Multiple Pricing for Same Project: Good for Smart Investor @atulaynehra writes

Multiple Pricing for Same Project: Good for Smart Investor @atulaynehra writes

It is no more surprising for investors or even the end users to feel cheated even after securing the best deal from the market for the best chosen project.

Recently a friend bought a property in a leading developer’s project, which was offered an apartment with plush specification for some 5000 psft plus the additional costs of another 250 psft, he after researching a lot about the project managed to secure a deal at 4500 psft, plus the additional costs. A month down the line similar property is offered to him at an all inclusive price of 4500 psft, which comes as shocking surprise to him.

So how exactly is this Happening?

In most of the projects today the developers accepts advance payments from the so called channel partners (Brokers) , widely known as underwriting, where in a size able number of apartment is committed by the consultant to be sold within a given time line for which the consultant may or may not have given a financial commitment to the developer. This commitment comes to the underwriter at an advantage of 13 to 15 percent lower than the market price.

This inventory (the number of flats booked by the underwriter) that the underwriter has booked is further distributed to the other small brokers in the market to be sold to the investors or the end users on a 10- 11 percent fee. These brokers retail these units to their investors against the minimal possible discount of the 10-11 percent they will get.

As the investor by now would have already inquired with the 10 -20 brokers a standard discount of 5 to 8 percent is offered (depending on the project).

This is where the issues like Credit Note, promissory notes start. The developers generally have a fixed price on which they will register any booking hence any discount given lower than the booking amount has to be adjusted from the fee which the broker will get, this is when the broker issues the credit notes, these notes – These notes whether honored or not at the time of third installment is a separate discussion.

In nutshell, if we look at the multiple pricing that is being circulated in the market –though beneficial for investors but sometimes leads to a chaotic situation where the investor end up not buying too.

Investors should  always compare the company , services  with the offered discounts as you might be missing on the customer services and support against those luring short term gains.