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
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.