The housing market is still looking grim. A report by Mumbai-based property research firm Liases Foras estimates that the unsold inventory in eight top cities rose by 22% in 2015-16. In the Mumbai Metropolitan Region alone, around 2.26 lakh apartments are lying unsold. In the National Capital Region, the unsold inventory rose 12% from 322 million sq ft in March 2015 to 361 million sq ft in March 2016. Assuming a flat size of 1,200 sq ft, that’s more than 3 lakh units lying unsold in what was once regarded as the hottest real estate market in the country.
While this may be heartening news for prospective buyers, it spells trouble for those on the other side of the table. With builders saddled with so many unsold flats and demand not picking up, people who wish to sell their property face an uphill task. However, there is a silver lining.
With increased concerns around delays by developers in handing over possession of new properties, buyers are increasingly looking at ready-to-move-in or resale properties. Interest in the low- and mid-income housing segments has picked up recently. Liases Foras found that sales of budget homes—priced between Rs 25-50 lakh—rose 13% from a year ago in the top eight cities. If you are struggling to find a buyer for your house, here are a few steps that can help seal the deal.
Spruce up your home to boost its value
Before you go hunting for a buyer, make your house attractive. Put yourself in the shoes of sega potential buyer: Wouldn’t you be put off by cracks in the wall, peeling paint and washrooms that don’t work? The prospect of putting in more on home repairs can be a deal breaker. You may have to shell out some money to spruce up the place, but it will add more to the value of your house and give you an edge when you negotiate the price. “Even a fresh coat of paint can add value to the house,” says Anuj Puri, Chairman & Country Head, JLL India.
Finding the buyer
Finding a buyer is not a straightforward task. How you approach the sale will influence what type of buyers you attract and how long it takes to close the deal. First decide if you want to use a broker or do it on your own. He will charge 1% of the value of the house. If that is not acceptable, go it alone but be prepared to do a lot of running around—including arranging for the registration and other legal paperwork. Experts say you should explore both routes simultaneously.
“The wider the net you cast, the better your chances of catching the right fish,” says Gulam Zia, Executive Director, Knight Frank India. Start in your immediate vicinity. People currently living on rent in your neighbourhood, or permanent residents looking out for a place nearby for their relatives would provide a ready catchment of prospective buyers. “Your first ‘interested’ home buyers may very likely be generated from notices put up in your housing society,” says A.S. Sivaramakrishnan, Head–Residential Services, CBRE South Asia.
Online housing aggregators help attract buyers directly. List your house on at least a couple of portals. “The seller must be available on multiple platforms as this is where buyers are undertaking initial research,” says Anurag Jhanwar, Head, Consulting and Data Insights, PropTiger. Jayashree Kurup, Head of Content and Research, Magicbricks, says, “Buyers are increasingly looking at individual listings on the portal, preferring to negotiate directly with the seller.” However, a broker with local expertise would be the best placed to generate relevant leads and will be able to help out with formalities.
Valuing your property
Pricing is critical for the deal. Make a reasonable assessment of the value of your property. A broker can help you here because he is aware of the market trends. If you are not using a broker, find out the sale price of similar properties in the area. Online property portals are helpful, but the information they provide can often be dated and therefore, misleading. A sluggish market warrants you make a competitive offer.
Zia warns, “A fairly sizeable residential inventory will be hitting the market in coming months as developers release completed projects with the new Real Estate (Regulatory and Development) Act coming into play.” Kurup also warns sellers against waiting for prices to inch up. “In many regions, it will take at least another two years to clear the excess inventory. With new stock coming in, the chances of getting the best price on your house look slim.”
If you want to sell quickly, give a discount of at least 5% to hasten things up. Be flexible in your negotiations and don’t get anchored to a price point you may have seen some time ago. “The buyer must see the value in the deal. Sticking rigidly to your price may put off prospective buyers,” warns Puri.
However, you can insist on a premium in certain situations. For instance, if an existing flat owner in the same building or society shows interest in your flat, you are in a better position to demand the price tag you seek. Do keep in mind that property should not be sold in a hurry unless you are in urgent need of funds. “Real estate is not a liquid asset. You need to give it a reasonable timeframe to close a deal,” says Puri.
SELLING A HOUSE WITH AN OUTSTANDING LOAN Want to sell a house that has a loan outstanding against it? Maybe you are finding it difficult to service the EMIs. Or want to shift to another location. Whatever be the reason, selling a house with a mortgage is not easy. The actual procedure differs under various situations, explains Adhil Shetty, CEO of Bankbazaar.com:
Buyer takes loan from same lender
In this situation, the bank, buyer and seller enter into a tripartite arrangement. Since the bank already has the property documents, the background checks can be done quickly, making the sale easier for all parties. Part of the new loan will be used to settle the original loan and the remainder will be given to the seller as the price for the property.
