Equate your land and then Sell to builder

This is an educational writing how to not get bogged by builders offer price. You should know this before selling the land.

To let you understand, I am taking a scenario:

Scenario:

Suppose a land is valuated at Rs. 10 L (L = Lakh), it has the permission of G+6 construction now and will be allowed to G+9 in future. Let us take the land as 100 Kth. (Kth = Katha, SFt = Sq. feet, 1 Katha = 720 SFt). The price in surrounding locality is Rs. 2500 per SFt.

Now you sell the land at Rs. 10L per Kth.

Means, 10 L x 100 Kth = 1000 L = Rs. 10 C (C = Crore) is what you gain.

Now lets check what builder gains:

Expanse for Builder

A. Purchase Price = Rs. 10 C

B. Administration Price = 10% of A

C. Legal Price = 20% of A

D. Building Expanse (as per standard of kolkata and current market -economy scenario) = Rs. 850 per SFt.

Let Builder builds G+6, hence he have to forfeit 20% of Land area.

So, total area available with him is 80 Kth. as Land and

80 x 6 Kth. = 480 Kth. as area to be sold.

E. Area to be sold = 480 Kth.

Total expanse for area to be sold

= Rs. 850 per SFt x 720 SFt per Kth x 480 Kth.

= Rs. 850 per SFt x 720 SFt per Kth x 480 Kth.

= Rs. 29.38 C

F. Expanse for building = Rs. 29.38 C

Total Expanse = A + B + C + F

= 10 C x 1.3 + 29.38 C

= 42.38 C

Let us now convert it to sale-able area cost price.

= 42.38 C/ (480 x 720) = Rs. 1226
G. Cost price of flat = Rs. 1230 (approx)

Total profit of builder:
 Selling Price of Flats - Cost price of Flats
= Rs. 2500 - Rs. 1230
= Rs 1270 (Per SFt.)
in Percentage to Cost  Return per SFt is = 103.25 %

Builders total Earning = Rs. 44 C
Your Total Earning = Rs. 10 C

Now if you had learned then don't sell your asset low.