Process of the Russian Real Estate Purchase - Essay Example

Understanding the decision process of the Russian real e purchase Findings and Conclusion The main purpose of this paper was to provide an understanding of the decision making process of the Russian real estate purchase. Taking into account the entire requirements of the models for decision in field of real estate investment provided in previous studies, analysis in this paper was framed as per the models suggested by E. St. Elmo Lewis inn1898 and Porter in 1985. At the onset of this paper, a claim was made, that there exist various factors in the Russian case of investments, which determine investor investment. This paper hypothesized that practical process of making decision is sophisticated and could be understood and researched within the four factors that impact on business, which are risk, interest rates, inflation, and government involvement. Russian real estate purchases were discussed according to this form of model, Porter’s model, the funnel of purchase, and the general concept on real estate business. The study was extended by the findings got during the interview with the director and sales team at CIC Gletcher together with frequent customers for the same organization. Interviews proved some of the aspects, which were covered in theoretical segment and also disclosed new, key, and interesting points of view, which were not taken into account previously. There are following findings as far as factors impaction on the decision making process in the situation of Russian real estate purchase. On top of all the findings, there was a common finding that was articulated by all the interview respondents. The finding indicates that the decision journey in Russia is different from that in UK, or even the rest of the world. In Russia customers mostly contact the company themselves and let the company understand their preferences. After that, the company arranges a decent location according the preference indicated by the customer. It becomes vital for both the company and the consumer to be careful in every subsequent step from this point. A customer, in Russia, will always come to a company with a distinct mindset. It is therefore upon the company to study thoroughly the preferences and desires of the customer in order to make a successful deal. This involves identifying the demand and supply in the real estate market, the equilibrium thereof (Dent, Patrick and Xu 12-15). This can only be understood by categorizing the customers as they affect the demand and supply equation. For instance, customers can be as owner (tenant), pure investor, renter and facilitator. Every category of customer identified always has specific reason for engaging in real estate purchase. For example, the owner, who is also referred to as tenant, may purchase a property for resale or for living in. Whatever the case understanding the mindset of the customers is very necessary. The findings showed that customers prefer a gated environment and as a result they assess the neighbourhood and surroundings just as they do with the property itself. The findings further show that frequently customers look for the value of their money, but in the Russian case more decencies such as good neighbourhoods, surrounding gardens can influence them to buy property even out of their comfort zone. Customers are willing to pay more for less given that the environment meets their requirements. This finding confirms the fact, in the literature, that in the Russia Real Estate Market analysis for purchase of a property does not matter. Nevertheless, location in the Russian Real Estate is very important. Real estate Market analysis is regarded as ‘information arbitrage,’ that is, the provision of little but important advantages in helpful information concerning property opportunities and transacting on that know how. Geospatial analysis, geographic information system technology (Bouwman, Hoof and Wijngert 36-9), and geospatial data are central to the acquisition and use of information in property market. Long-term investments involve commitment of large sums of money, and it is important to know it in the Russian Real Estate investment because the conditions are constantly changing (Kaklauskas et al. 108-9). It becomes very necessary to understand the market and follow applicable steps. It was also found that the customer asks several questions regarding the property in assessment. This will always happen since the customer has at least an awareness of the property to purchasable property. These questions can be valid and invalid. The customers will always express their opinion, whatever it is, on the property, because of the orientation of their interest. Nonetheless, the job of a salesman is to have an answer every question, brought forth by the customer, in such a way that it makes sense. This also involves answering every question the customer opposes. Customers always express what their preference is in terms of brand or model, and a salesperson has to produce it. Therefore, by taking on the negative connotations by the customer, the salesman fosters positive impact on the supplier-consumer relationship, and stimulates action. These actions can be foreseen, and should be foreseen to guarantee customer satisfaction (Shaw et al. 185-7). It is the skill of a real estate marketer to select which property best suits the customer desires. By doing so, the marketer requires to read the customer’s mind and assess the possibilities, slowly narrowing down to eventually come to a suitable conclusion (closing the deal) (Edelman 1-6) Once the customer is convinced, or decides, the rest of the deal is handled at the office. At the office, a contract is made that the customer signs. Nonetheless, the Russian mentality makes it essential for the agent to propose a healthy discount. Even if he boasts up the original rates, the discount often has a positive impact on