Enough is Enough !!!!!!

Buyers, do have enough of all the cheating by Builders and developers in the name of the dream home...Following are the example how these builders/ Developers Cheat us.. and How we all are getting sucked in to the Chakravyūha created by the Builders, Banks and Funding Bodies..

1. Built up / SuperBuilt Up Area calculation: This calculation varies from place to Place. Why such methodology is adopted? No rules or regulation for these calculation??
2. Developers do not quote you the single price instead they will quote you Split up of the entire quote. Example for under construction flat if they told you have to pay 2 Cr for the 2BHK flat including Taxes and you will be get all the amenities, buyer might not buy property.. So instead they will promote EMI or Split up pricing so it looks affordable in the short run..
Just imaging you work 10 years of your life 50 Hr a Week..saved 50% of your amount from your salary to make the downpayment and then buy a property on Loan to live in the Area of 500 Carpet... Hilarious..
3. Builders start to build the smaller apartment they used to built 500 carpet for 1 BHK now they have 300 Sq Carpet 1 BHK.
Following is an example.700 Sq Ft of Carpet for 2 BHK for 1.2 Cr looks unreasonable.. very expensive..
So restructured the Building and built two 350 Sq ft of 1 BHK at 60 lacs , People will buy.. and Builder end up making same money..That is reason room size is getting smaller and smaller
4. Wondering why prices are coming down. and why all the projects are been delayed.. Developer never uses his money to build buldings.. So let say he want to built and wanted give possession in 2022. So he will open a pre- launch booking in the year 2015 and using the money from the pre Lunach he start a process..if bookings stop .. he halt the project.. and will give reason like no approvals from the government.. still no new booking then he start another pre-launch project in diiferent location and use that money to complete this project.. So he is not putting his own money in any of the project.. So he has zero risk of loosing money.. As he do not any risk he can hold onto the project till he get the buyer who is ready to pay the asking amount.. Only looser in this scenario will be the buyer who booked the apartment at the time of Pre- Launch.. Builder does not have slash the prices are he do not have any risk involve..
5. No agreement copies are showed before giving an booking amount.
6. Do not comply with the agreement..Even if project got delayed, and there are penalty clause.. there no system in place who can ask developer for compensation ...I dont know government is sleeping or what.. Reason there were no strict laws is that majority of the projects funded by the Aamdar and Khasdar..
7. Amount of Money earn by the broker is unbelievable.. Its a chain of people who suck the money into the system..


There are so many ways people gets cheated.. So I have decided not to pay the hefty money to builder or developers. I will wait and also asking other people not to invest or buy these expensive projects.. Let these builder suffer the pain, which buyers goes through every day. I will rather stay in the rented apartment of 3-5 years rather than giving my hard money to these developers who can not be trusted.. If they want more buyers, they have to develop trust.. Please suggest any ideas which will be useful while dealing with the developers..
Living in the rented apartment is now seems to be a great idea.. we say we end up loosing money in the rents.. Lets look at the following scenario..
1. Rented 1 BHK in Mulund / Bhandup - 15 K (Yearly expense - 1.8 lacs First year
Second Year - 10% increase - 2 lacs
Their year 1% increase - 2.2 lacs Total Three year money spend = 6 lacs .. No money to be spend the house repair / maintenance.. Off course rented apartment comes with the downfall..
2. Purchase Rate in 1 BHK Mulund / Bhandup - 85 lacs + Government taxes. So 20% Down payment + Government 28.9 lacs initial investment which is money you been saving for years..........

EMI for 20 Years at 10.5 % = 65000 a month (67 lacs Loan)
1st year = Interest component 6.83 lacs... Nice... Then Principle component 1 lacs..
2 nd year = Interest component 6.7 lacs ... and Priciple 1.17 Lacs
3rd Year = Interest component 6.53 and Principle component 1.3

So Interest paid 18 lacs in the first three years.. Thats the huge and Loan paid 3.4 lacs so total amount paid to the bank 21.4 lacs..
So area still thinking about buying a flat.. Think and Decide..
Read more
Reply
14 Replies
Sort by :Filter by :
    • Other
    You have nailed it.
    CommentQuote
    • Price
    • ROI
    Aug 15 2016 : The Times of India (Mumbai)
    Don't rush to buy a home
    Narendra Nathan
    
