Selling a house? Watch out for these flaws in the Indian real estate market
Do you own a house in India, which you hope to sell? If so, you are probably aware that selling a property is currently as complicated as buying one, if not more so. In most growth markets, there are more sellers than buyers, and India is no exception. Prospective buyers have a lot of available options at their disposal, and sellers are having a hard time closing deals. This is particularly true in secondary and resale markets, where buyers are keen to adhere to documentation, by-laws, local building codes, etc.
Such challenges were further aggravated by the pandemic. There was little to no transactional activity in the Indian real estate markets, throughout 2020. Sellers and brokers pivoted to digital channels to showcase their properties, and virtual tours became far more common than before. In 2021, with the resumption of transactional activity and handovers, sellers are back in the fray. However, they now face a new set of opportunities and challenges – in almost equal part. Here are a few flaws in the real estate market that you need to be wary of, as a seller.
- Stagnant markets: Real estate is inherently a slow-moving asset class. Long waiting periods, before policies take shape and result in desirable outcomes, are common. So, impulse and emotion-driven selling could backfire. In a waiting game such as this, patience is the key. Timing dictates profits.
- Lack of differentiation: Properties in India often tend to be relatively uniform within their category – in terms of spatial planning, appearance, and overall ambience. If this is true of your property, you may need to differentiate it by efficient space utilization, maximizing value in the available space, installing the latest technologies, and offering auxiliary amenities.
- Prone to risks and unprepared: Indian real estate has, for the most part, remained conservative in the face of tech disruptions. And this has come at a cost that became evident during the peak of the pandemic. In the post-pandemic “new normal”, consumer sentiment is far more buoyant towards future-ready properties, which are aligned with ESG goals.
- Unrealistic pricing: Lack of a standard, go-to mechanism for pricing leads to painstaking negotiations, which often fail to mature into sales. It is important to set a realistic asking price, based on reliable indices. Next, substantiate the price, by making it clear what the buyer is getting for their money. Value-based pricing will allow you to sell your property at a premium.
- Legal issues: In a market like India, which is characterized by dynamism and urbanization, sellers sometimes face legal challenges due to complex or archaic laws. Many old buildings have been built using outdated by-laws. Ongoing or upcoming smart city, metro train projects, and other infrastructure development could lead to demolition. This has made prospective buyers apprehensive, especially in secondary markets. Sellers should furnish NOC and other pertinent documents to close the deal, in such instances.
That said, sellers in the Indian real estate market are also seeing some promising signs. Previously unqualified buyers are now able to procure loans, to finance their home-buying aspirations, thanks to decade-low borrowing rates and added incentives, from stimulus packages. The Indian real estate markets have significantly enhanced transparency, affordability, and transactional efficiency, in recent years. Such initiatives should spur demand, particularly from first-time buyers in the middle-class segment, who are very significant in number. Simply put, if you can avoid some pitfalls in real estate markets, as a seller, your prospects are likely to get better, by the day.