Prom­ises of­fered but not de­liv­ered

Do not get tempted by of­fers and let these in­flu­ence your de­ci­sion to pick up prop­erty, ad­vises Jee­van Prakash Sharma

HT Estates - - Front Page -

Su­man Jha, a 33-year-old fash­ion de­signer, bought a 2BHK flat four years ago in a group hous­ing project in Ghazi­abad. She came to know through news­pa­per ad­ver­tise­ments that the de­vel­oper was of­fer­ing gold coins as a fes­tive of­fer with each book­ing. Jha wanted to close the deal dur­ing Navra­tra as she be­lieved it it was a very aus­pi­cious oc­ca­sion. Lit­tle did she re­alise the buy might not be as lucky as she ex­pected.

“Not only was the project de­layed by a few years, I did not even get a coin be­cause the de­vel­oper later told me that the fes­tive of­fer was through a lucky draw. But the bro­ker hadn’t in­formed me about that. I felt re­ally cheated,” says Jha.

Asked if the gold coin of­fer was a fac­tors that tempted her to buy the flat, she says, “No, it was not. In fact, I don’t think any­one who in­vests R30 lakh or R40 lakh in pro­prty re­ally both­ers about a gold coin, LCD, fridge or tele­vi­sion. But when you have two al­most sim­i­lar deals to choose from, you tend to go in for the one with a good free­bies.”

Jha is not the only one to feel cheated. There are nu­mer­ous buy­ers who com­plain of be­ing taken for a ride while in­vest­ing in prop­er­ties dur­ing the fes­ti­val sea­son... and it’s mostly the smaller play­ers who rip buy­ers off .

In An­mol Sharma’s case, “the agent had promised me a Maruti Swift as a gift with a 3BHK flat in a new project in Luc­know. I bought the flat but did not get the car. The de­vel­oper in­formed me later that the of­fer was only for the first five buy­ers of the sea­son. But their ban­ner and boards ad­ver­tis­ing the of­fer had never men­tioned it.”

There have been many in­stances of builders or real es­tate agents try­ing to mis­lead peo­ple with at­trac­tive of­fers to sell real es­tate projects. A com­mon prac­tise is to prom­ise dis­counts by is­su­ing credit notes.

“Eighty-five per cent of bro­kers in In­dia fail to hon­our their credit notes (of­fered dis­count) in real es­tate in our coun­try. A credit note is a non-cer­ti­fied let­ter which a bro­ker is­sues to a buyer, promis­ing him or her some per­cent­age of bro­ker­age they get from a de­vel­oper,” says Raj Sharma of Best Prop­erty Deal, a real es­tate bro­ker­age firm.

He ex­plains, “Let’s pre­sume that a builder of­fers R1 lakh to a bro­ker as com­mis­sion for sell­ing a flat. The bro­ker will prom­ise to pay the buyer, say, R40,000 from his com­mis­sion. At the time of book­ing, the bro­ker will tell the de­vel­oper to give a R20,000 dis­count to the buyer from his com­mis­sion. He prom­ises to pay the re­main­ing R20,000 af­ter a few months when he gets the com­mis­sion from the de­vel­oper.” To make his prom­ise sound gen­uine, the bro­ker will give the buyer writ­ten as­sur­ance on his let­ter­head. Un­for­tu­nately, how­ever, in most cases, the re­main­ing amount is never paid.

One of the vic­tims of such deals is Veena Mathur, who bought a flat in a well-known projects along the Noida Ex­press­way through a very prom­i­nent prop­erty agent.

“I came to know about a fes­tive of­fer of 6% dis­count on apart­ments in the project. It was some­where dur­ing Oc­to­ber 2009. I bought the 850-square foot 2BHK flat at R2850 per sq ft. The agent asked the de­vel­oper to give me a 2% dis­count and ad­just this amount from his com­mis­sion. He promised to pay the re­main­ing 4% but he is yet to do so. He has been avoid­ing me and com­ing up with one ex­cuse or the other,” says Mathur.

Many oth­ers duped in a sim­i­lar fash­ion say that tak­ing the mat­ter to a con­sumer court is a very tir­ing and time­con­sum­ing process and so they give up af­ter some time.

Some­times, how­ever, real es­tate agents face gen­uine con­straints in hon­our­ing the credit note. “Ev­ery builder has his own pol­icy of re­leas­ing the com­mis­sion to bro­kers. In many cases, the builder does not give the com­mis­sion to the bro­ker and he has to then face the ire of the prop­erty buyer,” he says.

There have been times when “the builder gets 20-25% of the to­tal price of the house within 60 to 90 days from the date of book­ing, whereas the bro­ker has to wait for his 5% or 6% com­mis­sion for one to two years,” Sharma adds.

Some real es­tate ex­perts say that the prac­tice of is­su­ing credit notes should be stopped for real es­tate deals.

“It’s not a trans­par­ent method. “Another op­tion could be that the builder makes sure that the buyer is given his dis­count through the bro­ker when the builder re­leases the com­mis­sion to the bro­ker. Also, one should al­ways go for a known and es­tab­lished real es­tate con­sul­tant,” says Pradeep Mishra, a real es­tate con­sul­tant.

De­spite the hype over new real es­tate launches dur­ing the fes­tive sea­son, many house-hunters view of­fers by small-time de­vel­op­ers and agents as a trap to en­snare gullible cus­tomers and rob them of their hard­earned money.

Deepam, a res­i­dent of Ro­hini, lost R5 lakh when he bought a plot in Ru­dra­pur from a de­vel­oper in 2006. The de­vel­oper had of­fered him jew­ellery worth R1 lakh on buy­ing the plot on a down­pay­ment scheme. Deepam thought it was a prof­itable deal, paid up the money, but later the work on the project stopped as the de­vel­oper had sold the plots with­out proper sanc­tions.

“I lodged an FIR and the case is still go­ing on. I don’t know for how long it will go on. It was quite a frus­trat­ing ex­pe­ri­ence,” he says.

“Big and renowned de­vel­op­ers don’t in­dulge in these prac­tices. But their prices are so high that most of the time peo­ple from the low or mid­dle in­come groups tend to buy houses from small de­vel­op­ers. I don’t say that one should not go in for the fes­tive of­fers but buy­ers must do due dili­gence be­fore buy­ing any­thing. Don’t take a de­ci­sion in haste and get car­ried away by the thought of free­bies or dis­counts or gold coins,” ad­vises Mishra.

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