Monday, October 12, 2009

More scams by Mumbai builders

Just when we thought that we are aware of most the scams run by the builders, here is one more to be aware of. Not that I am a buyer at these prices, however it is something to consider before making any purchase

Builders hike transfer fee to cover up for lean phase

MUMBAI: With property prices in parts of Mumbai having stabilised, some developers who had sold properties during the slowdown are now charging
an exorbitant amount as transfer fee. Transfer fee is a one-time payment made to the residential co-operative society when there is a case of transfer of ownership. In cases where the society is not registered, which often is the result of owners not in possession of occupation certificates, this fee is charged by the developer. Though a ceiling of Rs 25,000 has been fixed by the registrar of co-operative societies, local developers have been charging as much as 10% of the total price. Vipin Patel, a property broker in central Mumbai’s Parel area, said: “In a well-known residential complex in the area, the per square foot price is Rs 19,000, with an additional Rs 2,500 per square foot as transfer fee. Transfer fee is charged by all developers and in most cases, the buyer pays for it.” The range in the area starts off at Rs 1,000 per sq ft and is as much as Rs 3,000. This is for apartments priced at Rs 15,000 to Rs 22,000 per sq ft. “Several developers had to sell apartments at rates much lower than what was prevailing between the end of last year and the middle of this year. The transfer fee is an indirect way to make up for past losses,” said a high net worth individual. In one particular case in Lower Parel, apartments were sold at prices as low as Rs 11,000 per sq ft to some HNIs. Today, with prices having increased to Rs 14,000 per sq ft, some of the investors are planning to sell their apartments. Here, the developer is asking for a transfer fee of Rs 1,000 per sq ft. Builders, for their part, said transfer fee taken from the buyer and seller is clearly accounted for. “An account is maintained for the transfer fee taken and the money is returned to the society committee once formalities relating to registration are taken care of,” said a prominent developer in central Mumbai. The society can be registered only when 60% of the flats are sold. Vinod Sampat, a property lawyer, said: “There is a lack of transparency as far as developers collecting the transfer fee is concerned and this is a way of extortion.” Mr Sampat has approached the Maharashtra state government against the practice of transfer fee. “The transfer fee is also charged by the existing co-operative societies but it is not as high as what buyers pay in new buildings,” said R Singh, another broker dealing in Worli properties.

31 comments:

Anonymous said...

The Govt. should try to bring transparency to the system and put behind the bars all the corrupt people. But how would they do it when many of them are also corrupt.

In turn, they have put the RE market on life support by aiding the crooks.

The fools don't realise that the problem is not the prices going down but the problem is why the prices went up 400% in the past 4-5years. Unless the problem is realised, no solution can work.

--HB

Anonymous said...

I guess the banks (and the government) really believe that if they can successfully promote the illusion of stability and a ‘bottom’ in recession, then there will be a ‘turnaround’ in house prices and another bubble so the people and banks will be ‘rich’ again.

Anonymous said...

In other words, disregard reality and facts such as your own personal balance sheet and throw caution to the wind and go out buy junk, rather, go commit financial suicide.

Throw in stimulus which is targeted at increasing the temperature on all the various cardboard thermometers of economic health and you have the makings of a recovery.

Have the Sensex touch 20K and feel we are out of the woods.

Anonymous said...

Oct. 12 (Bloomberg) — The four biggest U.S. banks by assets may have to take writedowns on $55 billion of mortgage- collection contracts after marking them up by $11 billion in the second quarter, casting a shadow over earnings.

Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. wrote up the value of the contracts, known as mortgage-servicing rights or MSRs, by 26 percent in the quarter as mortgage rates climbed by about 0.35 percentage point. Net gains on the contracts added more than $1 billion to Wells Fargo’s record earnings in the quarter and $1 billion to JPMorgan’s first-quarter profit.

Anonymous said...

I thought the Titanic was suppose to sink at the beginning of the year, but I keep seeing the Fed keeping it afloat. Is the Fed hoping to keep the ship floating until it reaches NYC. That is a long distance to keep a ship with big holes in it afloat.

Anonymous said...

MIAMI (Reuters) - Every 13 seconds in America, there is another foreclosure filing. That’s the rhythm of a crisis that threatens to choke off hopes for a recovery in the U.S. housing market as it destroys hundreds of billions of dollars in property values a year.

There are more than 6,600 home foreclosure filings per day, according to the Center for Responsible Lending, a nonpartisan watchdog group based in Durham, North Carolina. With nearly two million already this year, the flood of foreclosures shows no sign of abating any time soon.

Attempting to put a happy face on the decline in real estate prices is pointless. The underlying facts won’t change.

For the would-be home buyer who has been patiently saving up for a large down payment, the drop in general housing prices is good news.