the customer. The company personnel indicated that they do in fact increase the original price of an asset and then negotiate. This makes the last customer believe that the house is bought cheaper, yet on the back end, the company is making a profit. Finally, the personnel indicated that they select their customers carefully. There is eligibility criterion for choosing a customer. They only select people who are decent and polite, and do not mean to pollute or disturb a beautiful environment. Gangsters among others are not at all dealt with at CIC. This is essential for the maintenance of a healthy environment. These findings can also be explained in terms of the Porter’s five factors of describing an industry. The suppliers who in this case include developers will have a bargaining power because they will be offering accommodation in specific environments. Since Russians prefer to live in gated environments, the suppliers will derive a bargaining power from this. On the part of the customers, there are several alternatives to pick from, giving them a particular level of bargaining power with regards to the accommodation cost. Although there is no substitute product in the sector of housing, competition is strong with various suppliers offering different products. This calls for the marketer to know the way to approach the property market. This is mainly by meeting the desires in terms of the expected environment, affordability, and other property features. One of the features mostly considered is durability of the property. Durability of a property describes its value. It is notable that most customers who are interested in purchasing long lasting house will first take into account its durability. The difficulty that emerges is the fact that over 98% of the available properties ‘second hand’ or older. Therefore, to asses durability is essential; one should attempt to think in same way as the customer as this assists to identify flaws that one would, otherwise, cancel out (Trigeorgis 44). At the same time, the customer is also continuously aware of the transaction costs. This encompasses the travelling charges, the legal fee and the entire extra-curricular expenses. If a client is targeting to purchase a luxury estate nevertheless has a limited budget, these factors are vital and will affect his mindset in the ultimate decision. The findings also show that, out the factors relating to the Russian real Estate market, some factors have more influence on the customer’s decision than others. This implies that there is no, particular, way to predict preference 100% correctly (Lins, De Lyra Novaes and Legey 79). In general, the Real Estate market is different from the one on the UK and the rest of the world. It is the customers who set the stage in the purchase decision making process. They approach the company and give their preferences. The company organizes to meet them at their convenient locations. After this meeting the rest of the steps in the process automatically continue. The opinion of the interviewer indicates that the Russian case is different from the rest of the world including the UK. Respondents confirmed this and pointed out that if the marketer uses the right strategy, they can ensure that all the questions by the customer are answered and the right property chosen for the customer. Two aspects of the strategy were pointed out the respondents during marketing. First the marketer must make sure that answers are given to the customer because the customer has some information and a form of mindset (Mele 63). Second the marketer should be ready to offer discounts always even if they gave the original price (Gehner 7-8). However, the marketer should ensure that the company makes profit. This study indicated that the decision making process is sophisticated and should be analysed or judged only considering the entire influencing factors. There are many factors that such as transaction costs, durability, interest rate, perils which make the decision to purchase in Russian Real Estate optimal most of the time. However, it has been shown that gated environment is greater than any factor that may emerge. This paper is only an initial attempt to analyze the purchase decision process in Russian real estate market. This dimension of study requires attention and more research. Amongst the issues that can be studied include effect of competition on the purchase decision in Russian real estate market. Another question to answer factors affecting supply and demand of houses in Russian real estate market. References Bouwman, H, et al. Information communication Technology in Organizations: Adoption, Implementation, Use and Effects. London: SAGE Publications, 2005: 36-39. Dent, P, M Patrick and Xu. Real Estate: Property markets and Sustainable Behavior. New York: Routledge, 2012: 12-15. Edelman, D. Aligning with the Consumer Decision Journey. Harvard Business Review”. Cerca con Google, 2010: 1-6 Gehner, E. Knowingly taking risk: investment decision making in real estate development. Eburon Uitgeverij BV, 2008: 1-8 Kaklauskas, A, Zavadskas, E K, Banaitis, A, and Šatkauskas, G. Defining the utility and market value of a real estate: a multiple criteria approach. International Journal of Strategic Property Management, 2007:11(2), 107-120. Lins, M P E, L F De Lyra Novaes and L F L Legey. "Real estate appraisal: a double perspective data envelopment analysis approach." Annals of Operations Research (2005`): 79-96. Mele, C. Selling the lower east side: Culture, real estate, and resistance in New York City (Vol. 5). U of Minnesota Press, 2000: 62-64 Shaw, D, Grehan, E, Shiu, E, Hassan, L, and Thomson, J. An exploration of values in ethical consumer decision making. Journal of Consumer Behaviour, (2005): 185-200. Trigeorgis, L. “Making use of real options simple: An overview and applications in flexible/modular decision making.” The Engineering Economist, (2005): 25-53. Read More