One Year Later - Part 1

In the past I blogged about my experience of selling my old house, shortlisting a new one, getting a home loan and finally buying the dream house where I stay currently. Thanks for all the feedback regarding my earlier posts. Now that I am settled in the new house I thought it might be a good idea to write a bit about the experience of living in a big housing society. These are a few simple issues which are relevant to most new / 2-3 year projects which have been completed in Mumbai.

Quality of construction:
No matter what the reputation of the builder, you will NEVER get world class construction. Although my builder is a smaller guy, I spoke to friends who bough houses in complexes constructed by Rahejas, Hiranandanis and Runwals, and all of them had the same issues. In the age of increasing interest rates and high costs of conducting business most builders cut a few corners here and there. Most try to do it in a manner which is not very visible. One year down the line you will have peeling paint in your house, a few leakages here and there, nothing serious which threatens the building structure but lots of small issues which will need to be addressed in the long, if not short term.
Most builders will send maintainence people to attend to your complaints (at least till the time the society is formed), but these people will just do a cover up job which will mask your problem and not actually solve it. The aim of the builder here is to procrastinate as much as possible and avoid buyers till the time the society is registered and he hands over the day to day functioning of the building to them.
Nothing much you can really do here, if you are still looking at houses and close to shortlisting one, please insist that the builder fixes all the visible flaws BEFORE you get possession of the house. If you have already bought the house the your best bet is to highlight these flaws to the builder AND the provisional / managing  committee of the building society, you will need to do a lot of follow up to actually get some work done.
Parking:
The thumb rule here is that most builder force you to buy 1 parking at least for a 2bhk house and 2 for 3.5/4 bhk houses. If you want more than one parking while buying a 2bhk house, the builder will discourage you by saying that you can buy it later or that some open parking is available. Here lies the catch, the builder has limited parking spaces for sale and by hoarding this precious commodity he is trying to maximize returns for himself. When you actually approach him later on for that additional space, he will quite a price 1.5-2 times the original rate.
Another common problem you will face is that the open parking (which is supposed to be free to all residents / visitors) is sometimes much smaller that what was actually committed, because the builder hardly earns any money from this he is not really interested is providing this facility. A scarier version of this problem is when your builder runs out of covered / basement parkings and starts selling open parking spaces. Technically this is illegal according to BMC, but rarely is any action taken against builders. The only option here is that you and your managing committee take this issue up with the builder aggressively and threaten legal action. I don't predict a very high success rate with this action but it worth taking a chance.
Society Formation / Managing Committee:
Am sure most of your will agree that the most entertaining part of living in a large building complex is the society meetings. Usually when people start coming to stay in the building/s the residents form a provisional committee amongst themselves to coordinate with the builders office on various issues and to pass on information to other residents.
Most of the times, the initial committee will find itself at loggerheads with the builder. This is mainly because the builder takes advance maintainence for 12 / 18 / 24 months from you at a particular rate but the actual maintainence cost is much lesser. Secondly in most cases this advance maintainence money is supposed to include property tax for the first year at least. When the committee brings this to the builders notice, he will come up with some opaque explaination which usually does not make any sense. Then the builder will question the validity of the committee and ask if they enjoy the full confidence of the members of the society. I saw the same script being repeated at 3 different building complexes.
Most common area where the builder cons you are:
 - Not paying maintainence for unsold flats
 - Not paying  / negotiating the property tax with BMC and leaving the residents with a high bill in the end.
 - Claiming that the money for maintainence is over and trying to pass on all responsibility to the society.
 - Not paying any maintainence / tax for the flat in the building which he uses as a sales / admin office.

In the end there is nothing really which you can do to force the builders hand if he has decided to screw you. Your only recourse is complaining aggressively to your society and maybe taking legal action which will drag on for ages. The bigger builders will be slightly more careful here because they have other upcoming projects, so they would not want negative feedback from present ones to affect them. However that does not mean that they will be completely honest and fulfill all their promises. It is in the DNA of a a builder in Mumbai to take buyers for a ride and he will do so. This is simply because the laws and the administration in Maharashtra are completely skewed in favour of the builder's lobby.
Let this not discourage you, if you keep your eyes and ears open and fight for your rights you will end up with a decent deal.
Hope this advice helps. Feedback most welcome.

My Take on the IPL Auction and a dream for a better tomorrow.

The recent auction of players for IPL 4 gained a lot of media coverage. Some segments were happy that players are getting paid as much as their counterparts in other global sports, some were unhappy at this commoditizing of players while some emotional fans were upset at injustice meted out to their favorite players when they were not bid for by any of the franchises. Most criticism however is not fair unless one can provide a better alternative; I shall humbly try to do the same in the next few paragraphs.

Let us go back to how IPL began. It was envisaged on the lines of EPL with franchisees owning teams and getting a share of advertising and television revenues from the board. However that was where the similarities ended, IPL had a series of auctions to sell city based franchises and players to maximize revenues. They went about signing opaque (sometimes bordering on shady) advertising and television deals. Finally in a so called attempt to create a level playing field they capped the budget available to recruit players and capped the salaries of domestic players. In between there was a lot of tinkering with the player retention rules and many changes were made to favour certain teams.

A lot has been written in the media about brand IPL and its value. The concept of value was mainly based on the money received for television rights and the amount for which minority stakes were sold in some teams. No one really knows exactly how much money does a franchise makes in a year or what is its profitability. EPL has been around for a long time and has evolved as a brand, the main thing which creates value for a franchise there is the performance of a squad and its fan base. The big teams have created revenue streams for themselves (apart from revenue share and ticket sales) over the years in areas like themed restaurants, merchandise and appearance money for international tours.

Now lets look at the IPL model, we started with 8 franchises who won their team licenses for a period of 10 years by bidding (BCCI’s patented formula to maximize revenues). 2 more teams were added with even higher valuations. Since the term for which a franchise holds a team license is relatively small, for most businessmen it was a difficult proposition to make money, hence some chose to divest some shareholding to strategic investors who in turn invested big bucks hoping for an exit when teams would be allowed to go public. However the stake sale rules and future exit options remain a grey area for the teams currently, so lets assume a team owner is stuck with his / her investment for the next 10 years (7 now).

