A Little Snooping Can Reveal Who Is A Good Builder

Mayur Shah (name changed) has been spending his evenings over the past six weekends outside the gate of a premium project at Lower Parel. He is no petty stalker awaiting a glimpse of his Valentine. His mission: speak to as many residents of the project to understand their experience and then determine whether it is a wise decision to purchase an apartment in an under-construction project of the same developer.

Personally, I am delighted to see this level of due diligence by a homebuyer. Buying a home in India, especially at under-construction stage, is often a gamble. Risks cannot be completely eliminated but the odds of getting duped can certainly be minimised. At the heart of this risk management lays a central question – “How does one judge who is a good developer?”

Marketing Brochures? Yeah, Right!

There is the silly way of looking at marketing brochures and interacting with persistent sales staff – and thereafter forming an opinion. There is the lazy way of judging on the basis of the developer being a branded developer and unbranded developer.

It’s an approach that is riddled with holes since there is barely any evidence that branded developers perform superior to the good unbranded ones. Few branded developers truly value their own brand.

Here are some ways to judge the quality of a developer:

1.Visit his previously completed projects: No purchase should even be considered unless one has seen the last three completed projects of the same developer. The first level check at these visits should be know the age of the building and then notice the extent of deterioration in the project. There are more than adequate examples to show that some buildings almost look like a slum rehabilitation tower in less than 5-7 years.

2. Assess management quality: Managements change. And as does the quality of management with it. Since most of the real estate industry is promoter-led, often the change in management is basically a move from the old-gen to the next-gen.

In my experience while most of the new generation speak better English and sound more persuasive, there is no meaningful evidence that suggests next-gen does a superior job in delivery. Hence while the developer may have good projects behind its name, it is important that the current management also has well-executed projects under their belt.

3. Players associated with the developer: While the developer may be the star of the project, it is critical to know the supporting cast as well. This includes stakeholders like the architect, contractor, lenders etc associated with the developer and project.

4. Online chat groups and forums: This is a mechanism employed by many at a preliminary stage of evaluation. Personally, while this may have some utility I am skeptical of taking the content in these forums too seriously as several of them have been contaminated by brokers and agents.

5. RERA Website: With the advent of the regulator, RERA – a fair degree of transparency has been brought into the real estate industry. Details of the number of projects executed, litigation, project plan etc can be seen at a glance. This is hard data and facts that can be useful in knowing the builder and project better.

6. Engage with customers and more customers: For me if there is one approach that overrides all the other mechanisms, it is this: Talking to more and more customers in the earlier projects of the same developer. Customers in other industries are often too demanding and hence a perpetual sulk is likely even if the offering is of above-average quality. Mumbai real estate customers do not have that limitation – since the expectations of a customer are anyway terribly low. Thus, there is no better way of discovering the caliber of a developer than finding it out from the customers who have purchased and received an apartment from the developer.

If a customer has purchased an apartment only after completion – one can get a sense of the quality of living experience in the project. The experience can range from the fittings and fixtures to the maintenance of amenities in the project. If a customer has purchased an apartment during the under-construction stage – one can form a complete view of the organizational strength of the developer.

That’s because the process between booking an apartment and receiving the apartment is one of the most under-rated phases in a home purchase. And most developers are inadequate in this phase.

Eventually the way to determine a good developer is to follow the most old-fashioned way: Word of mouth. People like Mayur Shah may yet get duped but it will not be because of a lack in due diligence.

(Source: Moneycontrol)