Critical areas missed by middle-class, price-sensitive home buyers

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The more price sensitive home buyers, especially in Hyderabad, may look for an in the range of Rs 40 lacs to 65 lacs, admeasuring between 1100 to 1600 sft. Most of them even forego a gated community option, and instead, may even opt for a ‘standalone building apartment’ to save the extra bucks.

In this article we shall dwell upon how a typical middle class, price-driven buyer thinks vis-à-vis how a builder who operates in this customer segment thinks.

By the time you finish reading this article, we shall realize that PRICE cannot and should not be our only or most important yardstick of purchase. Quality matters, and quality costs! In the garb of getting a good deal on ‘price’, we end up missing out on the more important things like a good structural building, build with the necessary rigour, and built with high quality specifications.

We shall understand how we end up getting blinded to what we should be looking at, and lose out by being stuck upon the ‘price factor’ as if we are dealing with commodities of ‘perfection competition’ like fruits, grains or vegetable of a certain base quality. In real estate construction, an apartment is put together based on customer requirements (plus the market segment) as well as the requirements of what a good building should ideally comprise of! With lack of know-how of what a home should be made, a vast majority of middle class buyers simply go with price as their only yardstick to purchase. This makes the builder addressing this segment to compromise, and gets all the builders in this segment out-do one another on a price driven war. Result is a solid competition on price, with little or no regard for what goes into the making of the apartment.

The new home buyers must know that a ‘low cost driven’ price offering cannot come about without cutting corners, and going down on the quality front! What you end up buying tends to be lack luster on quality and durability front. The materials tend to be lower and lower on grade, and these savings are passed on to the new home buyer, while the builder keeps one’s own margins/profits intact. The question is: ‘Is it worth it?

We must equip ourselves to be able to identify ‘what kind of quality gives us what kind of a home’, and choose judiciously.

The objectives of this article are:

i) to give a balanced perspective, and clear the mist around the entire buyer journey a middle class buyer goes through

ii) seek answers from builder view-point to understand both sides of the coin, and dwell upon builders based on their positioning strategy vis-à-vis target segment of a lower price-driven middle class, who is equally unconcerned and oblivious to ‘building and internal specifications’ related offerings

iii) help the new home buyer gain clarity and wisdom on undergoing the buyer-journey with greater conviction

The focus of this article is to how a buyer should go about trying to find the right place, the right size, the right price…and the right builder… for one’s dream home!

Confusion in the Home buyers mind: many options, limited budget, unclear priorities

Today a home buyer has so many options, and it’s all very confusing. What to do in such a scenario? How to select the right builder….and the right home? Plus, making sure our money is safe?

Well, the buying process is normally the same for everyone:

• • we try to understand what we want
  • we have a budget and have to arrange for money…we dish out finances from our own sources or take loan
  • plus, our family requirements come into play….we look for amenities, comforts etc.
  • we even go for compromises depending on our priorities, our family demands
  • then, we look for a project or a builder through various channels…internet, friends, family, word of mouth etc.
  • we do our research to understand what the builder is offering, and
  • finally we shortlist ONE based on all the family, budget and other factors

All this is fine, but what’s more important is WHAT & HOW WE THINK WHILE EVALUATING OPTIONS.

HOW WE GO ABOUT looking for the BUILDER and the property matters most!

Not many people have clarity on this…and sometimes don’t follow a structured approach while buying.

With so many options available, finding the right builder and the right home calls for a deeper understanding of the buying process.

Without the right thought process, and with half-baked knowledge, buying-process becomes rather INCOMPLETE…and can be RISKY!

Three parts to the home buying process

Let’s divide the buying into three parts… as depicted below.

What you want Identify the right property from legal perspective What goes into making the property

Part 1 is everything that involves what you want and your budget…this basically about your preferences, your priorities, and your ability to buy..or how much you want to spend

Part 2 is everything we do to identify the right property from legal point of view. This is to keep your money safe, and to get timely possession of your flat, and ensuring it is hassle free from legally. This stage has to do with all the things that go into identifying a legally clean property with a clean builder so that our money is safe!

