price.

Once they heard the initial price - their eyes popped out of eye sockets.

Reacting to their weird reaction; we asked for their expectations;
after hearing their expectation our ears send these sound signal energy to the brain and converted the sound energy into anger, irritation.

Expected price for not so maintained property, 10 years old, 910 sq ft carpet, few leakages here and there is 75 Lakhs !!!! Booooommmmmm

Then we raised the bar from our side to 2 to 3 lakhs i.e up to 61 to 62 Lakhs...

After hearing this - one of the agent's body language became restless and told in a very rough and arrogant tone .. and giving a sarcastic laughter .. nodded with a big NOOOOO

We insisted on the justification of their irrational demand that too without registration n all.

In a defense - the owner and his crook and shabby friends insisted this demand is valid as this property is road touched...and availability of goods/ grocery items in vicinity.

To which my uncle reverted and deflated their baseless defenses by saying-

1. Road touch properties are good for commercial purpose and not for residential,
even in internal parts and in all lanes of Bavdhan Khurd each everything is available right from the medicines, h/ws, goods n everything you ask for.. Thanks to Rajasthanis / Chowdaries..."

2. Where is the consideration of property's age while calculating the whopping amount of 75 Lakh ? (There isn't a difference of 2 Lakhs in new and old property)

3. If a brand new flats are available at the same price inclusive of registration, etc etc then why should we buy a 10 years old flat for 75 excluding stamp duty, registration ?

4. Current rate in Bavdhan area is 6300 to 6400 for new properties, so even if you calculate with this rate property doesn't exceed the 64 Lakhs mark. For old property it must be lesser!

5. Why would we pay for Water leakages fix and few repairing work?

After hearing this revert; all the false claims of crooked nexus baffled and didn't have anything to substantiate their defense!!

Then agent peeped in and started defending his client like an honest dog!!

Here is what agent said:

1. My client can't afford the 63 lakhs and it would be a loss
( .. Toinnggggg.. what a stupidity. Owner is already getting around 300% profit)

2. Road touch properties are still in full demand and preferred by many for residence
(We asked for the recent purchases through him to substantiate his claim but he couldn't)

3. I've been active in this areas for many years ( funny ) so I know this property is worthy ...
(Reason for worthiness?? Ooppss....couldn't handled by his brain to put forward the good things.)

4. Water leakages fix and few repairing work must have to bear by you as this comes under your own special and customize requirement and modification ...(!?)

Finally the owner, his goonda friend and dumb middleman refute the deal by flaunting the arrogant body language and hand gestures, popping eyes gazing each others and transferring the message of repudiate, sigh with hmmm sounds were the enough signs for us not to waste a single moment of our life with such indecent, ignoble filthy people!!


After hearing such baseless answers and stringent demands and reluctance to negotiate and reduction in demand, we decided to walk away

But before leaving my uncle taught a lesson of lifetime by prodding with taunts (in the style of Punekars) -

- As middlemen, he didn't play the role of negotiator/ middleman but biased towards the owner (so called family friend)

- When we were ready to negotiate and try to finalize to a golden mean, he shielded the owner and stopped him to negotiate further

- He acted as lawyer, spokesperson, defender of an owner

We were left with the first actual, real, physical bitter experience while hunting for a dream home in Pune; earlier to which I had read the similar experiences on web portals, blogs etc of many property seekers.

Conclusion :

Common man's search (aka Struggle) for a dream house in Pune (not included fringe villages like Pirangut, Shivane, Dhayari, Kesnand etc.) as of now still looks distant!!!!

Mr. Resale Flat Buyer, Tujhse bhi jyada pagal lok is duniya mein hai!

Mr. Resale Flat Buyer, Tujhse bhi jyada pagal lok is duniya mein hai!

Guess! What would be the view of that flat seller & his property broker about above failed negotiations?

Do you think that they would have realized how irrational was their demand?

