Time for the experts - June 17th, 2006

A qualified broker can be of great help in determining the right price for a property

I am not impressed with your high valuation on my property." This is what an owner of a plush penthouse in South Mumbai told a broker. This broker had given a valuation of Rs.45,000 per sq.ft. for the property. Here the owner is a seasoned businessman who nearly knows the worth of his property and does not get swayed by the big numbers given by a broker to him.

When I was invited to the same property, I thought the correct valuation would have been around 35,000 per sq.ft., which was fortunately in lines with the expectation and valuation the owner had set for his property, based on his market knowledge and discussion with a few professionals. He shared with me the frustration he is going through as a seller in this city. Being a non-resident is making things more difficult for him to analyse and get the right pulse of the market. At the same time he is anxious to see the deal go through without being pretentious about it.

Similarly a genuine and keen `seller' of a well furnished, 'ready to move in' fourbedroom apartment, in Bandra, is frustrated to know that in all this confusion of high priced property deals, buyers feel that his property too is priced high, which is not the case. He has kept the flexibility to negotiate on price and is keeping an option to rent at a reasonable price.

The apartment is in spectacular condition and no one lives there. Viewings are practically two to three clients a day. The seller wants to re-invest the proceeds into a different location to suit his family needs. But still for some strange reason it's just not moving. There are several property owners in the city going through this frustration even though their thinking is more tuned to reality.

There is hardly a thumb rule that could be applied to determine prices. Everyone uses the previous sale as a benchmark to determine their property's worth. Most of the time, sellers and their brokers go wrong in their valuations - although some get lucky to get the price they set out for, in turn, giving hope to a whole bunch of people.

The above two illustrations are real and tell us how skeptical the buyer has become today. Even though some sellers, if not all, are genuine, the buyer always feels that he is being taken for a ride. You cannot blame him for feeling so, most of the times when we quote prices as brokers for certain properties, we can't help from feeling that it is over-priced and that the seller is just trying his luck with the price.

In such situations the market slows down and we start seeing stagnation. Although within the same location there may be a freak deal that creates a new high, giving a further boost in the arm to the seller and dragging the buyer further away from buying or, on the extreme side, making him take a bold decision on just going ahead and finalising the purchase in frustration.

I very strongly feel this is where a `Qualified Professional Broker' can guide you and not allow you to feel victimised or feel isolated. When the prices are on the rise one chases the price thinking they will come down. When you see no sign of that happening but prices going up further, you feel isolated as though you are the target and they are after your money, which is never the case. This kind of honest comforting dialogue between the broker and buyer is a must.