For
Indians, including NRIs, buying a home is perhaps their biggest one-time
investment. Over a decade ago, the buyers would commit their lifetime savings
to buy a house towards the end of their working lives. Now, many in the age
group of 25 to 35 years, have started investing in real estate.
But
the pitfalls they face when selecting a property, especially for NRIs, are many
and people overlook some important factors & suffer later.
Planning Could be Very Rewarding..!
Buying
a property may seem daunting, but with some planning, it could be very
rewarding. It is all about making informed choices at every stage of the
process, which starts with deciding the budget.
 |
| V.S. Suresh, MD, Real Value Promoters |
A
smart budget will save the buyer from biting more than what he can chew. The
choice of location and the developer is the toughest to make, after finalising
the budget.
One
needs to check if the area has the potential for development, quality
infrastructure & good connectivity.
Legal track Record..!
As
in choosing the area, the choice of developer must also be backed by
considerable homework. The developer’s track record needs to be thoroughly
checked in terms of market standing, reputation, construction track record
(compliance to rules, safety norms) and legal track record... whether there are
any court cases pending against the developer / promoter etc...!
A
background check on the reputation of the developer is very important, as one
may land up buying a property from a developer of a dubious reputation. House
buyers should ensure that they buy property from reputed developers.
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| Real Value Promoters Launches Padmalaya Project |
Knowing
what to ask for from the developer is the next step towards buying a house.
Developers
/ promoters should provide all the required documents of the property they are
selling. The buyer should find out how the fixed square feet area being offered
is arrived at, by asking for a detailed break-up.
Actual Carpet Area..!
This
will help them know the actual carpet area within their house, which will
exclude the common areas, staircases, and the lobbies. The other important
detail that needs to be checked is the undivided share of the plot on which the
apartment is being constructed.
Next,
the homebuyer needs to discuss with the developer the additional costs she / he
would incur– such as covered car
parking, choice of flooring, wall painting and bath fittings, deposits to the
electricity board, etc.
Common Areas....!
Also
housebuyers need to check what is being offered in the common areas like as the
gymnasium, swimming pool, party hall to which they will have access.
Once
a homebuyer has made the decision, it is advisable to seek the advice of an
independent legal expert. It is this legal expert who will be able to
scrutinise, on the buyer’s behalf, the various documents the developer has
provided , so that there are no legal tangles.
Legality..!
A
lawyer dealing with real estate should verify the original title deed, the
Encumbrance Certificate (which proves that the property is free from legal
issues such as mortgages & loans), and the ‘patta’ of the land.
The
legal expert must also do a thorough physical inspection of the said property
alongwith the buyer, for ascertainment of what exactly the buyer is paying for.
The
buyer must insist that the developer strictly adheres to the sanctioned plan
during construction.
Following
the legal expert’s consent comes the finance part. Young professionals today
are taking up financial liabilities like a property investment right at the
beginning of their careers. The financial partner in such a venture should have
the strength to verify the documents furnished by the customer.
Secret Clauses in Agreement..!
The
customer should ensure that there are no secret clauses in the agreement. If a
loan has been taken with a fixed rate of interest, it should be constant
throughout the payback period.
The
customer must look out for misleading clauses such as ‘market conditions’ or
‘unavoidable / unforeseen circumstances’ that limit a fixed rate of interest to
a particular period of time.
Keeping
in mind the Reserve Bank of India (RBI) guidelines, the buyer needs to first
check the percentage of the project the bank is allowed to fund, and whether he
is capable of pumping in the remaining amount.
Though
this may sound a little uninspiring, the tax benefits given to first-time
buyers, on the interest and principle payable, are still things to cheer about.
A
homebuyer also must ensure that the compensation which she is eligible for in
case of delays or disputes, is clearly mentioned in the final sale deed.
The
last stage is monitoring the project’s progress from the homebuyer’s side. On
receiving the flat or house, one must check if the developer has delivered on
all that was promised. The buyer must enquire about the after-sale commitments.
Buying
an apartment not only involves a substantial investment but also has long-term
repercussions. It pays to do one’s home work well before embarking on this
exercise, to prevent one’s property from becoming a millstone around one’s
neck.
In
a nutshell, it is better to play safe than being sorry later.
About
the Author..!
The author is
the Managing Director, Real Value Promoters Private Limited
(This
article was published in the Business Line)
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