[ecis2016.org] We offer some basic suggestions on negotiating with property sellers, to get the best deal on a home, during the COVID-19 pandemic
Owing to the Coronavirus pandemic, buying and selling of property has almost come to a standstill, despite technological advancements. Virtual tours have replaced site visits in the present scenario, while meetings with developers are now happening over video-conference and home loan approvals are happening over the telephone calls. However, one thing that buyers still need to do, is negotiate. At present, sellers are willing to give discounts and offers, to clear their existing stock and generate cash flow to survive the lockdown. Buyers can make the most of this opportunity, by following some basic tips on negotiating with the seller.
You are reading: How to negotiate for a home during the Coronavirus pandemic
Assess the market rate and returns in previous years
Before entering into any negotiation phase, talk to other sellers and property agents about the prevalent market rate in the area before the pandemic started and how the property prices have moved in the past five years. You can also use ecis2016.org’s Price Rates and Trends, to view historical data related to price movement across India. This can help you to assess how much return you can expect in the next few years, if you invest now. Also, comparing the offered price with prices during the pre-pandemic period, will help you understand if the market has been adversely impacted. You could expect up to 20% discount on the base price, if the market you are investing in has a number of vacant units. If there are very limited options left, you may not be able to bargain at all.
Compare other projects with the same configuration in the locality
You can also compare and view other projects and units in the same or similar neighbourhoods, to decide if there are better offers, view, amenities and facilities available at a lower or same price range. If there are other projects in the same locality that are lying vacant and are litigation free, this is your chance to pick the best one. However, do not compromise on the construction quality and delivery timeline, just because of the cost benefit. Ensure that the project you are investing in and the broker you are dealing with, is registered with the Real Estate Regulatory Authority.
Do not be too eager to sign the agreement
Do not show excitement or eagerness to sign a deal. Be firm on your quoted price and be ready to walk out from the deal, if the demand is not met. Do not make it evident to the seller that you like the property and are willing to buy it any cost. If you are dealing with the builder directly and you are buying the property for your own use, you can ask for free upgrades, instead of discounts.
Seek discounts on other miscellaneous costs
If you have decided the project you want to invest in, ask your seller to give you the exact break-up of the total cost. You can negotiate the base price, preferential location charges (PLC) and club membership charges, if the seller is open for negotiation. Many builders may be willing to waive the PLC or offer club membership for free. If you are investing for future returns, it is better to save on the total cost, rather than asking for club membership or extra parking for free. While most of the builders are now offering refundable booking amount, you can also ask for a customised payment plan.
Getting yourself pre-approved is a good idea
Home buyers and investors who are pre-approved from banks and financial lenders, are always preferred by sellers. As the seller does not have to wait for the loan approval process, to close the deal, it saves a lot of their time and brings in surety about the buyer’s purchasing power. This can give you an additional discount of up to 5%, if your seller is in a hurry to clear his inventory. However, note that home loan disbursements are not happening now, as it requires the borrower’s sign. If the government allows digital signatures, you can finish the buying process sooner.
Do builders negotiate on price?
Usually, builders are reluctant to reduce prices but you can ask for free upgrades, if you are buying the property for end-use.
How much can you negotiate on a house?
Make an initial offer of at least 20% under the price you want to pay.
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