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How to negotiate a good deal from property dealers on a house

How to negotiate a good deal from property dealers on a house

As the economic condition becomes alarming and the demand for property wanes, those looking to buy a house can leverage the situation to get a good deal. Here's a guide on how to get the best price from property developers.

There are few things better than a good bargain, more so if the object of purchase is as important as your dream house. As the economic condition becomes alarming and the demand for property wanes, those looking to buy a house can leverage the situation to get a good deal.

"Developers are going through a phase of liquidity crunch. As home sales continue to be sluggish in many parts of the country, they are becoming more open to price negotiations," says Ramesh Nair, managing director (west), Jones Lang LaSalle (JLL) India, a property advisory firm.

"In the current market where there is far more inventory of new properties than buyers, there is room for innovative negotiations with developers. It is important for developers to liquidate inventory," says Samarjit Singh, director, Agni Property, a New Delhi-based real estate brokerage firm.

Knowledge about the local market will make you well-equipped to bring the developer to the negotiating table. You should find out the prices of similar properties in the area. You should also know the period for which the property has been up for sale. If houses in a residential project have remained unsold for long, its developer will be keen to strike a deal.

An analysis of prices is a must. Find out the launch price and compare it with the latest price. Enquire about the price trend from local brokers, who will be able to give an idea about how much discount you can expect on the quoted price. A person who has bought a house in the project is also likely to give you the real picture of the discount you can expect from the developer.

"Two factors that play a major role in price negotiations are the cash-flow situation of the developer and the number of units he needs to sell. If the developer is cash-strapped and has a lot of unsold inventory, it will like to clear the stock to generate cash. Therefore, the situation varies from one developer to another. The customer needs to gauge that," says Kailash Gahlot, director, Brisk Infrastructure & Developers, a New Delhi-based builder.

Once you get an idea about the likely discount , make an offer. Talk to the developer's sales team and tell it that you want to buy quickly. A developer is more likely to give a discount if it knows that you are a serious buyer.

Spare a day or two and go on a result-oriented property hunt. A good strategy is to drive around the locality and get the best prices from a number of developers. Make a list of properties in which you are interested. Let each developer know that you are scouting for the best property at the most attractive price and that you wish to close the deal quickly. Tell developers that you will compare all the offers.

If sales in the area have been falling and there are a large number of unsold houses in the vicinity, point this out to the developer and use to your advantage. Selling quickly, even at low prices, often works for developers as they save the funding cost and get cash for new projects.

"Your initial offer for a house can be up to 15% less than the quoted price, but you should be willing to settle for a 7-8% discount,"  says Ramesh Nair | Managing Director (West), Jones Lang LaSalle India

Once you have all the quotes, let the developers know your offer price. "Your initial offer can be up to 15% less than the quoted price, but you should be willing to settle for a discount of 7-8%," says Nair of JLL. "Submit an offer to purchase the apartment even if you are not sure that the developer will accept it. Some developers will not begin negotiations until you give an offer," he adds.

Developers are interested in selling inventory as soon as possible. If you can make an upfront payment, you are more likely to get a good deal. You should keep cash ready for such a situation.

"You should get a loan pre-approved from a bank or a housing financing company. The most important advantage a buyer can have is the cheque book and the proof of home-loan approval. These will indicate to the developer that the buyer is serious, making it more than willing to negotiate," says Nair.

"If the customer has surplus funds and wants to make a cash-down payment, he can negotiate for further discounts, even as high as 9-10%. If a customer has outstanding home loans, the situation will be different," says Gahlot of Brisk Infrastructure.

The real estate market has two sales models. Some developers have own sales teams while some take help from brokers. Often, they use both. The brokers can help you find a property fast as they are aware of the market and the projects in the area. A reputed broker can get you a good deal as well, but you will have to pay him for the service. Going solo will work to your advantage if you have researched the market well enough to get a good deal.

Quick negotiation tips for home buyers
Quick negotiation tips for home buyers
"Usually, buying directly from the developer is better. However, in many cases, good brokers can get an excellent deal for their clients," says Gahlot of Brisk Infrastructure.

"While the developer is selling multiple housing units, for most, home is a one-time investment. It is important for brokers to provide value-addition to customers," says Singh of Agni Properties.

Even when you take help from brokers, do your own research and enquire about prices directly. This way you can be sure that the broker is taking care of your interests and not trying to earn a bigger commission by quoting a higher price.

Group-buying websites such as and can also be used to get a discount of 5-15%. When you go through such a website, you get a ready-made offer from developers and there is no room for further negotiation through the website. Even when you plan to go to the developer directly, you can browse through the listings on such websites to find projects and developers that are offering discounts.

You can also team up with other prospective buyers. "If there is a group of, say, three or more people, the negotiation is easier," says Gahlot of Brisk Infrastructure.

Whether you go out to buy alone or in a group, negotiate for what you estimate is a realistic price. "While developers are willing to negotiate in todays market, they are averse to reducing the quoted price below a certain point. This is partially because they do not want to publicise the fact that some customers paid less than others. They are more likely to offer freebies or incentives," says Nair of JLL.

"Most developers hate to haggle, so gather all your negotiating points into a single offer and position it as a take-it-or-leave-it proposition," adds Nair.

Some developers might not agree to lower prices to your desired level due to various reasons such as high costs. In such a situation, let the developer know that you will analyse the offer before arriving at a decision. Analyse the offers that you have, but wait for a couple of weeks before going for the best deal. Do not be surprised if you hear from some developers willing to close the deal at your offered price or a mutually agreeable lower price.

Published on: Jan 06, 2012, 12:00 AM IST
Posted by: Surajit Dasgupta, Jan 06, 2012, 12:00 AM IST