My model to allocate players for various franchises is based on 3 basic tenets:
- Free and Fair remuneration to for players in line with their capability and popularity.
- Freedom for teams to structure their squad without any ad-hoc / random rules about spending caps and transfers.
- Level playing field for all teams and players.

It is basically a mix of rules used in EPL and Pro-Cycling. Following some rules used in EPL / various European Football Leagues will ensure that the price discovery mechanism and recruitment of players is fair. A fair bit can also be learnt from rules in Pro-Cycling which ensure that teams adhere to moral and ethical criteria also apart from financial criteria to retain their franchise licenses.

Let me explain this in detail, my proposed model for player recruitment is as follows:

- No auction, teams to contact players individually and make offers for a 1, 2 or a 3 year contract. A list of all players available to play for IPL (part time or full time) to be made available by BCCI.
Why should a player be forced to play for any franchise? Even if it pays him the maximum amount of money. The first principle of this model is to treat the players with respect and give them choices, and not dictate terms to them. It’s a player’s prerogative that which team he wants to play for, if he is able to negotiate a good offer with that team fine, else he can consider the offers made by other teams and select the one which suits him the best. Do you think a Sachin Tendulkar will agree to play for a Kochi or a Rajasthan team even if he is paid double the amount Mumbai is paying him currently? Brand Sachin has a strong association with Mumbai and am sure both Sachin and the owners of the Mumbai team understand that, so no matter what the money am sure he will continue playing for the Mumbai Indians.

At the end of every season, a list of players whose contracts are expiring plus new players who wish to be a part of IPL will be circulated to all franchises and they can accordingly renew / renegotiate contracts with existing players and offer new contracts to others.

The absence of auctions will also ensure that no party (read N Srinivasan) can rig the auction to suit his or her dubious motives. It obviously will upset BCCI and Set Max because the advertising revenue will come down. A lot of seniors and young players will be spared the humiliation of no one bidding for them.

- No upper cap on team salary purses, teams can pay as much as they want. Exit clauses to be included in player contracts, so in case a player wishes to change teams mid-way through his contract another team can buy him out for an agreed transfer fee (similar to rules in European Football Leagues)
Most people will argue that this rule is not fair and will heavily favour teams which are flush with funds like Mumbai. I say no, simply because at the end of the day Cricket remains an investment for Mr Ambani. He might pay a huge sum of money to the entire Indian cricket team and make them agree to play for Mumbai, but will he recover his investment? It takes a crazy cricket fan or an egoistic fool to keep pumping money into a team to buy the top players and not get the expected returns.

The BCCI started by making us believe that IPL will be great for players and will popularize cricket in the country. It is great – but only for a bunch of top players. The domestic players who performed very well got their dues, but as far as earning money is concerned, only the ones with an India cap are eligible to appear in the auction and discover their market worth. The rest have to follow the diktat of the BCCI and get paid peanuts. The number of places in the national cricket team will always be finite, and most of these places will be occupied by existing players, so essentially we have a bunch of talented domestic youngsters vying for 3-4 open spots in the team and most of them will only warm the benches. Some might get a few endorsements due to the fact that their performances on field have made them known faces on television, but a vast majority will still not get paid what they are worth.

Taking a leaf out of pro-cycling, the teams should provide a financial guarantee to prove that they have more than enough funds to cover player salaries and administrative expenses to avoid situations like Punjab and Rajasthan where players were not paid their dues on time. Any instance of a player not being paid on time should be penalized and repeated offences should carry an even stricter penalty like cancellation of team license.

The stipulation about minimum number of under 19 players and players from the catchment area can take care of the balance of the team and ensure that it is not loaded with international superstars.

- In order to maintain the regional flavor of the tournament and to help build team fan base around the city / state, a minimum number of players (between 6-8 preferably) to be stipulated which have to be hired from their catchment area. However these domestic / capped players to be paid as per the terms they negotiate with the team.
Am sure most of you will agree with this argument. I still can’t understand why should a Venugopal Rao be paid Rs 3 crore and a Manish Pandey be paid only Rs 20 lakhs. Would this situation arise if players are allowed to negotiate their own terms? My guess is as good as yours.

- Present rule of having 3-4 (am not sure) under 19 players from the catchment area players for each team should stay, but once again the franchises are free to negotiate terms with the players
- A minimum base salary to be stipulated for any player who wishes to play in the IPL (domestic or international), say $15000 - $20000, this ensures that players are not exploited.


Most franchises made big noises about helping develop cricket in India by setting up training camps and youth academies. Am not sure how much has been done on this front (maybe the media finds this kind of reporting boring), but it would do a lot of good if BCCI makes some of these activities mandatory to retain the franchise. Similarly an anti-doping clause and one preventing mis-reporting of player ages also needs to be drafted in somewhere to ensure that clean, fair cricket is played. Somewhere down the line the BCCI needs to take a call if its objective is to maximize revenue from Cricket in India or to promote the game. If a Guthka baron is ready to pay $100M to own a team which he will use as a vehicle to promote his brand of mineral water in a form of surrogate advertising and an ex Cricketer is ready to pay $75M to own a team and plans to set up a youth academy along with the franchise I am sure the BCCI will opt for the former, they might even debar the ex Cricketer and stop his pension to ensure that he does not have the guts to bid against a corporate entity which will help BCCI earn lots of money.

Well that’s my take on the IPL auction and the franchise system. I still believe that IPL is a good concept and has definitely done a lot of good for Indian Cricket. A lot more can still be achieved if the scumbags who control BCCI see reason and stop monetizing the game at the expense of talent.

Your feedback will certainly be appreciated.

Sporting Moments of 2010

With the Football World Cup, Commonwealth Games and Asian Games in the same year, it was bound be an exciting one for all sport lovers. Apart from the standard Cricket, Tennis and Football fare my 'must follow' sporting list has grown to include Chess and Cycling also. But I still remain a believer and religiously follow the expolits of my fellow countrymen in other sports like Boxing, Wrestling, Billiards, Snooker and Hockey where I feel we still have a chance to be world beaters.

