Can’t sell your house? Black money may be a cause

No movie over the weekend made her cranky. She was still old school in that sense. Loved the big screen. The streaming platforms just did not work for her. And that’s how we landed up at a coffee shop. 

Before the barista could confuse us with a long list of choices, we pre-empted him by asking for two flat whites—coffee with boiled milk. 

The choices we make, do get boring with age. 

“So, why are you worried today?” I asked, sipping coffee. 

“How do you know I am worried?” 

“Well, when you are worried, your nose keeps twitching in a certain way,” I replied with a straight face. 

“Kuch bhi,” she said. “But, yes you are right, I am worried.” 

“And what is worrying you?”

“My father has been simply unable to sell his house in Delhi.” 

“Oh, is he still anchored on to the price that homes in his locality were being sold, in 2011?”

“No. After our conversation, a couple of weeks back, I was able to solve that problem,” she said. “I told him, he will be able to sell at the current market price, and not at the price that prevailed in 2011.” 

“And he got it?” 

“At least, he pretended he did.” 

“Then what is the problem?”

“Well. All the offers that Papa has got up until now, come with a black money component.” 

“Oh.” 

“The prospective buyers want him to accept one-third of the money in cash.” 

“And that is clearly a problem.” 

“Oh, yes. My father has been having sleepless nights. The buyers are ready to pay up to Rs 1.2 crore for his flat. Of that around Rs 40 lakh, is being offered in cash.” 

“Hmmm!”

“And the poor man is having sleepless nights, worrying, where will he keep Rs 40 lakh cash, if he does decide to sell the flat this way.” 

“Not surprising at all,” I replied. 

“Tell me something, what is happening here?” she asked. 

“Well, the prospective buyers have some black money lying around in the form of cash and they want to put it to some use.”

“Which basically means they want to get it out of their homes?”

“Yes. Pretty much. Real estate and gold are the easiest forms of converting black money into physical assets.” 

“Basically, nobody likes keeping cash under their mattresses,” she quipped. 

“Exactly.” 

“But my father is stuck.” 

“Well, if he doesn’t take a part payment in black, he is.” 

“Tell me something. What do people do with the money they receive in black while buying a house?”

“Typically, they go looking to buy another flat or flats, for that matter, in an up and coming locality, where the black money can be put to use.” 

“Interesting.” 

“Which is why it is very difficult to break the cycle of black money. For all we know, the prospective buyers of your father’s flat must have sold some real estate, got some black money in the process, and now want to put that black money to use, by buying your father’s flat.” 

“I can see that,” she replied. “So what do we do about my father’s flat?” 

“You want him and your mother to move in with you in Mumbai?” 

“That’s right.” 

“Then why not put the house on rent?” I asked. 

“You only keep writing around everywhere that the rental yield in India is very low, at around 2%, and it makes more sense to sell your home and invest in fixed deposits. That way you make more money.” 

“Which is also true.” 

“Then where does that leave us?” 

“The only option that we have is to wait.” 

“Oh.” 

“Yes. See the point is, if your father wants to sell the flat and not take any black money, I am sure there are a few people going around, who want to buy a flat and not pay any black money.” 

“Now that you put it that way, it makes sense.” 

“Don’t worry, one day the market will make them meet.” 

(The example is hypothetical) 
(Vivek Kaul is the author of the Easy Money trilogy)