Asking for discounts from the local kirana store is a common ritual most follow, irrespective of the fact whether the retailer actually gives a discount or not. Whether you buy white goods or garments, you look for discounts. When you buy in bulk, retailers offer slightly higher discounts. The concept has been successfully used by group buying sites such as Snapdeal, Mydala and Dealsandyou, that offer deals in retail and consumer services and items.

Gurgaon DLF Residential Building Hamilton court. Photograph by Harikrishna Katragadda.

How do these sites work?

Usually brokers buy in bulk from the developers and then offload the units one by one to homebuyers. Broker basically get discounts because they buy in bulk; they either do not pass this discount to homebuyers or pass only partial benefit. Group buying websites help buyers get such discounts by bringing a group together by registering them on the website and then bargaining with the developer for a cheaper rate. The group size can vary from 20 to 100.

“After the group is formed, buyers are sold units from a particular builder,” says Hem Tejuja, managing director, Grouphomebuyers.com, a company that set up shop just three and half months ago and has 7,000 registered domestic homebuyers.

Conventional brokers formed groups earlier too. “However, these groups were smaller is size and fragmented. But with organized companies coming in the business, buyer groups are now bigger and better managed. The sale is not just limited to the purchase, it also includes pre- and post-sales services,” adds Tejuja.

The benefits

Illustration by Jayachandran/Mint

He adds, “I met a number of brokers, went to property exhibitions in search of a property but I just got confused. While brokers deal in only one or two projects, property exhibitions showcase a huge number of properties from various developers. Then there was the issue of faith. The discounts offered in both cases were not enough and there was very little clarity on transaction-related services. Finally when I bought through the website, I got a discount of almost 2.5% on the property value.” Like Kapoor, there are other buyers in the country who look for organized service along with discounts.

For Mumbai-based homebuyer Ganesh Naik, the services of the agency involved constant updates from sales executives about the group formation and the site visit. In Naik’s case, the discount is about 12.5%. He has invested in a 1,215 sq. ft two-bedroom apartment at a rate of Rs 6,820 per sq. ft in Ghatkopar area of Mumbai.

The biggest benefit that you get is the range of discount. Says Tejuja, “The discount depends on builder to builder and is project specific. While a mid-tier builder or a builder in a tier II location can offer a discount of up to 15%, a prime builder that has reputation in the market may give just 2%.”

The discount comes without any charge. These firms do not charge any fee for the services. “In terms of rates, the discount ranges between Rs 300 and Rs 500 per sq. ft,” says Sugla.

Apart from the discounts, you can visit their offline offices and meet the company representatives to solve your problems, if any. They have in-house staff and also have tie-ups with local brokers in each city. For example, Grouphomebuyers.com has associated with Advance India Realtors, a brokerage house.

How do you buy?

Register with the website: In Naik’s and Kapoor’s case, the follow-up began from the day they registered their names and telephone numbers on the website. “There are two ways to form groups—either the people form a group and then register with us or people register with us and we form a group. In both cases, we approach the builder for discounts. However, we often have live deals with a window of 30-45 days. Here we already have pre-negotiated rates. If you have already decided on a property and project, we help you form a group with like-minded buyers in the same budget,” says Vikhyat Srivastava, co-founder and director, Groffr.com, the first real estate group buying portal in India; it has a registered database of 150,000 homebuyers.

Post registration: Once you have registered, the company executives contact you independently. “Our executives then call up to find out your preferences about the location and your budget. They will also ask you about your choice of people. Whether you want to be in a group of service class or businessmen. We then form the group on the website itself. You can also join a particular group registering your details on the website directly,” says Sandeep Sugla, chief executive officer, Discountedflats.com, a Pune-based group buying portal that has a database of 80,000 registered buyers across six prime cities in the country.

“In any case, you would like to visit the project. Here our executives meet you and arrange for the site visit and collect other relevant documents,” he adds.

The transaction: The deal is finalized just like any other property deal with a developer. This involves verification of buyer’s documents, submission of application form for booking and sanctioning of loan for the buyer, if required. But here you may find a difference in the services.

Adds Sugla, “Normally, a good deal runs for a short period of time. So we keep following with buyers; we categorize buyers based on their activity and then reach them with offers. Once the group is formed and the deal is done, we process their documentation at the developer’s end. Later, we send them updates and feedback on their projects.”

Says Naik, “I hardly get time to visit the project. But executives from Groffr.com keep sending me updates from the project site.”

The challenges

While there are discounts, there are challenges too. Says Anshuman Magazine, chairman and managing director, CB Richards Ellis South Asia Pvt. Ltd, a property consultant firm, “Though it is a win-win situation for all participants— buyers, builders and brokers—penetration remains a challenge for these websites. Do these websites cover the region properly? Is there in-depth information on a particular market and projects in that region? Bringing such information needs constant effort.”

You may get a discount in one live deal on the website, but you may miss on another good project that may have a better location.

Also, these deals are live on website for only 30-45 days. “This is an exciting proposition from developers. But suppose the 30-day offer doesn’t come through if the group is not formed, you may miss out on some other good deals available in the market within that time frame,” says Manish Mehta, vice-president, Agni Properties, a pan-India real estate brokerage firm that is planning to enter the space of group buying. Thus, before you plan to visit these websites and register with a group, run an independent check on the projects in your region.

devesh@livemint.com