Buyers hope for even lower prices. Sellers are taking a beating. Real estate agents pray for a return to the good old days of constantly rising prices. No one is absolutely certain what 2010 will bring, but the economy may not be able to shrug off the recession anytime soon and that means more downward pressure on house prices.

Anonymous said...

WASHINGTON (Reuters) - The U.S. economy may be creeping toward recovery after the worst slowdown since the Great Depression, but many states see no end in sight to their diving tax revenues.

Tax revenues used to pay teachers and fuel police cars continue to trail even the most pessimistic expectations, despite the cash from the economic stimulus plan pouring into state coffers.

“It’s crazy. It’s really just unbelievable,” said Scott Pattison, executive director of the National Association of State Budget Officers, and called the states’ revenue situations “close to unprecedented.”

Most states had been pessimistic in forecasting their tax revenues for the 2010 fiscal year, Pattison said. So far, collections have fallen below even those low targets.

Lower tax revenues could lead to higher taxes or another sharp reduction in services if receipts do not show signs of improvement before year-end, as every state but Vermont is required by law to balance their budgets.

That could mean fewer teachers, early prisoner releases and fewer highway repairs as residents battle soaring unemployment.

Anonymous said...

Oct. 12 (Bloomberg) — Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.

World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.

Anonymous said...

High speculative positions in gold raise sell-off worries

By Moming Zhou, MarketWatch

NEW YORK (MarketWatch) - Gold futures held by speculators reached a record high in the most recent week as prices climbed to an all-time high above $1,060 an ounce, raising worries that a possible switch in positions could lead to a slump in gold prices.

shailesh said...

Whether it makes sense to buy property at increased price?

Data from the department of stamp duty and registration in Mumbai show property registrations fell in August by 13% after an average month-on-month increase of 6% starting from April. This is mainly due to an upward revision in project prices. Property prices started falling from April ’08 and the trend continued till Dec ’08. Some properties saw a fall ranging between 10% and 40%.

Since Jan ’09 prices stabilised and economy recovery become visible, demand started to pick from March ’09. Depending on location and the stage of construction, a lot of projects have seen almost10-30 % increase in their quoted prices from July ’09. In the past 3-4 months, builders have been quicker to respond to this increased off take than they were when prices were falling. It’s a case of making the most of the opportunity.

Anonymous said...

Why would Econ Times write this article? Given the fact that they have an understanding with their advertising partners the builders?

It can't be that they have suddenly developed a social conscience..

Is it a shake out? Builders pay us more or Advertise more else we will unleash our investigative journalism talents...

Another thing I have always wondered about. Some people say that if one has to live in the house then it does not matter what price you buy it at...its ok.

Suppose the price of meal fluctuated 300% from a median price time to time in a day...When would you prefer to have a meal? When prices are 300% up from the median or would you prefer to wait for some more time till prices fell 300% below the median?

People will then not say that if you have to consume the meal, its ok if you pay 300% more than the median price...

Just to drive the point home I am borrowing from a book I really like. Its called Magic Formula Investing. In the book the author explains about how seed capital can be compounded over time to provide a nice nest egg. Then explains the impact of wasteful expenditure to a kid saying if you knew that each chewing gum stick you are buying for 25 cents can be compounded at a reasonable rate of return and will become 10,000 dollars after 20 years would you still waste money on that gum...

Another Author of a book called the Automatic Millionaire talks of the Latte factor..He shows that if you do not spend money on your latte at starbucks everyday and saved the money plus invested in safe instruments..then the money could be enough for you to retire on..

Given all this, even if you want to stay in that house right now, can you afford to spend extra money which could have provided for your old age and comfort in such a wasteful fashion??? can you say that I need to own my house right now at any price so let me buy it at the peak, blow all my savings and what's more take a loan at a teaser rate, which will definitely balloon one day to 14%+.

Its like taking dynamite and blowing up your future and your families future..But if you are that desperate, hey go for it, who are we to prevent you?

Anonymous said...

A Bounce? Indeed. A Boom? Not Yet.

THE sudden rise in home prices suggests that the psychology of the market has shifted substantially. But what should we expect in the months ahead? Not necessarily that we’re entering a new housing boom.

At the moment, it appears that the extreme ups and downs of the housing market have turned many Americans into housing speculators. Many people are still playing a leverage game, watching various economic indicators as well as the state of federal bailout programs — including the $8,000 first-time home-buyer tax credit that is currently scheduled to expire before Dec. 1 — in an effort to time their home-buying decisions. The sudden turn could signal a new housing boom, but is more likely just a sign of a period of higher short-run price volatility.

http://www.nytimes.com/2009/10/11/business/economy/11view.html?_r=1

Vulture.

Anonymous said...