Part 3– everything to do with understanding what the property offers…’what goes into the making of the property’. This part is like knowing both ‘what’s on-screen’, and what happens ‘behind the scenes’.

Part 1 is easy to understand, such as what a buyer wants is known to the buyer. We won’t go into the details of this article.

Instead, we shall focus on the 2^nd and 3^rd part only…that is, ‘identify the right property’, and ’what goes into the making of the property’.

Identifying the right property or apartment in Hyderabad: Part 2 buying process for home buyers

For identifying the right property or apartment in Hyderabad, a new home buyer needs to check two things we must check: 1) RERA registration and 2) GHMC Approval (or Building Permit) to begin with.

RERA registration:

• To have the right property, we need to make sure we check if the project is RERA approved
• RERA registration puts the builder under the scanner of the Act. Before 2016, there have been hundreds of builders who have taken home buyers for a ride. This was largely because a controlling authority was absent
• RERA registration does the same job of keeping a tab on the builders
• With RERA, builders cannot get away with delays, sub-standard quality, or take your money and use it for some other purpose
• So, in a nutshell…RERA registration number is given for a project only after loads of documents are submitted that include legal title, builder details, project plan sanction, and all the details regarding the flat including completion dates
• RERA make the builder accountable

GHMC approval (Hyderabad):

• GHMC is the civic authority for protecting the residents of Hyderabad…and closely monitors construction activity
• GHMC does the job of protecting the buyers’ interest by making sure every legal document is in order…I am repeating…without Building Permit, a builder cannot construct anything, cannot move an inch
• The Town Planning Authority in Hyderabad, which is a part of GHMC which grants Building Permit
• GHMC looks at the nature and type of building…and checks if the builder is following building permission rules
• To obtain GHMC building permit a builder submits an exhaustive list of documents…like building plans, sewage plans, and rain-water-harvesting-pits plan, authentication of the builder/architect/structural-engineer, ownership and linked documents to prove evidence of complete ownership…..and many related documents
• In addition, GHMC seeks important documents like Soil test report, Structure stability certificate, insurance for 6 years
• There are over a dozen NOCs that a builder is supposed to submit to obtain GHMC building permit. These NOCs are to make sure that the property is fit and safe for construction, and does NOT violate the law of the land. These No Objection certificates come from departments like fire services, urban land ceiling, revenue, traffic police, Airports Authority of India, pollution board, Electricity department, and National Monuments Authority
• With so many documents, mandates, restrictions etc… GHMC Building Permit is a solid deterrent to keep nasty builders under check

However, sometimes, builders obtain this but are slippery in their approach. So, another very important thing we need to do is to check on the reputation of the builder, their background, past projects. Besides, a new home buyer also needs to verify if a proper team of civil engineers, architects, contractors, legal are in order, and to check if the proposed site actually exists on the ground.

To be even surer, one can hire a competent lawyer to do this digging, just it be very sure and safe.

Part 3: identifying the right property or apartment in Hyderabad

Part 3 about ‘what goes into the making of the property’ is very less understood and often ignored by the home buyer…and they end up making wrong choices which are detrimental in the long run.

This is all about the specifications, the pre-construction rigour, actual-construction, the raw materials being used, and the brands of fittings/amenities/fixtures being used, be it common areas or inside the house. It is also about the mentality & priorities of the builder.

The questions we must ask are:

• what kind of apartment is the builder offering?
• what kind of construction is being done? Right from foundation to pillars, columns, slabs, walls etc.?
• what kind of fittings and accessories are being used for electrical, bathrooms, floor tiling, window-shutters etc.
• what kind of amenities are being provided?
• plus, is the builder really committed to most critical things like soil testing, anti-termite treatment?
• see, all these things are extremely important in the long run safety and strength of the building?
• after all, it’s you who will live in the apartment…and own it for years…NOT the builder

When we act prudently and focus on ‘what goes inside’, that is, behind the scene element…we can actually take an informed decision while buying a flat.