    
    Pressure is building up in the real estate market, even as prices hold up in places
    Buying real estate is considered a safe bet by Indian investors, even though the market might show otherwise. Like every other market, real estate too has its highs and lows. The real estate market boomed between 1988 and 1994, and property prices went up by over 10 times in places. However, the bear market that followed was very challenging. By 2002, many properties were on the market at half the peak price they achieved in 1994.If one considers the high inflation during the 1994 to 2002 period, the actual correction was more than 75%. A similar trend seems to be playing out now. Investors minted money in residential real estate during the boom between 2002 and 2013, with prices going up by 6-10 times in several pockets. However, experts caution against expecting similar returns in future. “It was as an aberration, reflecting the times and the fact that markets were in a nascent stage. It is not fair to expect that kind of appreciation in developed markets,“ says Amit Oberoi, National Director, Knowledge Systems, Colliers International (India).
    Speculative markets move in cycles, and real estate in no exception. The boom in residential real estate market is over.It is now in a correction phase, which began three years ago, and according to experts, will last for a few more quarters.

    Lack of buyer interest

    There has been a marked decline in the number of people buying residential properties. One reason is prices remain high compared to average income of individuals. “There is end user interest, but buyers are waiting for reasonable and affordable prices,“ says Sunil Sharma, CIO, Sanctum Wealth Management.

    Since real estate prices vary significantly across cities, affordability needs to be analysed at the city level. Affordability is affected by interest rates and increase in income. Fall in housing loan interest reduces the EMI and increases affordability . Although the RBI has cut benchmark rates significantly in the recent past, its transmission was much smaller. Home loan rates came down only by 50-75 bps compared to 125 bps cut by RBI, which did not result in any significant pickup in demand. The rise in income over time also failed to keep pace with the jump in real estate prices.

    Rental yield--the rent paid per annum over the cost of buying a property , is another factor that determines demand. If rent is higher than the EMI to be paid for purchasing a property in a given area, people are more likely to choose buying their own home over living on rent. This means the end user demand will go up if rental yields are high. Similarly , return for investors who buy houses to rent out also go up and this will increase investment demand. However, rent didn't increase in tandem with the jump in capital values either. Rental yield has dropped to 2-4% compared to the housing loan interest rate of 9.5%.

    Inventory build-up

    As a result of the dip in demand, investors and builders, who developed and hoarded properties expecting prices to rise, found themselves unable to sell inventory . Unsold units in eight large cities in the country have hit an all-time peak of 1,171 million sq ft, up by 22% from last year. If the current rate of sale persists, it will take more than three years to exhaust the inventory. “Compared to an ideal inventory level of 8-12 months at the national level, current inventories are close to 45-47 months,“ says Pankaj Kapoor, MD, Liases Foras Real Estate Rating & Research.

    Pricing pressures

    Cost of construction has risen steadily over the past few years. With the introduction of Real Estate Regulator, compliance cost will also go up. However, builders may not increase prices of units because the large inventories they hold have cut down their pricing power. The inventory build-up and lack of pricing power has impacted the financial health of builders, leading to delays in property delivery . Since it has reduced the number of `ready to move in' flats going up for sale, there has been no price correction for ready procession flats. With project completion delays becoming the norm, consumer preference for ready-to-occupy properties has also increased.

    Although builders have been able to manage some price stability so far, they are now failing to sustain it. “The small fall in interest rate is not helping builders because their borrowing cost is still high at 22-25%,“ says Feroze Azeez, Deputy CEO, Anand Rathi Private Wealth Management.

    New investors beware

    So how should one proceed? It depends on the kind of deal you are looking for.While this might be the perfect time for buyers to start searching for their dream home and cash in on good deals, experts say investors should stay away for a few more years. “We do not think fresh investments in high value residential real estate will generate returns like it did in the past,“ says Sharma.Azeez agrees. “We have held a negative view on residential real estate for the past few years, and expect it to go through two or three more years of time correction,“ he says.

