Happened to watch Star Vijay Tv at about 6am today. One ad was for real estate – and one of the ‘idiots’ of 3 idiots was selling real estate. Did not pay much attention, but thought to myself ‘why the …..should these guys sell products that they do not understand’. Then i reconciled myself saying that if Amitabh and Sharukh can sell everything except women’s hygiene items…it is ok for a younger guy to do it.

Then came a fantastic ad of VR developers…do not know the anchor…cannot recognise him (could be a tv star, no clue)…

he said..’If you buy a piece of land 2-3 km away from the National Highway..it may or may not appreciate…BUT if you buy it on our property…..it will go up 5 to 10 times IN ONE YEAR’

wow….DO we need a real estate regulator…

Now let us look at the facts:

a) if there is some asset which will really go up 500% will not all the money be there BEFORE you need to advertise it?

b) if everybody knew that the highest rise will ONLY be on the highway and NOT 2-3 km from the highway, will not a builder try to create an arbitrage?

c) who is responsible for the land, pricing, etc. why is there no customer protection at all?

d) holistically speaking why should i take the trouble to save Rs. 20,000 for a client who goes and loses Rs. 30,00,000 in a property?

e) real estate, in my view, is sadly the biggest investment that a client makes. The broker, the builder, the renter, the landlord are completely UNREGULATED. Sad.

 

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  1. Good one Subra sir!! I also happened to watch that ad today morning 🙂 It was really funny!! And yes, you are absolutely right..we need a regulator there, its high time we had one.

  2. and I also do not understand why prices should go up just because there are good schools and colleges around? are schools so difficult to create in a country where trained and untrained teachers are available in abundance? beats me.

    place price goes up because there is fantastic infrastructure and access to high paying JOBS. Like Mumbai, Delhi, Bengaluru, Chennai,…if u are 3 hrs drive from Chennai…well you are 3 hrs from Chennai, that is all!!!

  3. Subra,
    In USA homes in good school district areas command a premiums. There are some areas in San Jose california where the prices have actually gone up during the housing bust. Good school is one of the reasons!

  4. If we switch on any TV in Tamil Nadu, we can see only the real estate idiots … since mostly female hosts are there, many people are trapped to buy..

  5. this makes no sense.you mean people who actually believe such outrageous claims are honest,hardworking,prudent people?

    i bet most they are not.the mentality of people who are chasing 10 times return per year is of laziness,avarice,covetousness -you name the 7 sins and they are full of it.
    i’d say,the market is a perfect antidote for such people.
    there are marxist school fellows who says that the market rewards the greedy.which is nonsense.the market PUNISHES the greedy.big time.
    anyone investing based on the outrageous claims of a local tv star DESERVES TO LOSE THEIR MONEY.why should my hard earned money be used to hire a bureaucrat who will protect these idiots from their mistakes. why do you assume that these buyers NEED protection from their own idiocy?
    subsidy for idiots?

  6. “since mostly female hosts are there, many people are trapped to buy”
    there you go: LUST.the market is just brilliant.it punishes ALL sins.not just greed.

  7. i agree with pravin. The claim in the ad is outrageous but why should that justify spending taxpayer money?

    Suppose a cold drink ad claims that it can cure cancer, will you ask for a cold drink regulator?

    It is this instinct of ours (including well meaning intelligent people like you) to root for a mai-baap sarkaar at the slightest sign of problem is India’s main problem.

  8. Subra, I love these programs in Vijay.. I usually watch it for 10-15 mts on sunday morning.. really destresss.. Much better than any comedy show we see 🙂

  9. Sanjay Singhaniya

    We may not need regulator for advertisements but we certainly need regulator for one sided agreement.
    In fact there should be a regulation on what can be specified in agreement and what must be specified in agreement.
    One sample copy of agreement for each housing project should be on a government website. only the placeholder of price should be left empty.
    There should be maximum 3 years given for construction of each housing project. If it is not completed within 3 years then stiff penalty should be imposed on builder.
    This itself will solve many issues.

    But the fact is, real estate is used for parking black money. If illegal money is stashed in an asset then politicians wont allow to regulate the market.

  10. Good old TN … and similar flavour for each part of the country. Looks like RE is the new ChitFund…
    Only promised growth is now in three digits…
    Thats called ‘development’ and being ‘progressive’ two favourite leftist terminologies..

  11. so,why do people enter into ‘one sided’ agreements?. because that is the best they can do -given their particular circumstances.
    imposing one size fits all agreements is no solution.

    if someone broke the agreement,the courts should handle it.now the court system is broken.that is the problem.
    one sided agreements are not problem. trade happens because 2 parties are unequal.equal parties dont need to trade.

  12. Sanjay Singhaniya

    @Pravin
    You are wrong. There is something called as “unfair trade practice”. One sided agreement is one such practice.
    Just to give example, banks can change rules and regulations. What if a banks start charging total interest or 5% of principal amount (whichever is higher) as penalty of premature withdrawal of FD? Do you think that it is fair or do you think that it is one sided? What if all banks apply such penalty? It would have happened if there would have been only private banks and no banking regulator.
    There was one more such practice – prepayment penalty.
    One common day to day unfair practice – when auto rickshaw driver refuses to ply on short distance routes. He is obliged to but he usually would not.

    Free market does not mean it is jungle law. It is supposed to be governed by rules and regulations.
    When you feel that somebody is getting cheated then it is usually unfair trade practice. and it can not be defended under the pretext that both parties willingly participated into agreement.

    As a side note, real estate is a necessity – just like food and water. Hoarding of food is not allowed. Hoarding of real estate should not be allowed for same reason. Of course, you can argue that real estate can be rented out. But hoarding of land banks still does not “seem” correct.

  13. The universal claim is “investment in real estate can never give negative returns”. I have met so many people who have been cheated by these so called developers promising so many facilities and amenties just 25 kms from Chennai or Bangalore. Once you invest your money then all you can do is suck your thumb and wait for another 20 to 25 years hoping that some development will take place.

  14. I totally agree with most of the comments I am a broker and support 100% for a regulator, However many a times many people want discounts from our brokerages, as its a standard practice in the market since other brokers are offering and the clients take a lot of pride in achieving the discount by playing hard ball with the brokers who in turn is more worried about his brokerage than ensuring that his client buys the correct property. Brokers and builders are criticized often I would like to draw your attention that if we were to say that you will get 10 to 12% return annually and no discount how many of you would buy? More than the industry the regulatory is required to protect the interest of the brokers as well (besides the interest of the clients and the builders as well) so that they can stop worrying about their income and dedicate their time on research and analysis of builders, locations and properties! Fool clients would buy a stupid property because they got 10% discount on it and will jepordise their 90% of the income but, wont pay 2% as brokerage to a broker who can protect their 98%. In our country we love free so much that if we are headed to Mumbai from Delhi and en-route we see a sign board saying “left turn Free” we will go to Guwahati instead, because left turn was free! I guess serves em right and theses people will still end up as fools even when the regulators are there!

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