• With a good understanding of ‘what goes in’…a home buyer gets the wisdom to weigh the price factor betterx
• The new home buyer is able to move away from making PRICE the SINGLE MOST IMPORTANT CRITERIA to purchase
• Lot of home buyers, who miss this part, and focus more on a lower price. They do not bother so much on ‘what goes in’. In the bargain, SEEKING GOOD QUALITY gets compromised…and priority switches to the price, the sheer number (quantity) of amenities, or size
• Quantity without quality results in a poor decision, and the overall poor living experience unfolds this bitter truth over a few decades
• There is nothing wrong in BARGAINING, but bargain is good only once we are sure that the quality benchmark meets a reasonable expectation

Example of what goes inside

A list of indicative things which make up quality are given below-

• To check if Soil testing (pre-construction rigour) has been followed by the builder– what kind of ‘footings’ are given at extra depth to ensure optimal structural stability
• Anti-termite treatment done or not, to secure customers’ health and the buildings’ safety & strength
• What kind of common walls exist, and do these features secure elements like better ventilation, privacy
• Check for Vastu compliant, if important
• Check for Branded lifts for superior living and a seamless movement experience while entering and exiting your floor
• Options like CCTV surveillance, water connection, presence of alternatives like a Borewell
• To check whether ‘best-in-class’ processes, construction-materials and sanitary/electrical fittings are being used
• To check if branded construction materials are being used for enhanced functionality, durability and aesthetics
• Check whether Branded Aerocon bricks/blocks (stronger, lighter, better than red bricks), Top brand of cement for columns and concrete
• Whether premium quality of Electricals, Sanitary fittings/fixtures, plumbing, UPVC 3-rail shutters
• DG genset of adequate capacity by branded companies (acoustics enclosed) for adequate Power back-up for common areas, homes
• Doors: check what the Main and internal door is made of…whether Teak wood frame and shutter or other options like engineered shutter with veneer finish
• Windows: check if a good branded UPVC sliding windows with glass-panelled shutters are being provided
• Painting: Check if the External painting is weather-proof, and the Internal painting is done with acrylic emulsion of reputed make
• Flooring: Check if the Rooms & balconies have good vitrified tiles or stones; bathrooms & wash-areas are good tiles; Check how the Corridors and common areas are made of
• Check which brand of Crome-Plated fittings and Sanitary fixtures are being offered by the builder
• Electrical fittings: Check if branded Fire-retardant copper wiring, Distribution boards & MCBs, modular electrical switches are being offered

A price-driven builder’s perspective explained with an example

Let us take an example. A builder quotes Rs 4000 and drops the price to Rs 3300. We may be tempted grab this price, because you think you’ve got an excellent, not-to-be-missed deal! This can be a blunder!!

• Things like builder’s priorities, builder’s intent, their commitment to giving you a good quality home and the steps taken to ensure QUALITY get missed when price becomes the single most important factor for the builder. The builder then single-mindedly targets this segment
• The extent to which the builder is willing to compromise on QUALITY for the sake of selling the flats faster becomes evident when the buyer digs deeper into specifications and ‘what goes in’

Builder force-fitting price with more area/benefits results in a Quality compromise

There is a close relation between the builder being COMPETITIVELY PRICED, and being able to offer QUALITY. The problem comes when a home buyer works backwards. They first start with a budget, and then think: “how can I get more for less”….that is, how to get most benefit for least money! Question is: Is that really possible?

• The problem with this approach is that ‘cheap and best’ is NOT possible. Clearly, we simply cannot buy a high-end luxury car for the price of a mass-market car
• A home buyer must keep a budget, that’s not an issue…but first think: what quality of building do I want my family to live in for decades to come?
• Seeking cheapest price must not be the single minded criteria

Being TOO COMPETITIVELY PRICED means the QUALITY WILL GET LOWERED!