    According to experts, even if the prices witness no correction and remain stagnant over the next few years, there is no reason to invest in real estate, since there is a significant cost associated with holding property .

    Drive a hard bargain

    However, some industry experts feel that buyers should take advantage of the current turmoil in the residential market, instead of avoiding it. “Smart people buy when the market is perceived to be weak. Since builders are offering great flexibility in pricing and payment plans now, this is a good time to buy . But buyers should bargain hard for a better price,“ says A.S. Sivaramakrishnan, Head, Residential Services, CBRE South Asia.

    If you are aggressive investor and do decide to enter the market now, opt for under-construction flats over ready procession ones, as the discounts on the former have gone up significantly .
    Attachments:
    CommentQuote
    • Price
    Prashant C;, can relate to your very well composed post.

    Issue is a home is no more simply a home but has become a vehicle of investment. I dont understand why are first time buyers of a home also fascinated by the appreciation when they have bought a home to live in. Builders are good at exploiting greed of buyers. Don't buy at all and let prices fall sounds good, but is not practical.
    CommentQuote
    • Other
    Originally Posted by HomeToLiveIn
    Prashant C;, can relate to your very well composed post.

    Issue is a home is no more simply a home but has become a vehicle of investment. I dont understand why are first time buyers of a home also fascinated by the appreciation when they have bought a home to live in. Builders are good at exploiting greed of buyers. Don't buy at all and let prices fall sounds good, but is not practical.


    We are all waiting for the arrival of "Rational Economic Men" :)
    CommentQuote
    • Price
    • Complaints
    You are totally right.. Builders are good at exploiting greed of India Buyers..In the current Scenario People with lot of money does not want to invest in real estate, So developers started tapping the affordable housing market and came with the fantastic Idea.. Instead of 2 BHK (900 Carpet) Lets built 1.5 BHK and Promote it as Smart 2 BHK with (550 Carpet) and Yes people are falling for it.. Still small investor doesnt have that kind of Money like 1 Cr so here comes the Banker offering Variety of Scheme like Subvention Scheme, Builder paying all the Pre EMI till possession, and what not..

    In India, poeple only have a greed for money.. and they judge people also with Money.. Basic needs suppose to be cheap like Food, Education, Cloths and Home.. These are things companies are making money.. We are paying heavy price for Colleges, Home, Cloths and even good food.. These are needs and not an investment hubs where people will make money on Inflation.. Inflation is bad.. and here people want to make money out of it..
    No wonder so many people are leaving the country.. All this is possible because of our financial companies and Bankers.. Buy food, Clothes and Electronics on Credit, Pay us letter.. Complete your education on EMI, Buy Home on EMI and We are falling in these traps again and Again. and That is reason it is costing us so much... If you cant afford it, Banker will split price into 100 small packets and charges the heavy interest on borrowing.. they think people are stupid.. They wont think through..and yes they are right..
    Only Education and Knowledge will change the system..

    All this becuase of our GREED.

    a Frustrated Indian Citizen..
    CommentQuote
    • Legal & Taxation
    Originally Posted by Prashant C
    If you cant afford it, Banker will split price into 100 small packets and charges the heavy interest on borrowing.. they think people are stupid.. They wont think through..and yes they are right..
    Only Education and Knowledge will change the system..

    All this becuase of our GREED.

    a Frustrated Indian Citizen..


    100% agreed. Combination of factors like insecurity, greed and herd mentality prompts the masses to fall trap of those top elite exploting them and if and when the lender goes bust then the same masses would bail them out by means of more taxes etc.... because they are "TOO BIG TO FAIL"......
    CommentQuote
    • Other
    What next? What is the solution?
    CommentQuote
    • Price
    • ROI
    Originally Posted by howsRE
    What next? What is the solution?