Am trying to analyse some noteworthy performances below mainly from the Indian point of view. The list might be biased towards some sports which I like and enjoy much more than others, but what the hell..whats the point of writing a blog when you cant glorify your sporting heroes :-)

Most Promising Performance of the Year: Ashish Kumar (Gymnastics) and Virdhawal Khade (Swimming)
These have traditionally been events where nations like USSR  / Russia, USA and China have built their Olympic dominance (apart from Athletics). India has been amongst the weaker participants in these sports and we usually participate only to make up numbers and to gift a sport administrator and his family a trip abroad. This is what makes their performance significant. Competing against and winning against the Chinese sporting machinery is no mean feat, especially when your own nation hardly follows the sport or cheers for you. Lets hope this means a new dawn for Swimming and Gymnastics in India.
Other Noteworthy Performances: Bimoljit Singh and Sandhyarani Devi (Wushu)

Disappointment of the Year: The Indian Shooting Team at the Asiad.
Technically speaking this should not even count as a disappointment. Barring Ronjon Sodhi and Gagan Narang none of our shooters are in the top 5 rankings of their respective disciplines. However we choose to glorify them after their performance in the CWG against average or mediocre teams like Australia and England. Their true test was always going to be against China and the Middle East Countries and this is where they fell flat. NRAI is also to blame. Faulty selection process, cumbersome process to import guns and ammunition added to the woes of our shooters. However all said and done, Shooting still remains one of the most promising events where India can expect an Olympic medal.
Other Disappointments: Tiger Woods (Golf), Lance Armstrong (at the Tour de France)

Indian Performance of the Year: Vishwanathan Anand and Sachin Tendulkar
Playing against one of the strongest players in the world in his home town can be a daunting prospect for anyone. Add to that a 30 hr car journey (due to the Volcanic erruptions in Europe) and psychological warfare by the Topalov camp in not wanting to give Anand an extra day to prepare for the match can be enough for any top sportsperson to crack. Things got even worse when a miscalculation in moves cost him the first game, things could not have been worse for the reigning world champion and it looked like Topalov would run away with the match. But like a true champion Anand won the next game flawlessly and went on to beat Topalov with Black in the final game to retain the World title.
I dont think I need to write anything about Sachin's 200 at Gwalior. It is definitely amongst the top 3 global sporting performances of the year according to my list (am sure a lot of sport analysts and journalists would agree). But our great man didnt stop at that, he continued tormenting his opponents and had a fantastic year in Test Cricket as well capping it with his 50th Ton.
Other Noteworthy Performances: Saina Nehewal (Badminton), Sushil Kumar (Wrestling), Vijender Singh (Boxing), Womens 4 x 400m relay team

Match of the Year: Holland vs Brazil (World Cup Football) and Ranji Trophy Final (Mumbai vs Karnataka)
Well I am not a football fanatic and do not watch the Premiership or La Liga regularly, I do try to catch the important matches. However the World Cup and The Champuions Trophy knock out stages are a different matter and I try to watch each and every match. I am a big Brazil fan and expected them to win this year. Simply because it is one of tose teams which plays its best on the big stage. They are capable of raising their game at the appropriate moment. Be it a terrific free kick or a brilliant save from a goalkeeper, the Brazilians always find something special at the World Cup.  So to see them outplayed was a shock, but I enjoyed every moment of the match. I think the football played was of the highest quality and Wesley Sneijder had that extra bit of special play in him to deny the samba boys.
Talking about Cricket, one can quote dozens of interesting T20 matches or ODIs, but for the sake of the game and purists I have confined my search to Test Matchs only. The first test of the India vs Australia Test series was a prime candidate for this title, but the patriot in me won. We rarely watch domestic cricket because the matches are boring, pitches are lifeless and the big stars rarely play. I do not remember any domestic match (barring the IPL) in the last 10 years generating so much excitement. A perfect pitch, some brilliant performances by youngsters (Abhimanyu Mithun and Vinay Kumar deserve a special mention) and a nail biting finish made this match a memorable one. Lets hope the trend continues in domestic cricket.

Global Sporting Performances of the Year:

1. Rafael Nadal: Rafa capped a brilliant year by winning the US Open title to complete a career slam. Barring Roger Federer no one has displayed this kind of brilliance on the court lately. Even Roger would agree that this has been one of the most dominating performances in recent times by any tennis player. Although Roger will always be the GOAT in my books, Rafa is getting closer and will rank quite high when he hangs up his boots.
2. Fabian Cancellara: Winning the Tour of Flanders and Paris-Roubaix back to back, Wearing the Yelloe jersey in the Tour and winning the World Time Trial Title for a record 4th time, this man had a fantastic season and looked nothing short of invincible in the cobbled classics and TTs.
3. Spain: Rarely has a team come back and won the world cup after losing their first match. A team known for its attacking style of football scored only 7 goals in the entire tournament but still played brilliantly, lifting their game to the highest level when required and won their first World Cup. With the Euro and World Cup trophies they have finally shed the underachievers tag.

 Note: I dont follow a lot of Baseball and Basketball so many noteworthey performances in these games might have been overlooked.

Tales from The Metropolis: The War begins

Haroun looked across the vast expanse of the lands of the Shire and saw his force. Finally it was time for him to fulfil his destiny, the one the Oracle made to his mother. It was said that he would be a warrior greater than his father, Alexander the Great, and would lead the worlds largest force in the war that would end the world. His battle hardened face carried many scars, but none of his expressions gave away the pain he felt for the great sacrifices he had to make to reach the position he was in. This was no time to feel the pain, he was a man on a mission, he was leading the largest force the world had ever seen in the mother of all battles. He was the commander in chief of the armies of Odysseus.