Oct. 12, 2009, 8:47 a.m. EDT · Recommend (46) · Post:
Obama fails to win Nobel prize in economics
Commentary: Michael Moore, Timothy Geithner also passed over

By MarketWatch

LONDON (MarketWatch) — In a decision as shocking as Friday’s surprise peace prize win, President Obama failed to win the Nobel Memorial Prize in Economic Sciences Monday.

While few observers think Obama has done anything for world peace in the nearly nine months he’s been in office, the same clearly can’t be said for economics.

The president has worked tirelessly since even before his inauguration to wrest control of the U.S. economy from failed free markets, and the evil CEOs who profit from them, and to turn it over to wise, fair and benevolent bureaucrats.

Anonymous said...

Nice article in Time about the Dubai World developement. The author noted that only one island reportedly belonging to Sheik Mohammed ended up occupied. The 299 other islands arebarren.An Irish investor in the islands reportedly committed suicide after Dubai’s property market dropped 50%.

theh best quote

“Dubai today has the feel of a futuristic five star ghost town basted by sandstorms”

My guess is in 5-10years the futuristic aspect will be gone.

Anonymous said...

US Unemployment:
“US jobs in September declined by about 263,000 jobs, worse than the 175,000 drop expected by Wall Street economists. To the 15.1 million on the official unemployment count, add 9.2 million “involuntary part-time workers” and 2.2 million who were dropped from the tally because they had not sought work in the past month, and the unemployment rate would rise to 17.1 million. That doesn’t include another three million long-term discouraged workers - those who want to work but who have long since stopped looking. That would take the number up to 20%.”

Anonymous said...

Party long over in Dubai:

An Analyst Questions Dubai on Its Heavy Debt Burden
By THE ASSOCIATED PRESS
Published: October 11, 2009

DUBAI, United Arab Emirates (AP) — A support fund created to help Dubai pay its debts has “insufficient” resources to cover the billions of dollars of debt coming due, an analyst at the credit-rating firm Standard & Poor’s said Sunday.

The sheikdom and its network of state-controlled companies amassed at least $80 billion in debt on projects like artificial islands and opulent high-rises during a multiyear building boom that helped the city-state fashion itself into the Middle East’s hub of finance, trade and tourism.

About $50 billion of debt needs to be covered over the next three years, said Farouk Soussa, S.& P.’s head of Middle East government ratings. A lack of government information has left investors wondering how it all will be repaid or refinanced.

“It’s anyone’s guess how much the government of Dubai has to support that debt,” Mr. Soussa said at a conference in Dubai. “It comes back to transparency.”

Anonymous said...

This is done by most big builders in parel/worli/central mumbai/goregaon, especialyy the big projects. Moreover, owners are not allowed to sell until the project is fully sold and society is formed as i discovered in Oberoi Splendour at JVLR near AArey recently. Its a big scam by builders to protect their sales and not allow buyers to cash in on the opprtunities in a rising market. Where is the Government and the regulation???

Anonymous said...

I just happend to go to Bandra registrar office last week for registering leave n licence agreement. This place is worst then a fish market.

A prominent builders guy was ahead of me and he was registering 11 documents. I dont know from where the money is coming?

I really dont know how people can afford at this price. I used to regret earlier for not taking timely decision but now i am not worried, frankly speaking i have no option but to stay on lease. One day i am sure i will be able to and till then i am willing to wait!!!

Hey guys dont regret for not having brought a house relax and accept fate. I feel so happy when i read that there a lot of people like me over here but deep down my heart i also feel sad for all of you:-(

Hope we all will be able buy a house someday.

DWBH

Anonymous said...

DWBH,
I don't regret. I don't have a house and I don't plan to buy one in this market.

And why should I? I'm free from any payments which are 4 times the rent I pay. I've saved quite a sum just by renting and I plan to buy cash in 2-3 years when the market is 60% down.

I'll wait for the market co rrect rather than giving my hard earned money to crooks. It took me 7 years to save roughly 80 lac rupees. I'm getting good interest on it and that pays my rent and all other household expenses. Why would I risk my savings when I'm pretty sure that the market has to come down.

I would say people who bought, do not cry when the prices fall by 60%.

Anonymous said...

anon@5:29 AM

Very good point above. I just want to add one thing to your statement. Unless you are heavily in love with the flood and mafia ravaged city of Slumbai, you don;t really have to buy a home there. Just work, rent happily and keep saving and investing. At some stage, you might just want to retire or semi retire with a lower paying and less stressful job and move to another city, which has much more affordable real estate. The savings you have by renting and not buying will make sure that you get a dream house in a city that does not go under water every time the monsoon hits.

Anonymous said...