Buyer takes loan from another lender
Background checks take longer. After processing, the bank issues two payments: one, to close the original loan, and two, towards the seller as the price of the property. As with the processing of any home loan, both these options will involve processing fees, background checks, establishing the buyer’s loan eligibility, verification of property papers, etc.
No loan. Buyer pays from own savings
In this case, buyer will have to make two payments: one, to the bank to help close the loan and release the original documents of the property; and two, to the seller as the price of the property.
Property is not registered
Banks insist on registration of property after the approval of a loan. In a situation where this has not happened, if the buyer wants to buy an unregistered property using his own funds, he may have to enter a three-way arrangement with the builder and the seller, pay the price of the property, along with the relevant processing fees and transfer charges, obtain the requisite NOCs, and have the property registered in his name.
In case the buyer wants to finance the purchase with a home loan, he may find the banks insisting on full documentation of the property. Banks will be hesitant to finance properties where the ownership is unclear. The buyer may simply insist that the seller and the builder register their sale. After the registration, a fresh loan can be purchased to finance the resale of the property, assuming all other conditions have been met.
WHAT EXPERTS SAY
“Home improvement doesn’t make sense in high-end property. Buyers have their own tastes and even builders hand over bareshell flats to them.” Gulam Zia, Executive Director, Knight Frank India
“The buyer must see value in the deal. Sticking rigidly to your price may put off prospective buyers.” Anuj Puri, Chairman & Country Head, JLL India
“Keep the opportunity cost in mind in a subdued market. A slightly lower offer should not be completely overlooked.” A.S. Sivaramakrishnan, Head – Residential Services, CBRE South Asia.
DRESS UP YOUR HOUSE TO SELL FOR MORE
Simple measures can make a house more attractive to the prospective buyer. We estimate that the Rs 62,500 spent on these can add Rs 2.45 lakh to the price tag.
1. Paint the walls
A fresh coat of paint can work wonders for the value of your house. There is no need to splurge on premium emulsion. Go for a basic distemper and choose neutral shades. A light colour makes the house look bigger. Make sure that all holes are filled with putty and any damage to the plaster is repaired.
Cost: Rs 40,000
Increase in value: Rs 1-2 lakh
2. Check electrical equipment
Many buyers are looking for a property in which they can move in very quickly. Functional plug points and switches are very important. Ensure that the electrical equipment is working and replace fused bulbs. It will light up your chances of fetching a good price for your house.
Replace switch plates & fused bulbs
Cost: Rs 3,000
Increase in value: Rs 25,000
3. Replace cracked floor tiles
A damaged floor looks very unattractive. Replace broken tiles or get the floor polished to give it a glossy look. Grinding and polishing a marble floor can cost more.
Polishing floors
Cost: Rs 10,000
Increase in value: Rs 25,000
4. Fix leaky taps
Taps with no water and non-functional washrooms tell buyers that they have to get a lot of work done. Ensure that all faucets and wash rooms are functional.
Cost: Rs 1,500
Increase in value: Rs 5,000
5. Clean everything
A prospective buyer should not start coughing when he enters the house. Get the entire place vacuumcleaned so that it is spick and span. No cobwebs or dusty floors.
Cost: Rs 500
Increase in value: Rs 10,000
6. Use plants
Brighten up the place with potted plants. Even artificial plants can bring cheer to an empty house. If there is a balcony or terrace, check that the railing is not broken.
Cost: Rs 500
Increase in value: Rs 5,000
7. Wash the exterior
Nothing like a good shower to spruce things up. Spray water on the exterior walls and in the courtyard to give the house a fresh feel. The only expense is your sweat and time.
Cost: Nil
Increase in value: Rs 5,000
8. Polish kitchen and cabinets
If the woodwork in the kitchen is in a bad condition, get it varnished or laminated. Spray pesticide to get rid of co*ckroaches and other insects.
Varnish and laminate
Cost: Rs 2,000
Increase in value: Rs 10,000
9. Fix the parking space
For some, a fixed place to park their vehicles is more essential than an extra bedroom. If you have an independent house, build a shed to cover the parking area.
Cost: Rs 5,000
Increase in value: Rs 30,000
10. Disinfect the toilets
A dirty, stinking bathroom can be a deal breaker. Ensure that all toilets are clean, the drains are not blocked and there are deodorisers in the washroom.
Cost: Nil
Increase in value: Rs 15,000
11. Wash the exterior
Nothing like a good shower to spruce things up. Spray water on the exterior walls and in the courtyard to give the house a fresh feel. The only expense is your sweat and time.
Cost: Nil
Increase in value: Rs 5,000
12. Keep some furniture
An empty house is not as appealing as one with some furniture in it. It adds warmth to the property. This is why sample flats are filled with furniture. A small fridge with some refreshments can add more value.
Cost: Nil
Increase in value: Rs 15,000
Total cost: Rs 62,500 Increase in value: Rs 2.45 lakh
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