It is a fact that being overtly COMPETITIVELY PRICED in a certain segment would raise doubts over the quality of the building and the specifications there in. What goes into the making of your flat will invariably be low-end…or poor.

The structure and materials used won’t be sturdy long lasting, and you are bound to face issues like the structure getting weak, cracks developing in the floor or walls, pipes leaking, accessories looking run-down, getting termites in the building, walls getting seepage…so on.

What we need to understand and appreciate is:

• the builder will NOT pay anything out of his pocket to give you QUALITY…and will want to keep their margins intact
• If you don’t want to pay more…no problem, As a builder will still make money by taking care of the customers’ needs
• One way to do this is to begin compromising on quality of construction materials, and all the fittings and accessories being used in the apartment. This is done by lowering the specifications.
• One thing the builder won’t do is to compromise in margins. After all, the builder is into business, business means getting profits, and to have cash flowing in without too much marketing hassles
• Every builder wants to sell what they make produce easily…and NOT having to struggle!!
• A builder will give you what you want….offer a lower quality…with lesser life or sturdiness or finishing or utility or lesser durability…and still maintain one’s earnings

An example of being COMPETITIVELY PRICED- what’s at stake? What to do?

Let’s take the example- if a person has a 55 lac rupee budget for an apartment.

• Let’s take a locality like Kompally…let us say Builder A is offering you a flat for Rs 3200 per sft, …and there’s Builder B asking for a price of Rs 4200 per sft…both are offering similar amenities
• normally thought will be….Builder B is ridiculously priced…why should I pay more for less?
• let’s say, you need a 1000-1200 sft flat with a budget of about 55 lacs
• with a budget of 55 lacs, a buyer can get 1600 sft 3 bhk with Builder A, and 2bhk flat of 1200 sft with Builder B
• now both builders will have their margin out of Rs 55 lacs that you pay…and that margin will remain constant…
• decision time: home buyers sometimes just jump to grab the bigger apartment without seeing what goes into the making of both these flats
• builder B may be using better construction materials, using branded materials, giving superior built…but all that gets over-shadowed because the buyer thinks builder A is giving a better deal
• the point is…LOWER PRICE does NOT give you a better deal!
• Builder A will offer lower priced amenities, lower priced accessories, lower priced tiles, electricals, plumbing, doors & windows, lower priced painting….and ALL THESE WILL BE LOWER QUALITY…
• The only thing that will NOT lower is his profit margin…you give him Rs 55 lacs…and he will end up making the same x percentage of profit regardless of what you get!
• The question we need to ask ourselves: ‘is that what I want as a buyer?’

If you want a 2 bhk, and if you want high-end construction quality, it may make sense to choose a smaller flat of builder A who has better quality…and NOT choose bigger or cheaper flat of builder B with lower quality….this decision can be taken only if the buyer has the knowledge of ‘what goes in’.

Conclusion

Even if the market is price sensitive, a vigilant and sensible buyer must NOT compromise on quality by making lowest price as the most important decision criteria. A low price does not mean that it’s a good deal!

This ‘lowest price-driven’ mentality should be dealt with sensibly. One needs to weigh more important factors like the specifications, brands of fittings and accessories used in the building’s internal and common areas.

You need to seriously evaluating ‘WHAT’ you are seeking in an apartment…in terms of DURABILITY and QUALITY!

As a home buyer, you must intelligently & sensibly PRIORITIZE what you want in terms of the quality of construction, quality of specifications, and quality of amenities. Subsequently, compare the offerings by the builders, and everything will become clear!

A strong, sturdy home provides safety, and has long lasting benefits. The benefits that come with quality are sustainable, and continue to show up even after you have lived in a building for over 10 or 15 years. The resale value of such properties will obviously be better than the low-end apartments which look run-down, dilapidated, and plagued with many issues that intrude with a comfortable living.

“Quality is never an accident; it is always the result of high intention, sincere effort, intelligent direction and skilful execution; it represents the wise choice of many alternatives.”

– William A. Foster

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