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What is real estate group buying?

ABC Builders is a real estate company. The company has just built a housing complex comprising of 100 flats. Since the real estate market is down, ABC Builders could not sell all the flats and is left with 30 flats still up for sale! ABC Builders is ready to give heavy discounts if someone can buy in bulk, say 10 flats. Quite a few builders are in a similar situation as ABC Builders. In spite of the heavy discount for a bulk purchase offer, there were no takers as why would anyone want to purchase 10 flats in one go?

Mohit, Rahul and Suneet are software engineers at Pune, Mumbai, and Bangalore respectively. They know that the market is down and want to make the most of this situation to buy a home. However, they are not able to find a good property deal with attractive discounts in such a subdued market.

How can ABC Builders and potential home buyers like Mohit, Rahul and Suneet get in touch with each other? It seems obvious that if these potential buyers and ABC Builders got together, a mutually beneficial arrangement can be worked out!

How it works? So the Potential home

buyers i.e. Rahul, Mohit and Suneet connect with one another through homeseekers.co.in, and form a group. The company then goes to the ABC builder with a couple of orders and negotiates for possible discounts. The builder, sensing a good opportunity to sell a number of his properties, agrees to the discount. Typically, there is negotiation on discount but the discount is higher than what is offered in individual cases.

How it works? Contd… Let's see how group buying works. Essentially, there are two ways.

Buyer initiates the deal

In this case, the potential home buyer posts his or her wish to buy a home in a housing complex. The deal is then listed on the website and potential home buyers are encouraged to form a group if they want to buy a house in the same housing complex or from the same real estate developer. The home buyer can also visit the office of the company and get the required information. Once the group reaches the critical number, the sales team contacts the home buyers, aggregates the demand and submits the bid to the builder. The deal is then negotiated, and finalized. The home buyers get the agreed group discount.

The other way buyer can initiate the deal is to provide his or her requirement to the company. The company looks at its database and find out home buyers with similar requirements.

Based on their requirement, the company proposes some of the housing complexes. Once a critical mass accepts the recommendation, the sales team negotiates with the builders and gets the discount as applicable.

Broker Company initiates the deal

In this case, the company posts a potential housing complex that will come up or an existing one. The deal is displayed with discount on offer at the website of the company. The deal also has an expiry date after which buyers cannot form the group. The buyers are encouraged to form a group to avail the discount. Buyers typically register and then show interest in the property posted by the company.

Once the group achieves the critical number, the company submits the bid to the builder. The deal is then negotiated, and finalized. The home buyers get the agreed group discount.

How it works? Contd…

How to buy home as part of a group Register with

homeseekers.co.in . The registration is free. Check the deals available

online and show interest for one or you can join multiple groups Alternatively, you can also start a new group for an unlisted property you are keen on.

Once the group reaches to required number of buyers for a particular deal you are informed for further processing's if you are interested.

The deal will be then confirmed in group.

Advantages of group buying The typical home buyer is in

constant search for a better deal. As individuals, home buyers cannot negotiate for a better deal since it will not make economic sense for developers. The transaction cost with each individual will be high for developers. Also, an individual home buyer will not have bargaining power in a market dominated by real estate developers. By coming together and forming a group, the individual buyers can increase their bargaining power and hence will be able to bag a better deal!

Advantages of group buying Contd….

For example, suppose ABC builders prices 2 BHK apartments in its residential complex at 2800 per square feet. The company can negotiate the price and bring it down to 2300 to 2700 per square feet for group buying of apartments. This discount will be much more than what an individual home buyer can negotiate with the builder. Typically, the company which negotiates on behalf of the home buyers will probably be able to get a 4% to 10% discount on the price of the property. This means if the price of your dream home is 40 lakhs, you can save up to 4 lakhs in discount!

Another advantage is that the group can share common services needed to complete the transaction such as a home loan, lawyers' fee, and compliances. In these areas the individual home buyer as part of a group, will have more power for negotiation.

Advantages for Property Developers

One of the reasons for the popularity of group buying is the advantage it offers to builders. Usually down payment in group buying is higher and hence developers who are just starting to build the complex get much needed cash. In the era of high interest rates and uncertain stock market, the higher down payment comes as a blessing for cash strapped developers.

Moreover, developers get a readymade market to sell their properties in bulk without spending anything in customer acquisition and marketing. This reduces their cost of selling. This savings can be passed to the home buyers in the form of extra discount.

Group buying also helps developers sell the properties faster and focus on the next venture.

Happy Buyers At homeseekers we will keep

you posted on the progress of the property you are interested in.

We will help you with the processing of documents.

We will also help you in buying other things such as home loans, furniture, security systems that to on good discounts.

Transparency in transactions. We will also help you in after

sales service such as we will keep you informed about your installments, possessions and other legal dealings and also in resale.

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