After a project is constructed, it is time for actual transactions and possessions to happen. There are various intricacies involved in these seemingly simple stages. Let's see how.
Transactions
The sell and purchase transactions in the real estate sector follow several innovative methods. More often than not, builders initiates the transaction process much before the actual project is constructed - as soon as from the concept stage. Just to have a better picture of this look at the following chart:
The above chart is a snapshot of one of the prevalent schemes that builders follow for selling off the constructed property. This process of interval payments ensures that ready supply of funds is available with the builder which can be used to service the operational costs of the project.
Usually the process of transactions is carried out by:
1. Brokers
2. In-house marketing
3. Word of mouth publicity
Out of the above 3 channels, brokers are the most prevalent and considered-effective means of carrying out transactions. In Indian scenario, especially, brokers form an integral part of the real estate value chain. Although they are the most convenient means of sell/purchase of properties but having brokers in the transaction process gives rise to a plethora of additional costs for both the parties - buyers and the sellers.
Of course having brokers for this process reduces the time-to-possession and do not divert builder's attention from his main job, but if some other effective channel can be devised for this process, we are sure that a lot of costs can be saved in every project - nearly to the tune of approximately 5-10%!
Usage
As already discussed by us in our first post - Understanding the reality in RealT – Generic Real Estate Value Chain, usage can be divided into following 3 categories, depending on the nature of use.
There are different norms and procedures for acquiring the possession of all the above mentioned categories, but more or less the underlying process is the same.
Ending Notes: With this post, we have completed an eagle-eye view of all the phases of value chain which are involved in any, literally ANY, real estate project. We will now cover various topics which we think will be benefitial for a first-time investor in understanding how one can make money here ;-)
----- Till then, Keep reading RealT Horizon :-) -----