Do you think that the broker would have told the flat seller - "Let us reconsider the property price & try to renegotiate"

No! I don't think so!! Instead of that both of them must have told each other -

"Mr. Resale Flat Buyer, Tujhse bhi jyada pagal lok is duniya mein hai! - Pagal Lok - who while buying a flat - give importance only to the location!!"

I completely agree with the flat seller & his agent!

If this resale flat buyer - who has a budget of 63 lakhs for a 2 bhk - really cares for value for money - for the quality of property - he would have gone for a new flat - which is constructed as per current development rules - using current construction methods - having latest specifications & amenities - in a developing area of PCMC. For example - Siyona at Punawale!

But for Mr. Resale Flat Buyer - location - Bavdhan near Kothrud - was more important than the quality of the property.

When the flat seller & his agent tried to take advantage of his weakness - Mr. Resale Flat Buyer got upset. Instead of blaming himself for being so naive - Mr. Resale Flat Buyer started blaming the nexus of flat buyer & broker and requested me to share his 'haunted' experience.

Look at his experienced uncle! Instead of guiding his naive nephew to buy a right property - the so called wise & experienced uncle supported his nephew!

Mr. Resale Flat Buyer, you get what you deserve!

Be wise! Stop blaming others!!

Pune real estate market has become so crooked and wicked - only because of the naive flat buyers like you.

What say you?

Please, share your views in the comments.

Related Stories:

1) Why are wise Hinjewadi IT Engineers booking flats in Pethkar Projects' Siyona at Punawale, PCMC, Pune?

2) Like Hinjewadi Techie Boys - I don’t Own a Flat - So What?

3) Sad story of a son who purchased a flat in Sus

4) Don't book a flat in Pune till RERA is implemented

5) 5 Objections Against Maharashtra RERA Rules

6) A visit to Vasudha Etasha, 71 Kothrud, Pune

7) The best way to buy a flat in Pune real estate market

8) Pune : Agent took me to Police as I purchased from Owner directly and did not pay his brokerage

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  1. After reading this i remembered my experience same as this ... ha ha ha ... good one ravi :-)
    at my time, owner of the flat said.. price will always negotiate 5-10 % only on owners exceptions... this is the undefined rule in the industry... if you are negotiating 20-25 % then you are not a serious buyer...... lol...

    1. True, Manohar. Everyone likes belive in what is beneficial for him.

  2. Well said - The logic is simple - broker will anyway get commission from both side the commission is a %of deal price from both parties so it makes sense to be with the seller since the higher the price the deal closed its beneficial, also buyer has no say in resale since all brokerz have their lobby, sellers in Pune primarily are
    1. Those who have parked retirement income
    2. Those who have earned in $$$ and parking funds here this includes NRI
    3. Beurocrats and others who park black money
    None of the above have any urgency to sell it's an investment forever where in returns are not the main criteria - the criteria is one can't park it anywhere else

  3. Good blog Ravi.
    The broker will always try to maximize his commission & for this, he will expect more price than even the owner expectation ! Now that's different part that buyers don't buy it due to this.

    A flat buyer should think also from perspective of seller, find his strengths & weakness & use this info for negotiations.
    Eg. If investor has multiple properties & need cash due to change in recent income tax laws like set off of max 2L limit on home loan interest, benaami property etc. or falling prices due to which investor is desperate, it then becomes easier to pump them harder.
    On the other hand, there are people who have purchased flat at very low cost 10-12 years ago & they are selling it just because they aren't seeing any appreciation & that's the only flat they have, then they can hold on a bit longer & this holding power in current scenario is directly proportional to the greed of the investor. However, today or tomorrow, they have to fall in line with market dynamics simply because if not him, there are 10 sellers in queue already, not to forget the builders who are open for big negotiations.

