This is just sharing of some personal experiences – I would be happy if you learn from this…

Long ago (to be precise in the year 2000) I was doing an assignment for 2 of the most intelligent men that I have ever met. They were classmates, and were busy raising money for their business from the venture capitalists. One of the things that they were doing was setting up offices all over the country, because they had told their fund providers ‘we will set up 100 shops in 5 months’ or some such amazing bull, and were racing against time.

One of the geographies that I was handling was Delhi. Delhi is an amazing place and if you have gone from Mumbai, the pricing could be shocking.

We were recruiting GRADUATES – strictly we did not require anything more than that, but yes the salary on offer was about Rs. 2500 to about Rs. 4000 depending upon experience. We got tons of MBAs who had come – and we had no clue how to deal with them.

Typically these guys would ask for Rs. 8000 to Rs. 9000. I got disturbed and turned to the ‘supplier’ in anger. He said ‘Sir this is Delhi, if he says 9000, you can offer Rs. 3000, and he will accept that. I was stunned. I found that the same thing worked when we spoke to the potential landlords (remember we needed 20 offices all over Delhi?).

Cut to 2014. Trying to buy a decent house in a Mumbai suburb. Most of the land lords in one particular society are from the North – Delhi and further north. These people have all bought these houses in 1994 for prices ranging from 15 to Rs. 30 lakhs, and many are up for sale. The prices that they quote has NOTHING to do with reality. However they have no problems / issues if you quote a figure far far below their quote.

The whole thing in RE is very amusing. One house in 3 levels (about 2000 s ft usable area) is available for Rs. 1.8 crore – and another house about 900 meters away is available for Rs. 9 crores (quoted figure). Another plot is available for Rs. 1.4 crore – again about 1 km away.

Quoted prices have very little connection to the prices at which recent deals have been done!! Why does this happen?

– In RE there is just no way how you can know the recently concluded prices. The best deal according to confirmed sources are at Rs. 1.5 crores about 6 months ago. The best quote is for Rs. 1.6 – and on the negotiating table he was down to Rs. 1.55 crores. Fair enough – the last deal happened about 1 year ago.

HOWEVER, for exactly a similar flat there are people asking for Rs. 2 crore.

One bungalow deal was done for Rs. 5 crore – the best offer now is for Rs. 9 crore :-).

– the sellers are in Delhi – and they think that Mumbai will pay any price for a property. Completely untrue, no deals have happened in the past 6 months!

– sellers have tremendous holding power – they are not in a hurry to SELL.

-buyers have a choice – newer buildings are available at a lower (much lower) price

– tremendous amount of misinformation prevails there, and there is a crying need for creating data capturing websites.

– surprised why websites like www.hdfcrealty.com and www.hdfcred.com are not doing this job. In a crowded space they just do not stand out.

– most of the websites are infested by brokers, and that is a big pain.

– there are no exclusive ‘only direct users’ website making a mockery of RE intermediation

– there is a crying business need, wake up businessmen who are looking for a nice scale able business model…

 

 

 

Related Articles:

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

  1. “Cut to 2014. Trying to buy a decent house in a Mumbai suburb.” !!! Are you buying? You have mentioned quite w few times why it is better to rent than buy. Any financial/non-financial reason now?

  2. “– sellers have tremendous holding power – they are not in a hurry to buy.”
    I think you meant “not in a hurry to SELL”.. πŸ™‚

  3. Where can one find the true price of last RE buy/sell transaction? Stamp duty or Registration is the official record but it’s always less than the actual price paid isn’t?
    If people can source this information – probably user generated i think i could be a scale able model.

  4. Price discovery for Non listed Company share is impossible and it depends on Buyer – Seller. In Similar way, RE Price discovery is also limited.

    We should have Real Estate exchange locally for proper price discovery and transparent transactions.

  5. There was a news item a fortnight ago, that IIM Bengaluru is trying to put a portal in place for exactly what you are suggesting.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>