The real-estate building industry does not show much sophistry in its selling approaches. This is very evident in the face-to-face interaction with the personnel notwithstanding the high-pitched ad campaigns appearing in the press in recent times. Here’s my personal experience as a customer:
The building society (formed by residents of an apartment complex) unanimously decided to go for redevelopment – a trend going viral in recent years in Mumbai suburbs that generally gets the resident members bigger and better apartments in newer higher-rise building at the same site. In a redevelopment project, after accommodating the current occupants at no extra cost to them, the developer gets to sell the additional flats he constructs in the open market to recover his costs and make a decent profit for himself.
In line with the procedures established by the authorities, a project consultant was appointed and under his guidance, specifications were drawn up and a public tender was published in the local papers inviting bids from builders for redeveloping the plot of land. It included a strong message against any kind of lobbying.
On the appointed date the sealed offers from various builders were opened and in the following days comparison tables were prepared. In a couple of sittings, facilitated by the independent project consultant, the members narrowed their choice to three. And these short-listed builders were provided with some inputs on the shortcomings perceived in their offer and asked to submit their final offers.
On the top of the list was a very established builder (B 1) with a long and proven track-record. The proprietor was a youngster, an MBA from UK. He was the only one to impress the members during the site-visit with his knowledge of the business of constructing residential flats. To give a flavor, he claimed it was his practice to use precast blocks for a foot or so from the floor in all the walls he constructed. Why? Indians have the practice of washing the floors often with water. And water seeps through small gaps at the edges. The precast blocks were impervious to leakages. This is in sharp contrast to all other builders coming up with an unimaginative and uninteresting ‘Just tell us what you want, we’ll do it.’ instead of coming up with any real ideas. The uniform refrain, with no tinge of arrogance at all, seemed to be: Hey, Mumbaikar, aren’t you lucky to get so and so square feet with four walls, a roof and a floor in this pricey market? Everything else is frills – take what you get, instead of looking into horse’s mouth.
Second on the list was a builder (B 2) whose offer beat everyone else by a significant margin in terms of the extra area he offered and also cash compensation to the current flat-owners. Simply on that count he could not be ignored though the members had agreed among themselves early on quantity would not be the sole criterion.
The third builder (B 3) to make the short-list was a very courteous guy liked by everyone with his sober approach. He won everyone’s disproportionate heart-share with his simple gesture of thoughtfully offering refreshing cold-drinks to the members, mostly sixty plus, tired from all the climbing up and down during the site visit on a hot and humid day. His place in the short-list was further assured when during the same site-visit in a chance encounter a customer of his – a house-wife residing in a building constructed by him – spoke glowingly about his quality of construction and ethical business practices. There were many among the members sincerely wishing him to be the chosen builder.
So the revised and final offers were submitted by the builders.
As suspected, B 3 did not significantly improve up on his earlier offer that was unanimously considered too low by the members. Many of them were quite sorry to see him scratched off from further consideration. If only he was within plus or minus 10% of the other two…It was actually a surprise that he made it thus far with no hard plus-points in his favor – his display of basic courtesies and hospitality coupled with a non-aggressive selling approach had appealed to his elderly prospects with upper-middle-class scruples to propel him into the short-list.
The other builders not in the shortlist did not even ask why they were not considered. Some of them immediately jumped to the conclusion it was all rigged up.
Now it was between B 1 and B 2.
B 1 had worked with the society for at least a couple of years since the redevelopment was conceived and thus earned members’ goodwill. With an offer acceptable though not the best, he was clearly the favorite.
B 2 wanted a foot-hold in the neighborhood. This being his first project if he got it, he had gone a full length in his offer. Nothing obvious could be found against him but for being not a known entity in our parts of the city. His revised offer maintained his earlier lead of 20% over B 1 with regard to compensation to the members. In his interaction, they found him to be a trifle annoying making a heavy weather of some of the peculiar procedural issues in the society’s affairs – he was telling them what they did not want to hear!
But at this point the issue could no longer be ignored – the elephant was sitting pretty in the room crowding us out.
The issue: The building was not on free-hold land, it was under lease from the government. And to redevelop the land (demolish the existing building and construct a high-rise in its place) the government would demand its (large) share of the pie making the entire project nonviable for the builder and the residents alike. The society’s stand was this rule did not apply since the formation of the society predated this act of legislation. And the members were quite convinced about the reasonableness of their stand. This fact was already made known to all bidders up front and their help was solicited in clearing this issue out of the way.
This time around the two builders were called for a discussion specifically on how they would help in resolving this issue and proceed with redevelopment.
B 1 came in first.
He appeared very confident: ‘We have a team of lawyers in our organization to take care of these issues. We cannot assure you of the outcome. If X happens, it’s no big deal, we’ll bear the cost. If Y happens, it cannot be so – the added cost is to your account.’
That’s fair – but, hey, what’s your assessment of the society’s case and tell us how would you actually go about sorting this out?
‘Give us the documents for our lawyers and they’ll tell us how to proceed.’
But they are already given to you when we invited you for this meeting.
‘I cannot tell you right now what our lawyers would make of it.’
Clearly he had not looked closely at the one problem that was uppermost in members’ mind. In absence of any insight he was taking recourse to a system’s approach wherein his lawyers would handle it appropriately. He had no first-hand assessment of what he thought of the case and hence the outcome vis-a-vis the authorities.
The vagueness of his stand disturbed the members.
B 2 was a much smaller set-up. The proprietor, no MBA, laid out the details for the members to understand and the possible approaches that could be taken. While he also was unsure of the outcome, his view was the society stood a chance of beating it if he was provided with some historic records. The rays of hope handed out by this guy, so far considered as purveyor of bad news, was very encouraging.
To sum up, there was B 1, a larger resourceful organization with an impressive site-visit and show of expertise. And a much smaller B 2 making a much better offer and importantly displaying more insight to the problem the society faced.
The society decided to take its chances going with B 2.
Post the decision, some members suddenly recalled negative reports they had heard of B 1 in the market-place (see point d below)!
A week later B 1 reverted on a more definite and positive note on the society’s case. Members were unwilling to go back on their decision.
Learnings culled from this experience:
a) Obviously selling depends on the prospects and the context. Here they were elderly upper-middle class members numbering less than ten. Also it helps to understand the evaluation criterion. In this case it was clearly stated quantity in terms of floor space and cash compensation was not the sole factor.
b) Hospitality and small courtesies combined with honest non-aggressive selling appeal to this audience.
c) Insights into construction practices and innovative space saving methods are appreciated. Sadly one does not see much of these. Would you know there are hardly any metrics to evaluate floor-plans? It is still considered as an exercise in art, not amenable to analysis. One hears designing residential blocks is not the focus in schools of architecture.
d) It pays to build a more broad-based support among the members rather than limiting to key-persons especially in ‘democratic’ societies.
e) If other (important) things being okay, quantity certainly weighs in heavy.
f) The real winner is the ability to seriously address issues a society may have in its pursuit of redevelopment.
Does it sound all too familiar?