    Sorry, no solution, we are still fools. Runwal Bliss pre-launch happening brokers will make fool of people saying pre-launch at 12k, launch at 15k, rate at possession will rise to 20k etc. Buyers will queue up in herd like they r getting money instead of paying money, without seeing agreement and other permissions. Then they will come on forums like this and crib about developer not starting construction, legal approvals etc. Will then wait for at least 5 years, will pay further 50 lakhs in pre-emi interest, and still no clarity on possession. This is how we operate as common middle man, despite paying money we behave at the mercy of builders. So sad!
    CommentQuote
    • Other
    Originally Posted by consumerconc
    Sorry, no solution, we are still fools. Runwal Bliss pre-launch happening brokers will make fool of people saying pre-launch at 12k, launch at 15k, rate at possession will rise to 20k etc. Buyers will queue up in herd like they r getting money instead of paying money, without seeing agreement and other permissions. Then they will come on forums like this and crib about developer not starting construction, legal approvals etc. Will then wait for at least 5 years, will pay further 50 lakhs in pre-emi interest, and still no clarity on possession. This is how we operate as common middle man, despite paying money we behave at the mercy of builders. So sad!


    Cycle of life: Greed, fear, Greed, Fear . . . .
    CommentQuote
    • Price
    • Home Loan
    It is an age - old intelligence - never have loan more than 40% (I would say 30%) on you. If one is earning say 2 lac per month in cash, at 40% it comes out to be - 80 K. That is the maximum EMI one can pay. Considering 20% have to be paid in cash to book a flat - one need 20 lac in cash to buy a 1 crore house, and pay 80 K as EMIs.

    So logic is simple - most property is priced above a crore. Average income is not 2 lac (even joint earners) - Mumbai is simply un-affordable.

    So who is buying - existing homeowners who are upgrading to gated societies with all facilities at a bomb, selling their existing properties at a bomb which do not have any facilities like enough parking, playgrounds, club house etc.

    The buyers of the secondary market think - the property price would never fall down, and buy home in secondary market. With this cash, the existing homeowners buy home in gated societies.
    CommentQuote
    • Price
    Amit, Nice Analysis. Simple and effective. Per Capita income of Mumbai is 1.92 lacs i.e per year income.. No Doubt people are buying affordable segment home. Major purchase of central mumbai is happening in Badlapur, Dombivli due to low prices..
    Price are steady for last three years.. This year I am seeing lot of advertisement for new Projects and even good reputed builders are promoting ready to move projects..

    Waiting for the prices to come down. I am 90% sure that price will come down.. because of huge supply of property..
    CommentQuote
    • Price
    • ROI
    Originally Posted by Prashant C
    Amit, Nice Analysis. Simple and effective. Per Capita income of Mumbai is 1.92 lacs i.e per year income.. No Doubt people are buying affordable segment home. Major purchase of central mumbai is happening in Badlapur, Dombivli due to low prices..
    Price are steady for last three years.. This year I am seeing lot of advertisement for new Projects and even good reputed builders are promoting ready to move projects..

    Waiting for the prices to come down. I am 90% sure that price will come down.. because of huge supply of property..


    There will be some correction in the resale (20% approx), however builder prices will remain stagnant over the next 18-24 months, which means time correction with increase in salary and interest rates coming down...
    Builders will also dilute some inventory at discount thru channel partner quoting investor resale, not directly...
    So, anybody looking for end-use, keep ur eyes/ears open and look for discounted investor resale...
    CommentQuote
    • Complaints
    • Home Loan
    Originally Posted by Prashant C
    Enough is Enough !!!!!!

    Buyers, do have enough of all the cheating by Builders and developers in the name of the dream home...Following are the example how these builders/ Developers Cheat us.. and How we all are getting sucked in to the Chakravyha created by the Builders, Banks and Funding Bodies..