It was a three pronged combination, the left flank was led by the Witch King of Angmar, the fearsome head of the Nazgul, he led about 3 battalions of human soldiers along with 2 battalions of Druids led by their Master Sorcerers, he also had his main strike force - The Nazgul, led by his deputy Khamul - The Shadow of the East. The Nazgul were deformed men with mysterious magical powers, it is said they descended from a line of humans and socerers. The Nazgul rode on huge flying creatures called the Furies, who belonged to the line of Great Fire Dragons form the erstwhile kingdom of China. The Nazgul riding on Furies were almost impossible to fight, apart from the spells of fear they cast on their opponents, they could also shoot energy beams and were excellent swordsmen. The Furies were the unmatched lords of the sky, they could fly at speeds no bird had ever known, the only thing that could match them was the wonderful flying machine built by the Jedi. They could also breathe fire and were mentally connected to their lords the Nazgul, they didn't need any verbal instructions, their mental bond was enough to relay information.

The central formation was led by Haroun himself, it consisted of 8 battalions in total, each led by a great warrior, fighting monk or a magician. This formed a bulk of their army and consisted on the most powerful fighters ever seen in the world. The winners of Tekken and the Mortal Kombat tournaments were also fighting for Odeyssus under the personal supervision of Haroun. Haroun himself was protected by the elite andorid force provided by COBRA - the worlds biggest terrorist organization. How COBRA came about to help Odysseus in this quest is the subject of another story to be told in time.

The formation to the right was the slowest moving. However it was the one which packed the maximum power. The Robots from Megapolis with their seige machines were the ones who would break down the walls of Sattelite City. Apart from the machines, the Robots had at their disposal some of the deadliest guns and missiles which the world had never seen before. They were a peaceful science loving community which mostly kept to themselves, till Odeyssus made them the offer which would determine the future of their race some months ago. They were here to play their role in the world changing events which were about to unfold.

Markus the gatekeeper was the one who first noticed the seemingly never ending army marching towards their gates. The army was almost 3 miles long and stretched to a mile and a half in breadth. Just the sight was enough to scare any man to death, but Markus was made of sterner stuff. The chief gatekeeper had fought many battles alongside Achilles himself. He sounded the war horn. Within minutes the war council of Satellite city begin its first meeting in over 5 years. They never needed to fight, the fear of their army was enough to scare enemies away, and when they fought, they never lost. The only undefeated standing army of the world might have to go to war now. Grandmaster Yoda headed the meeting, Ajax, Achilles, Hercules, Thor, Obi Wan Kenobi, The Bride and Abhimanyu were in attendance.

Grandmaster Yoga was the spiritual leader and healer who had guided Achilles all this life, and now when the city Achilles had built was facing its greatest test, it was only natural that he turned to the wisest man in the world for advice. 'Powerful it is, their army' spoke Master Yoda, 'But fear you must not, The Force is with us, our greatest advantage'. ' How long do you reckon we could hold out before Lord Achilles will have to join the battle?' asked Ajax. 'We could easily hold out for 4-5 days on our own and push them back, but if Haroun enter the fray, the rules of the game might just change' said Hercules. They deliberated on battle strategies and tactics for some more time, till Achilles spoke. ' Thank you my brothers and colleagues, and Master Yoda, for always believing in me. Today our city, our land, the one which we built with our love and care faces its greatest test. 7 days is how long the war will last. I don't expect anything from anyone here, but I just want to ask you of one thing. Go out and fight like you have never fought before in these 7 days. Our destinies as warriors were written long ago and many of us are expected to perish. But no one can take these 7 days away from us. Let us fight together one last time for the City which is mother to all of us.' With these words he walked away from the hall to start his preparations for the war and Ajax gave instructions to the deadliest fighting force in the history of 4th age to assemble.

So Long and Thanks for the House..

I have been writing about my experiences in searching for a house and buying one over the past few weeks. This is the final post in this series when I finally get the keys to my dream house.

Story so far: After unsuccessfully searching through property portals I finally found a buyer for my house in Navi Mumbai. I started searching for a house in Chembur in Mumbai and found one within my budget, had a traumatic experience in getting a home loan.

Once a bank gives you a sanction letter for that elusive home loan, do not under any circumstances think that all your troubles are over and the bank will easily disburse the amount sanctioned. The bank still has a couple of tricks up its sleeve, namely the legal and technical evaluation of the house.

The legal is a straightforward step where the bank just goes through your registered agreement with the seller (in case you approach them for a loan after registering) or examines the draft sale agreement, this is mainly to ascertain the agreement value and the facilities / amenities and space included in it. Banks have a panel of legal advisors who do this and it takes 1-2 working days. Since most agreements are in a standard format, this should not give you any trouble.

Then comes the killer, the technical evaluation and the valuation. Technical evaluation means examining the building plans and permissions and determining if it matches what the seller is offering you. Typical documents which are checked are the municipal corporation / relevant authority approved building construction plans showing the areas of the flats and the Occupation Certificate given to the builder by the relevant authority (BMC in Mumbai). An OC (currently in news because of the Adarsh scam) is granted to the builder only when the entire construction is done as per the approved plans and all the relevant approvals are held.

Now if you are buying an under construction property, the OC is not required, just a copy of the commencement certificate (a document which allows the builder to start construction as per the approved plans) is required. Once the banks technical team (or an outsourced firm) checks these documents and ascertains they are in order they send a technical team to visit the house and confirm if its built as per plans and specifications. Be very very scared if you are buying a house in Navi Mumbai, because most builders here use their own concept of super built up area (to charge you extramoney), and usually it never matches the super built up area they are claiming to sell you. That’s one of the reasons why most agreements have carpet area (the actual usable area) mentioned. This is a problem typically with the smaller builders, none of the big guns will screw around like this because they depend of the banks to fund them as well as their customers.

Once the banks has checked the approvals and physically matched the specifications a bank appointed firm does a valuation of the apartment. This is where most of us get screwed. The banks sanction letter has a killer line in the fine print ‘ Bank shall disburse 80-90% (whatever is approved) of the agreement + stamp duty and Registration value OR 80-90% of the valuation conducted by a bank appointed firm whichever is lower’. This is the line which killed me both the times (in 2007 as well as 2010). Most of the times the valuation done by the banks valuers is lower then the agreement value. However most banks are accommodating here and have some sort of an understanding with the valuers and manage to get the desired valuation. Once again MNC and PSU banks screw you here and they refuse to manage this aspect leaving you in the lurch in the last minute.

