Tuesday, September 18, 2012

How does reputation help real estate developers?

The first few projects of the new entrants to the real-estate business might prove to be difficult but once accomplished, these provide the way for the next ones which are relatively easier to undertake and accomplish. The difference between the first and the subsequent projects lies in the experience gained and the reputation developed with the accomplishment of first projects which act as vital inputs for the next ones. However, if the reputation takes a dip, it becomes increasingly difficult to develop and market the next projects. For this reason of the importance of reputation, every builder takes care not to do anything which would give it a bad name. What does good repo achieve for a project, say, the BPTP Resort Faridabad:

1. Easy Sales: You would be surprised to know the impact which good repo makes on the customers. This gives the builders a unique opportunity to achieve easy sales of the units being developed, without as much marketing effort as some other builder would be putting in. In fact, this can even lead to reduction in the marketing costs of the project. An average customer is generally unaware of the legal and documentation aspects of the properties and has to rely on some builder or agent for transacting in property. That person puts his or her trust in the goodwill of the builder and its brand name. Expectedly, these two factors are highly likely to aid them in their purchase decision.

2. Easy availability of finance: If the builders are in need of financial backing from the banks and financial institutions, then the reputed ones can easily seek the same due to their excellent track record of not defaulting on payments and clearing off the loans within the stipulated time period. Further, even the customers of the project do not have problems in getting the home loans since the project is from the reputed builder who takes care of all the legal aspects of the project and is not likely to do anything wrong to the customers or to the banks. Banks do carry out their own assessment and due diligence but they are also guided by the goodwill of the builder.

3. Sell at premium: Banking upon the goodwill in the market, the top builders might charge a premium for their properties. So, if you find BPTP Resort a little pricier than some other projects of similar nature, it is because they charge a premium for their brand name and the effort that is required for developing properties as per their high standards.
So, good reputation helps in increasing the sales of units, cutting down on the marketing expense and even helps the builders to charge more price than their competitors. But, it does take a lot of toiling and hard decisions, at times, to be able to have a good name in the market.

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