Real Estate Group Discount Offers for Property Home Purchase: Look Before You Leap

There has been a sudden outburst in the business of Group Offers - it started with restaurents, lunch offers, spa's etc. and this group buying scheme has been extended to big buying decisions like those of real estate, property and flat purchases. There have been lots of companies which have now mushroomed up all of a sudden, which promise to offer great discounts on real estate purchases if you sign up for their offers. In this article, we will discuss whether these group discount offer companies really offer any value worth or is it just a commission earning marketing gimmick, which might land the buyers in trouble. Let's start with the basics:
How do property group offer companies work?
The model for group offers is simple - you start a firm/company with a group offer discount available only if a certain no. of people apply for it jointly in a group.
Now, this is where the so called "Group Offer Companies" try to cash in upon.
Let's see this with an example. There is a group offer company called "GroupOfferX" and There is a restaurent in the city which is not seeing much crowd on weekends in the afternoon during lunch hours. The restaurent wants to have customers come in. So they start offering discounts for the luch time during the weekends.

Group Discounts Offers for Property, Real Estate Home Purchase

However, that may still not work, as the restaurent needs to advertise for that discount offer (another cost), and also suffer losses due to discounts. So what they do is either they approach the GroupOfferX company or the GroupOfferX approaches them. They get into a deal like this:
Restaurent: Get me confirm 100 clients by FRIDAY evening, who would come to dine at my resturent on Saturday Lunch time and I will offer 25% discount to them on the normal charges and another 10% will be paid to GroupOfferX for getting these 100 clients.
GroupOfferX: We will try for that and confirm by Friday evening

Now, the GroupOfferX company puts this offer for 25% discount on their website, send that info through SMS to their subscribers and email marketing and try to gather the required 100 clients.

Suppose the lunch is offered at Rs. 100 per plate, then the GroupOfferX will get 10 Rs. per client, if they manager to get the required 100 clients. The 100 clients only need to pay Rs. 75 (25% less on 100 Rs. lunch).

Typically, a client who is interested in that offer, needs to pay only say 20% of the bill amount for showing interest (i.e. only Rs. 15 for the actual discounted amount of Rs. 75). This is either through online payment or direct debit from bank - these details are usually stored by the GroupOfferX site. Once the GroupOfferX company gets the minimum required 100 clients for that restaurent, the GroupOfferX will then automatically take the remainder amount of Rs 60 from the credit card or net banking for all the 100 clients, confirming the discount offer.
After that, all the 100 (or more) clients are send vouchers through email/sms which they can show at the restaurent and get the discounted lunch.

How is this kind of Group offer beneficial?
It's a win-win situation for all parties.
For the restuarent, it gets increased business, increased popularity as more and more people visit it. It may take a slight hit in the beginning due to discounts being offered, but it can expect visitors to publicize about that restaurent. They save on individual advertising.
For the GroupOfferX company, they get the commission from restaurent
For the end clients, they get a good collective discount, which may not be possible had they gone to the same restaurent on their own

So, for the GroupOfferX company, they are the ones who play the pivotal role or the commission agents or the brokers in all this deal. The above example is for a restaurent, but the same can be extended to other sectors - like spa's, beauty parlours, branded clothes, apparels, jewellery, and now the biggest of all - the real estate or property market especially the homes and apartments.

How does group offers work for Property deals or home purchases?
That is the million dollar question and the biggest of all kinds of the group offers. With internet, email and SMS serving a quick and easy way of sharing information, it has become easy for lots of so called group companies to mushroom around and start claiming to be the best in the discount offers they can make available to their end clients.
First, lets talk about how the Group discount offers work for property or home purchase.
Say a builder is planning to construct a 10 floor building with 60 flats or apartments in it. The site is at a relatively new location, with no proper roads and not much of amenities, but they are expected to be developed in around 2 years time. The builder also expects to complete the building in 2 years time.
But because of the current state of the locality, the builder is not getting much enquiries from clients. To continue construction, he needs partial payments from the buyers, which he cannot afford.
The so called group discount offer company, say RealEstateGroupOffer, and a builder gets into a deal. RealEstateGroupOffer claims that they can get around 40 clients for the builder in 3 months time, provided builder offers them a good discount. Builder agrees to offer say 20% discount to clients coming through RealEstateGroupOffer, provided GroupOfferX gets them minimum 40 clients.

So now, RealEstateGroupOffer company uses its own network of clients (potential flat buyers) who might be looking for purchasing flats for their own use or for investment purpose. So they start advertising for this Group Discount offer for purchasing apartments on their website, through emails and through SMS, to potential customers offering them 15% discount. The balance 5% they will pocket as their commission from the builde.
Interested clients will reply to them and express their willingness to purchase the property. However, the exact details about the property like name/builder/location may still not be disclosed by RealEstateGroupOffer to its clients. The group offers for home purchase works a bit differently than the example of restaurent cited above.
In case of Home buying group offers, the RealEstateGroupOffer company asks the interested clients to assemble at a particular location (some landmark near the actual site) at a particular date and time. The interested people come and then they are taken to the actual site where floor plans, availability, location, etc. is revealed to them.

What are the conditions or problems of Group Discount offers on Property Flat Purchases?
Although some group discount offers may be good and genuine, there are still certain doubts that the buyers must keep in mind and get them clarified.

- What is the real reason that the builder is offering discount on group buying? If its a good project, why is he not getting clients, why is his flats not sold off till now?
- If the builder is offering discount on group bookings, is he doing so for want of money? Is there a possibility that he may face financial problems in future during the construction of the flat if material or labour costs increases?
- Is locality or area the issue?
- Are there any problems about basic amenities - water, electricity connections, roads,
- Is the neighbourhood safe - any liquor shops around, criminal activity record of that area, etc.
- Is it an under-construction project - what is the guarantee that the builder will make it ready in the promised time of 2-3 years?
- Is the RealEstateGroupOffer company or the builder offering any condition for delay in promised possession

What should be checked about the Discount Offers on Group Bookings for Real Estate Or Home Purchase?
There can be many many reasons why the builder is offering group discounts, but its for the buyer to keep himself safe. Here are some checkpoints and conditions which the group discount buyer should be careful about:

- Usually, only unsold under-construction flats in far flung areas are offered by group discount companies.

- Almost all of them are under-construction project having proposed possession timeline mentioned as 2 years or even more (which may further get extended)

- You may be forced to book on the same first day of your site visit, to avail the discount. Remember, purchasing a house is a lifetime decision. Dont fall for the marketing & pressure tactics of these RealEstateGroupOffer companies (& the builder)

- More money to be paid early - you will be asked to pay more money in the early stage itself, in the name of the discount offer. But be careful - you might end up paying high interest on your home loan amount, because of your higher initial payments in the name of group discount bookings. The so called discount will then vanish away.

- Above all - simply keep a suspected eye - why is this being offered at a discount, what can be the reason?