Just imagine your situation when your bank informs you at the last minute (just a couple of days before you have committed final payment to the seller) that they will disburse Rs 4-5 lakhs less due to valuation issues. If you are on a tight budget like me, managing to arrange this amount in just 2 days is a tall order and can cause immense stress. Its too late to even go to another bank because the process of approval takes 5-6 days minimum. In some cases the seller has a clause in the agreement which enables him to charge you a penalty or interest on delayed payment screwing you further.

To cut a long story short, I faced this issue but luckily I am a bank employee and knew some people around, so a few emails and phone calls later the home loan department agreed to increase my valuation basis the podium parking (a 1st or 2nd floor parking area) which my builder had allocated to me (god bless him) which in the eyes of the valuation agency is much more expensive than a stilt (which is a standard covered ground floor parking) or a basement parking (I thought a basement is more expensive to build with the digging and all).

A few tips to tackle the final leg of this loan disbursal journey:

- I would strongly suggest going in for a bank approved project (if under construction) simply because the banks have all the documents required and wont pester you for it and also because the valuation is not an issue here because of an implicit agreement between the bank / financial institution and the builder.
- If you are buying a ready possession property directly from a builder, please go through a bank which has funded transactions in that building, makes life easier.
- Some banks / institutions agree to check the valuation upfront and let you know if there might be a problem with disbursement. Notably ICICI (in some cases) and HDFC. This is great news because the stress later on is just not worth it.
- If you are buying a ready possession property which is more than 2 years old from a seller and the society is not formed then you are screwed. MNC and PSU banks wont fund you. Private Banks will take a call on a case to case basis. Your best bet would be NBFCs like Deewan Housing, Indiabulls etc.
- In the above case if the society is not formed a NOC from the builder is needed to complete the sale. Most builders charge a fee for it. Currently in the Mumbai market the buyer and seller pay this fee jointly (usually in a 50-50 ratio).
- If you are buying a flat from a seller and a society has been formed, please check beforehand that the society has all the relevant documents which your bank / NBFC might require. In case the society is very old and has lost documents, please don’t bother wasting time with banks and head to NBFCs.

Wait my dear prospective home buyer, if you tackle the valuation leg do not think that disbursement is just a day away. Banks in this country still have some ridiculous rules to screw you. Some idiotic banks insist that the builder submit his KYC (not the firm of the builder like Raheja Constructions but Mr Raheja himself), obviously the builder will ask you to take a hike if you ask for it because he does not have any dealing with your bank and is not expected to share his personal documents without any rhyme or reason. In such a case, please scream at your bank, threaten to drag them to RBI and make a huge noise so the bank will finally relent and waive this condition.

Some general tips which I might have forgotten in my earlier posts:
- HDFC rocks in the business of giving home loans, they have been doing this business successfully for many years and is fair and transparent to its customers. In case you are looking at speed (occasionally with some errors) go to ICICI Bank.
- Please avoid MNC Banks as far as possible as they are very rigid with their rules and will give you attention only if you are a private banking or a client who gives them lots of mutual fund and insurance business.
- Go to PSU only if you know the branch manager very well and the rates are low enough to justify the long wait for approval and disbursal.
- Please make enquiries with prospective neighbors about the builder, if possible read the society notice board. You might find out something you didn’t know. Please discuss it upfront and get a clarification from the builder before signing on the dotted line.

So finally after two months of struggling with banks, agents, property portals and builders I finally paid off my builder and got possession of my new 2BHK house in Chembur. Hope the blog posts are helpful and make you prevent the stress and sleepless nights which I spent in this process. Your feedback and suggestions are hugely appreciated.

The Househunting Chronicles - Part 3 - The return of the Banker

Story till now: I had purchased a property in Nerul on the outskirts of Mumbai in early 2008. I finalized a sale transaction for the property recently and started looking for houses near Chembur in Mumbai close to where my parents stay. Had shared a few observations about the entire process in my previous blog posts.

Having finalized my dream home and paying a token to the builder, I started another painful process called 'Searching for a Home Loan'. Having taken a loan for my last purchase in 2008, I was quite experienced with the process and was aware of the various steps and processes. Since I had spent many sleepless nights in 2008 worrying about my loan disbursement I decided not to take any chances this time. My plan was simple - Apply to 2-3 banks at the same time and take the loan from the one which gives the best deal in terms of interest rate and speed of disbursement.

For the uninitiated let me first take yo guys through the process of a home loan sanction and disbursement in India. (Disclaimer: This is not a moronic Economic Times type articles meant for the retards)

Step 1: The collection of documents. Since I belong to the salaried class I shall cover aspects mainly related to my clan. If you have less than 2 years of work experience, please don't bother applying to a Private, MNC or a PSU bank for a home loan, you are better off trying with a NBFC.
Basic documents you will need are:
 - Salary Slips (3-6 months depending on the bank which you are applying to
 - Form 16 (1 - 3 years depending on the bank which you are applying to)
 - Bank Account statement (6 months minimum, and this is for the account into which your salary is paid)
 - PAN card copy (everyone needs it)
 - Identity and Address proof (Driving License or Passport Copy)
 - Photographs (1-4 depending on the bank where you apply)
 - IT returns (1-3 years, usually Form 16 should do, but some banks insist on this)

These are some basic documents which every bank asks for. I suggest that you make 3-4 sets and keep them ready. Please ensure that you sign on each and every page of all the documents. Most banks do this to confirm that the documents received are from prospective customer only and not someone else (to prevent fraud).