This Practice of Transfer fees is not new !!! I have seen it since last 12/14 years when I sold one of my flat which I bought as an investment in under construction apt.

IF Government wishes , this reforms can be done over night with the help of IT.But as everyone know nexus of officials with builders doesnt allow this.

I also wonder that Mumbai has seen the flow of money not only from abroad but even internally from different other states !

When I look around my area I realise that lot of people who are in to business / IT jobs have come from out of Mumbai ,which fueled the demand for housing & in turn has helped to support such astronomical prices !!

VIK , I admire you views & your post which are logical nut ground reality is since Last 3 years prices are going up & up only ( last 1 year if not up , it is stable for sure).I was of the same view as you have that prices would fall by 40/50 % but now what I feel is prices may not go down ,may remain at this level with the changes of +/- 10 % for another 3/5 years befoe it picks up.

I may prove worng if GDP of India grows at 7/8 % Avg. or lot of liquidty comes to market from Western countries as a part of Stimuls money being used by Banks.

I personally feel Liquidity play an important role ( not the olny factor) in pushing the prices up let it be stock or Real Estate.

We had seen lot of money comming in in 04/05/06 even from Japanese Funds apart from US.

Since US & western economy are in recession & recovery being slow, money is flowing in TO India & other Asian market & this is one of the factor prices are not dropping or infcat going up post election.

Anonymous said...

Some guys predicted 7000 Sensex and 70% fall of property prices before Diewali 89

Now less than 7 days to diwali

I am worried - can I seoll my bandra flat and all my shares and sit on cash?

Anonymous said...

Anon above:
Predictions and opinions are not time based accurately. People who read here and believe in them are morons.

The great world economists didn't know the recession that came in 2008, then who are people here to predict anything.

If you want to sell or buy is your personal decision. But based on current economic scenario the RE prices and overall India's economy is set for a downfall and RE has no where but to go down upto 60-70%in the coming few years.

The delay in downfall has been caused by massive Govt. intervention and stimulus by world economies. Once that dries up, the whole thing will fall like a pack of cards.

Anonymous said...

Anno. Above

You only said in you blog that ''The great world economists didn't know the recession that came in 2008, then who are people here to predict anything''

Now who the hell you are to predict it:-). are you out of your mind to predict 70 % drop !!!

just see the income level of people have also grown to 2/3 times in last 4 years so the purchse price parity would always be in play & that how the houses prices will rise so even if prices have gone four fold it can stabilise around 2.5 to 3.5 fold !!!

Anonymous said...

Anon above:
Why don't you go and buy some more RE then. You should not be on this blog. Buy buy and buy more. Good for you.

Anonymous said...

Anno. Above ,

I have already bought a house 4 months back & rates has shoot up 15 % by then :-)....

This forum is for discussion & to express views so it is not just for bears even bulls can participate.

Anonymous said...

Hey diwali is 3 days away and where is your 7 K sensex???
and 70% Fall???Vashi hunter is dreaming of becoming my next door neighbour in Bandra when prices fall 70%

Ha ha ha

70% fall means my 2 Crore bandra apartment will cost 60 lack????
When oh you crystal gazing oracle??

And then shit from vashi ,vashi hunter can buy our bandra apartments from his outright money???? Vashi f**er please f**k urself.This is bandra .Do not dream ,we do not even tolerate "sandas bhai's" from chembur and people from shanty shitty subrbs like Cenral one and beyond Andheri ,a Vashi guy should not dream of bandra!!!

Anonymous said...

Bandra Guy
Yours is most disgusting comment I read.
Man bandra property was a joke and I thought everyone took it in that way.
Myself is too doubtful about 70% fall and I've ridiculed that..

You are disgusting..remember time is not constant and mighty may fall...........

Anonymous said...

Anything can b done against investors buying all the flats in mumbai?
from past six month i have been trying to search 1 bhk with no luck in western suburbs, as prices goin high everyday for god knows what reason. and there is absolutely no availability of new 1bhk flats bcs they are already booked/bought by investors. Salaried people are suffering because there are no 1 bhk availability due to investors, and buying 2 bhk is just out of reach (budget). Even brokers don't entertain for 1 bhk anymore. within last 2 months prices have gone too high even to consider 2bhk. the resale flats owner are charging any rates. i was told 1 bhk flat at kandivali 60-70 lac, malad, 60-70 lac, and andheri too 60-70 lac. so even though one ay think it better to buy new property, but those eaten already by investors.. what should people like us do? I hv decides for now to stick to my rented flat. anyone faced the similar issue?

Anonymous said...

Want to know some more tricks of how builders cheat you?Go to this link
www.2bhk-nerul.com
and be amazed.Then take a measure tape and get working on your own flat...and be ready to get depressed.

rajni sharma said...
This comment has been removed by the author.