    1. Built up / SuperBuilt Up Area calculation: This calculation varies from place to Place. Why such methodology is adopted? No rules or regulation for these calculation??
    2. Developers do not quote you the single price instead they will quote you Split up of the entire quote. Example for under construction flat if they told you have to pay 2 Cr for the 2BHK flat including Taxes and you will be get all the amenities, buyer might not buy property.. So instead they will promote EMI or Split up pricing so it looks affordable in the short run..
    Just imaging you work 10 years of your life 50 Hr a Week..saved 50% of your amount from your salary to make the downpayment and then buy a property on Loan to live in the Area of 500 Carpet... Hilarious..
    3. Builders start to build the smaller apartment they used to built 500 carpet for 1 BHK now they have 300 Sq Carpet 1 BHK.
    Following is an example.700 Sq Ft of Carpet for 2 BHK for 1.2 Cr looks unreasonable.. very expensive..
    So restructured the Building and built two 350 Sq ft of 1 BHK at 60 lacs , People will buy.. and Builder end up making same money..That is reason room size is getting smaller and smaller
    4. Wondering why prices are coming down. and why all the projects are been delayed.. Developer never uses his money to build buldings.. So let say he want to built and wanted give possession in 2022. So he will open a pre- launch booking in the year 2015 and using the money from the pre Lunach he start a process..if bookings stop .. he halt the project.. and will give reason like no approvals from the government.. still no new booking then he start another pre-launch project in diiferent location and use that money to complete this project.. So he is not putting his own money in any of the project.. So he has zero risk of loosing money.. As he do not any risk he can hold onto the project till he get the buyer who is ready to pay the asking amount.. Only looser in this scenario will be the buyer who booked the apartment at the time of Pre- Launch.. Builder does not have slash the prices are he do not have any risk involve..
    5. No agreement copies are showed before giving an booking amount.
    6. Do not comply with the agreement..Even if project got delayed, and there are penalty clause.. there no system in place who can ask developer for compensation ...I dont know government is sleeping or what.. Reason there were no strict laws is that majority of the projects funded by the Aamdar and Khasdar..
    7. Amount of Money earn by the broker is unbelievable.. Its a chain of people who suck the money into the system..


    There are so many ways people gets cheated.. So I have decided not to pay the hefty money to builder or developers. I will wait and also asking other people not to invest or buy these expensive projects.. Let these builder suffer the pain, which buyers goes through every day. I will rather stay in the rented apartment of 3-5 years rather than giving my hard money to these developers who can not be trusted.. If they want more buyers, they have to develop trust.. Please suggest any ideas which will be useful while dealing with the developers..
    Living in the rented apartment is now seems to be a great idea.. we say we end up loosing money in the rents.. Lets look at the following scenario..
    1. Rented 1 BHK in Mulund / Bhandup - 15 K (Yearly expense - 1.8 lacs First year
    Second Year - 10% increase - 2 lacs
    Their year 1% increase - 2.2 lacs Total Three year money spend = 6 lacs .. No money to be spend the house repair / maintenance.. Off course rented apartment comes with the downfall..
    2. Purchase Rate in 1 BHK Mulund / Bhandup - 85 lacs + Government taxes. So 20% Down payment + Government 28.9 lacs initial investment which is money you been saving for years..........

    EMI for 20 Years at 10.5 % = 65000 a month (67 lacs Loan)
    1st year = Interest component 6.83 lacs... Nice... Then Principle component 1 lacs..
    2 nd year = Interest component 6.7 lacs ... and Priciple 1.17 Lacs
    3rd Year = Interest component 6.53 and Principle component 1.3

    So Interest paid 18 lacs in the first three years.. Thats the huge and Loan paid 3.4 lacs so total amount paid to the bank 21.4 lacs..
    So area still thinking about buying a flat.. Think and Decide..

    Nice Prashant.
    I have also paid 10 lakh as Interest in 3yrs for the loan of 35 lakh. Prepaid all the loan in three yrso and kaan ko haath laga liya that will not take loan again in my life.
    In loan it is banks who gain the most and you who lost all
    CommentQuote
    • Price
    • ROI
    deepak465; Thank you for reading the content..We all are the victims of the system.. You can can not buy property without loan because of the high prices.. It was almost impossible task unless you have another home to sale and have fixed deposits lying in banks..

    Property should never be looked as an investment option because return in property market are based on the inflation/rise in prices which we should avoid at any cost. Properties are necessity of the people rather than investment destination. Many business are not able to match the property inflation and wanted to reduce the area of the workplace. Ultimately it all boils down to inflation. Many companies are moving out of Mumbai.

    70% people in Mumbai live in slums. It is not that they don't earn good but even if they start saving for the home property prices will increase by the time. Lack of Infrastructure and Regulation are major concern in India.
    CommentQuote