Now for the silly document requests.
 - Copies of degree / post graduation certificates (some PSU banks)
 - Copies of repayment records and closure letters of past loans (once again PSU banks and some NBFCs)
 - Recommendation letters from branch managers where you took education loans in the past (Bank of baroda actually asked me for this)
 - Appointment letter from present employer (some private banks and most PSU banks ask for this)
Tips:
 - If you are applying for a joint loan with the wife / husband, please keep a copy of your marriage certificate ready. if you haven't bothered getting your marriage registered forget about applying for a joint loan. (more tips about obtaining a marriage certificate in a later post)
 - If you have any personal loans / educational loans / car loans please mention it truthfully in the application form, else the bank credit will get back saying you withheld information from them.
 - There is a difference between a co-applicant and a joint applicant. A co applicant is a stupid concept introduced by banks to ensure that someone takes over the liability in case you die, the co applicants financials wont be considered for loan eligibility and he / she need not be a joint owner of the property. A joint applicant is also a joint owner of the property and his / her financials are considered to increase your loan eligibility.
 - If your loan amount is small (below Rs 25 lakhs) even Sales executives will throw attitude and collect your documents according to their convenience.

Step 2: Logging in the documents
This is where the home loan executive collects your documents and creates a file in your name. The file is checked for discrepancies like missed signatures, information missing from the home loan application form etc. In case there is any discrepancy then the executive will contact you again and get it rectified. Finally when your file is complete in all aspects, it is logged in the operations department of the Home loan vertical. This process is almost uniformly followed by most banks.

Tips:
 - The worst time to log in your file would be the last five days of a month. The executive will keep avoiding you on one pretext or the other. Most of them have disbursement targets and they are running around to get the disbursals in the cases which are already sanctioned. The best time to send your documents for processing would be the first 10 days of the month.

Step 3: The Verifications
This is a two part process, the first part consists of verification of your home and office address and telephone numbers. The second part consists of verifying your CIBIL records to check for any past defaults in loan payments / credit cards.

Tips:
 - In case you have a friend working in the credit card department of any bank please use your charm and get a copy of your CIBIL report for free beforehand. You can also get it through a painful process through the CIBIL site which is best avoided. Usually banks look for a CIBIL score of 750+ to sanction a loan
 - If you have some late payments in your credit card or personal loan accounts worry not, they are unsecured loans and a home loan is a secured one so the late payments don't matter so much. However a default is a serious matter and might result in you application being declined.
 - Many a times (especially with PSU banks) you repay a loan and they forget to update the CIBIL records. Always ensure that you have documentary proof of a loan repayment (statement / closure letter). This is important because outstanding loans on your CIBIL file will reduce your loan eligibility.

Step 4: The Approval
This is where the people in the credit department approve your home loan amount and give the go ahead to another department to issue the sanction letter to you.

This is just the start, we still have 2 more painful processes lined up which I shall cover in my next blog post. The technical and legal evaluation of the property can make or break your deal.

General Tips and Observations:
 - The first thing you need to be aware is how much loan you want and for how long. Private Banks usually finance 85% of the property value (this includes agreement value + stamp duty + registration). ICICI bank goes up to 89% in some cases. Banks like Kotak do this for their employees but not for external customers. PSU banks are generally more chindi and sometimes do only upto 80%. MNC banks also usually do 85%, for some senior employees they go upto 90%. So if your agreement value is 90 lakhs ad stamp duty and registration works out to Rs 10 lakhs. Most banks will want to give you only Rs 80 lakhs to Rs 85 lakhs. Rest has to be paid from your own pocket BEFORE loan disbursal. Bank will also ask you to show your account statement to evidence that the payment was indeed made from your own account.
 - In case you wish to get 90% funding, ICICI Bank or an NBFC (Indiabulls / Reliance / Dewan Housing Finance) would be your best bet. The interest rates in the NBFCs will be slightly higher (0.5% to 1% more thank bank rates).
 - Please make it very clear to all bank executives that you are negotiating with 2-3 banks for rates and approval terms, ensure that they give you an option to stop processing your papers once you have finalized something with a competitor. Once the sanction letter is out, no one will refund your processing fees.
 - Some banks (like HSBC) give 25 year loans, this is really helpful to increase your loan eligibility and reduce EMIs.
 - Some banks like Standard Chartered and HSBC have an interest saving product called Smart Home / Interest Saver. Its a very good product where all your savings go into a savings account linked to your home loan account. The tenor of your home loan keeps increasing according to the savings kept in your account.
 - Most banks have a tie up with General / Life Insurance providers to provide you with a term cover on your loan which reduces with your outstanding. Simply out, if you die the insurance company pays off your home loan and the property belongs to your family. However some banks force you to buy the insurance product and some even club the premium amount with your loan amount hence reducing your payout to the builder. Make it very clear to the sales executive if you want the insurance or not and ensure that the premium amount is kept out of your loan sanction.
 - Loan eligibility norms of most banks differ, however from experience I can safely say that PSU banks will show that you have the lowest loan eligibility. Private bank sand MNC banks are better.
 - If you are looking for low interest rates only please go to a PSU bank, however be warned that the sanction process takes 10-15 days there and largely depends on your relationship with the Branch Manager. Disbursal takes a further 15-20 days as their technical and legal evaluation procedures are too lengthy.
 - If the project is pre-approved / approved (for under construction properties) by a bank it makes a lot of sense to apply for a loan there as the legal and technical evaluation is already done. For a property which is for ready possession and if you are buying through a builder please enquire and find out which banks have financed flats in the building and approach those to reduce the time to disbursal.
 - Resale properties (where you are buying from the house owner) are slightly trickier. Most banks wont touch a flat if the building cooperative society is not formed yet. If the society is not formed please talk to the sales executive upfront and give your papers for processing only if he confirms that his bank finances such projects. Better still, give a copy of the previous sale agreement and related documents to the sales executive so that he can check and confirm.
 - If you are buying a property in Navi Mumbi be careful, two main issues: firstly the way the builders calculate super built up there is totally different from the way Mumbai city builders calculate it. As a result my 865 sq ft Chembur apartment is larger than my 970 sq ft Nerul one. Secondly there are two types of building plots Gaothan plots where the builder has purchased land from a villager who used to own it and CIDCO plots where the developmental authority (CIDCO in this case) sells the plot directly to the builder. Most banks will easily finance the second case and stay away from the first one. This is simply because in a Gaothan plot other family members of the villager might stake a claim to the plot in future and demand money from the builder and the property might get involved in a legal dispute. However a Gaothan plot becomes cool once a society if formed.