    Those looking at 10 year old or more flat, do keep in mind the following :

    > Bank will give far less loan than otherwise due to age of flat,

    > Buying a 10+ year old flat is like marrying a 40 year old woman, mother of 2 just because she is MBA from Columbia university ! Exceptions like Jennifer Aniston are there :P but then how many builders construct projects like Samudra Mahal, Worli today ?

    > In normal conditions or when real estate is booming, flat prices appreciate the fastest between age 0-3 years, appreciation pace reduces for 3-5 years or max 6 for really good, well maintained projects & starts reducing compared to new projects from 7th year onwards. So for investor, 0-3 is best period to sell as banks also give more loan. As flat becomes older, bank loan amount is lesser due to which down payment amount required increases which leads to much lesser buyers.
    But when market falls like it is today, older flats loose price at much faster pace than new flats.

    > If buyer uses such flat for say 10 years & then takes call to upgrade or migrate, this flat which is 10 year old for him will be 20+ year old in real terms. One needs to factor in this aspect.

    Apart from this, basic infra within the building, be it electrical, flooring, plumbing, lifts will be one generation old which results in faster wear & tear as it's life decreases. So use the depreciation factor of flat in negotiations just the way you do for a car.

    This doesn't mean one should go & buy new flat in jungle but rather than buying old flat in KP, it's better to buy new flat in Kalyaninagar.

    Since this is investor-buyer blog, this latest news about investors will be helpful for buyers. It shows that for buyers, it's best to rent right now.

    Realty not yet best asset class for investors -

    Experts are advising buyers not to rush in as a pick-up in demand may take much longer than anticipated. In addition, the numbers too don't make real estate an attractive asset class.

    As an asset class too, real estate has underperformed most other asset classes over the past few years. According to the Cushman report, real estate prices in the top eight metro cities corrected 14 per cent on average in 2016 over 2015. In comparison, Nifty gained 4 per cent and gold almost 10 per cent, and fixed deposit rate is at 7 per cent.

    The situation is unlikely to change any time soon, and has only got worse, according to Anshul Jain, managing director, India, Cushman & Wakefield.


    1. Thanks for the valuable information about buying a resale property, ThaMonk! I admire your insights.

  4. @TheMonk you are always bang on target ..straight ,simple advice .you should start an consulting. I am eager to take advice from you :)

    1. Thank you for your kind words amrut but it's best to take advice in matters of real estate from Ravi. What I share here is my experience while dealing with brokers, owners, builders etc. Just remember one thing, when it comes to finance/money, never ever think based on emotions. It has to be strictly driven by factual calculations. If they favour you, proceed, if not, halt. Don't know how people get carried away in sea of emotions while making major decisions ?

      Btw, High Court has come down heavily on PMC for giving approvals to builders without supporting infrastructure. So hopefully, projects in & around Pune which gives a feel of staying in Tadoba tiger reserve will be a thing of past.

      Bombay HC raps Pune civic body for giving permissions to builders not providing necessary infrastructure -

      The issue that had been raised by Balwadkar pertained to Baner and Balewadi areas of Pune where indiscriminate construction has been happening in the recent time. Balwadkar's lawyer Anurag Jain had contended that without roads, water supply, occupation certificates are also given while people take heavy home loans to get a roof over their head only to realise later that they have to pay heavy society charge as the buildings do not have water supply. "Heavy expenditure is borne by most of the building societies to get water tankers," Jain told the bench.

      Justice Kulkarni noting this issue said, "You (corporation) are mainly interested in indiscriminate revenue. Before you have skyscrapers, why can't you get basic infrastructure in place?"

      However the court said, "This cannot be the nature of development. Don't make it look like a concrete jungle. This just shows you are only concerned about builders and not the people living in those buildings."


    2. Thanks for the link, TheMonk! I have shared it on the blog - The tragic case of Baner Balewadi Flat Owners ------The Bombay High Court today came down heavily on the Pune Municipal Corporation for giving permissions to builders to construct buildings without creating the necessary infrastructure in Baner Balewadi. - https://goo.gl/bJSVxy