July 16, 2020: Cash-famished real estate developers in the Delhi-NCR are offering property-swap schemes to homebuyers who are stuck in delayed projects, providing them an option to switch to another property if they are ready to pay at least 70% of the price of the new property.
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Builders are willing to accept customers from any stuck project and give them a property at any of the under-construction or ready-to-move projects. Once they receive a request, they are looking to contact other buyers of the stalled projects. That way they can get more customers without spending on marketing and brokerage.
Credible builders such as Supertech and Bhutani are also coming up with similar schemes and some brokerage firms are acting as an intermediary between developers. The idea is that it helps the developers recover the balance amount, which the buyer had paid to the developer of the stuck project, whenever that project is completed and sold.
The amount the homebuyer has paid to the first developer will be deducted from the new property that he or she is purchasing. Most of the homebuyers have paid 20-30% of the total amount.
For switching to a completely different project, the buyer needs to pay just the remaining amount.
In most cases for a builder marketing, brokerage and profit account for 30% of the total cost. So he can sell at 70% of the value if he is getting customers in bulk.
Commercial property developers are also offering the same option as returns are higher in the segment.
About 200,000 housing units in the NCR are stuck with developers as they are unable to complete the projects due to liquidity issues and cartelization in raw materials. Leading consultants, however, suggested that buyers should properly scan the details of such schemes.
Although the developers may offer property-swap or other similar schemes to clear inventory, it is very critical that homebuyers exercise proper caution and understand the implications of these schemes meticulously. Schemes should be structured in such a manner that they offer a win-win value proposition to both developers and homeowners.
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