Enough gyan about the loan approval part for now. Please to let me know your views and feedback.

Coming Soon: So Long and Thanks for the House (where we evaluate the technical and legal aspects of a loan disbursal)

Previous posts about Househunting:
The Joke called Property websites
The Broker strikes back

The Househunting Chronicles: Part 2 - The Broker strikes back

In my last post I mentioned how property portals like MagicBricks and 99Acres have been useless in helping me find a property to buy which fits within my budget (upto Rs 90 lakhs). I was resigned to using the neighbourhood brokers to continue my search. So armed with the numbers of some brokers me and my dad started doing rounds of their offices.

Stop 1: A fat lady who claims to have sold many many houses in the area asks us point blank if we have the money to buy a property. I felt quite offended by the rude question and offered an irritated response saying that why else would we come to her. To this the lady said that she merely wanted to confirm if the deal for my Nerul property had been concluded and if I had the money to make a downpayment. That angered me and we walked out. I hated her attitude and made a mental note to ensure that I mention this to all my friends and acquaintances who were planning to buy a property in Chembur.

Stop 2: The real estate brokerage arm of one of the leading MNC banks of the country. This one was recommended to me by the wife. Their executive calls us to Diamond garden and promises to show us a 2BHK flat near Amar Cinema at Chembur, the cost of the flat isRs 75 lakhs. We reach at the given time, wait for 15 mins for the guy to show up, he leads the way on his bike and we follow in my car. Instead of taking a left turn to go towards Amar Cinema he takes a right and starts leading me towards Basant Cinema. I wonder if we heard wrong. He stops at a building there and says he is showing us a 3BHK flat now and will show us the 2BHK after that. We point out that we dont want a 3BHK becuse its not within my budget, he gives me the usual broker bullshit 'Sir dekh to lo, kya pata pasand aa jayega'. We see the house and like it a lot, but its quoted at Rs 1 cr so obviously beyond my budget. I once again mention my budget to the guy and tell him that I want to see house that are below this or equal to this amount. He nods his head. Next to took me to a building in the middle of nowhere and showed me a tiny pigeonhole which had rooms as big as my kitchen (seriously, I am not joking). The quoted price for the house was Rs 75 lakhs. No way on earth was I even going to consider it. The executive later called my wife and offered to show similar good properties, thankfully she politely declined.

Stop 3: My parents then went to the broker who had helped my Dad rent an office in Chembur. He showed them around 5-6 properties which either they did not like or were way beyond our budget. Finally he showed them a project which quoted an affordable rate and he claimed that he had done a deal a month ago at a rate which was Rs 200 per square ft lower than the amount quoted by the builder. Parents loved the property and told me about it. I too was kicked about it because it was a 16 storeyed tower with a swimming pool, club house and all that jazz. However I wanted to approach the builder directly and negotiate a rate. Here I made a big mistake, in my eagerness to get that Rs 200 discount, I told my Dad that we should inform the broker and tell him that we will give him a brokerage only if he manage to get us substantial discount.
A time was fixed and we headed to the builders office, the broker didn't bother calling us before the meeting. However when we were looking at the flat which we wanted to book, he called my Dad. Now I was irritated with him because he didn't bother calling us before and also because my friends recommended I deal directly with the builder, so I asked Dad to make an excuse and cut him out. Dad said he was out and would call him later. After looking at the flat we walked back to the builders office and our beloved broker was waiting for us there.
We began our negotiations with the builders representative, Mr Broker just kept quiet. My Dad finally told him to get us a good discount else he wont get his brokerage, so his highness finally 'requested' the builder "Sir, thoda kam kar dijiye please". I was irritated beyond my wits. Somehow we concluded our negotiations with Dad and My best friend (who is quite knowledgeable about property deals) being the major participants and managed to get a price which just about fitted into our budget. However the discount which we got was nowhere close to what the broker promised my dad.
Later on we found out that in fact this particular broker had not even closed the deals he was mentioning. And the price at which he quoted he closed the deal was also incorrect, the actual price was much higher. It seems he just made up the story to impress us and ensure that he gets something out of this deal.

We finalised the property and paid a token to the builder directly, Mr Broker-Who-wanted-a-small-cut was nowhere to be found and we decided to cut him out of the deal. If he comes back to fight Dad might give him a small token amount simply for the effort he put in to show them some properties.

Learnings:
1. Most brokers wont even show interest in you if your budget is small, they will throw massive attitude and behave as if they are doing you a favour by showing you some houses.
2. A lot of brokers tend to boast about the deals which they have done and their great contacts. Ideally you should make discreet enquiries within your circle, if that's not possible observe the broker closely. How soon can the broker get the keys to a flat, how soon can he get you a meeting with the owners etc will tell you a lot about how effective the broker is.
3. If a builder still has a site office in a ready possession project, do not even think of going through a broker. The builder will obviously give you a bigger discount as he does not have to pay the broker. Going through a broker makes sense only when the broker can ensure you a fixed discount over the last quote of the builder.
4. For under construction projects, ALWAYS talk to the builder directly.
5. A broker will usually try to show you flats which he wants to sell not what you want to buy. So if you want a 2BHK within a budget of 80 lakhs, he will show you a 3BHK with a budget of 1 cr first. Some brokers do this to show you how property rates are high and your budget is ridiculous, some do it in the hope that maybe you will like the property and might exceed your budget in trying to buy it.
6. The brokerage of the broker is ALWAYS negotiable.

Services you should insist your broker provide:
1. Negotiating the rate as per your budget not a compromise between what the owner wants and whats your final limit.
2. Helping you resolve any payment disputes / delays with the owners
3. Helping you with documentation (property related) for bank loans

There is a breed called as a 'good' and 'effective' broker, although its in danger of extinction. Finding one of this species will take some time and you might have to deal with lots of assholes

The joke called property websites

I recently sold my house in Nerul, Navi Mumbai and plan to buy a flat near my parent's house in Chembur in Mumbai soon. I consider myself tech savvy, so instead of doing rounds of the offices of  Real estate brokers, I decided to use technology to help myself find a buyer (for the flat in Nerul) and a seller (for a flat in Chembur). Have jotted down some observations and experiences in this process.

The Selling Part:
After checking with friends and searching the net, I shortlisted two websites where I wanted to post my property 99Acres and MagicBricks. The listing part was easy and within a couple of days of listing my property I started getting responses through SMS and E-Mails. Most of these responses were from brokers in the area. Despite having posted ALL the detail about the house (Area, exact location, expected price, full cheque payment expected etc), I kept on getting calls from brokers asking for these basic details again and again. Even when I reiterated that all the details are on the sites and I could give them the property id on the site to check them out these morons insisted that they could not see the details on the site and only my phone number was visible.
Within a week of registering on MagicBricks I could not see the contact details of the people who had responded to my post, I could view the contact details only if I bought a listing package from them which cost around Rs 1000 for a month. Since I wanted to reach out to a wide audience I relented and purchased the listing package. 99Acres was slightly better, they allow a months free listing and then give you the option to go in for a paid one. As soon as the month was over their sales executives started calling me for an upgrade, which I agreed to, once again I paid Rs 1000, but I got a listing for 3 months instead.
Having paid for a premium listing on both the sites, the response picked up gradually and I started getting quite a few calls (2-3 on a weekday and 5-6 on weekends). the only disappointing fact was that 90% of these calls were from brokers who made me painfully narrate each and every detail about the property again and drove me to a point of severe irritation.
Finally my property deal was finalised, but not through any broker or a prospect through these sites, it was a relative of a family who stayed in my building who was interested. It was the old friend, family and neighbour network which came to my rescue.

Learnings:
1. These sites are helpful to get the market to know that you are selling, but be prepared that 90% of your responses will be brokers. Still it saves you the trouble to go to meet them individually.
2. Most brokers are not so tech savvy (at least in Navi Mumbai), they have an office boy or a receptionist sitting and searching these sites for listing by Owners of properties and then call them for details. No one bothers to read your post properly.
3. These property sites are quite money minded (especially MagicBricks) and expect you to pay for listing your property. However the listing is cheaper than a classified ad in a newspaper andguarantees better response. So its quite VFM actually.

So, If you are looking to sell your property, I would definitely recommend a listing in property portals. Even if you don't want to pay commission to a broker, it helps you get an idea of what the market is offering, besides it always helps to have a couple of offers from brokers on the table when you negotiate with direct parties. Just a word of caution, please be patient and prepared to explain each and every detail of your property over the phone to these brokers. And remember, most families prefer seeing houses on afternoons on weekends, so be prepared for lots of calls during that time (I suffered a lot because of this as I usually try to catch up on sleep on Sunday afternoons).

The Buying Part:
I am looking to buy a 2BHK apartment in Chembur. I based my budget on listings available on 99Acres and MagicBricks. I tried searching for 2BHK apartments between Rs 60 lakhs and Rs 80 lakhs in Chembur on through 99Acres (in fact they just have a Rs 60 Lakhs to Rs 1 Cr option to search) and got 19 responses which were within my criteria, for the same criteria in MagicBricks I got over 100 responses. So obviously I was happy that property prices are still not so high and I will finally be able to buy that house within my budget. I planned accordingly and started saving money, liquidated some investments and prepared myself to buy a flat within a couple of months (this was beginning of Sep-10). Being the planner that I am, I did not call any of the listings till I had some money ready for downpayment / token, the bank loan part could be taken care of later.
So finally I started calling these listings on Sunday, as expected, more than 95% of the listing were through brokers. On calling them, most of them quoted a price between Rs 90 lakhs and Rs 1.20 Cr for a 2BHK flat in Chembur, when I pointed out that their listing on the site said something else they said that that property was sold and now they have properties in this range only. The first two times, I thought maybe this is true, its quite easy to sell a 2BHK in Chembur for Rs 75 lakhs. But then after calling 8 different brokers I realised all of them were bullshitting. They just buy bulk listing on these sites, the property description for every 2BHK sounds the same and the actual location is almost never ever mentioned ( a few exceptions to this), all the prices are between Rs 70 lakhs to Rs 80 lakhs and ALL the brokers claimed that these properties were just sold off last week.
After being disappointed by the broker clan, I decided to check if any actual owners had listed their properties. I found zero matches on 99Acres and around 10 matches on MagicBricks. Once again I was in for a disappointment when I called the so called owner, I realised that he was a broker and had only listed himself as an owner to get more responses.
Some brokers have offered to show me some apartments in Chembur in the bracket of Rs 80 lakh plus but I am not so hopeful and have resigned myself to a long wait. In fact some brokers didn't even talk properly when they were informed that my budget was ONLY upto Rs 80 lakhs, a couple promptly cut off my call rudely and did not even bother to pick up when I called subsequently.

Learnings:
1. 95% of listings to sell properties on property portals are by brokers. All the properties listed by a particular broker will have similar description and no indication of the actual location of the property within a locality.
2. Most low prices quoted are only to attract buyers, almost all the brokers will claim that the property was sold recently and now the rate has increased by 10-15%. In fact one particular broker had 5 2BHK flats listed for Rs 75 lakhs, he coolly told me that there must be some mistake on the site and they must have listed 5 such flats by mistake, the only one he had was sold last week only.
3. If you wish to search for a house in any locality in Mumbai through a property portal, please be prepared to pay brokerage fees + 10 - 15% to the average cost of apartments quoted on the websites.

So if you wish to purchase a property, use these portals only as indicators. None of the listings on them are reliable and most of the brokers are listed only to reach out to prospects. A trip to your neighbourhood broker is highly recommended. I have once again put all my hopes on the friend, family and neighbours network to get something within my budget and would recommend you do the same.