things every homebuyer should know
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A bird's-eye view on the availability of essential factors describing the liveability of a locality
including schools, grocery stores, health care facilities, parks, etc. is important.
Liveability is a combination of efforts put in by the local authority as well as market forces.
For instance, clean roads, well-maintained sewage network, less water logging issues signify
the management efficiency of the urban local bodies.
Whereas, presence of good shopping centers, nice eateries, etc. are a result of the prevailing
market forces. It is a symbiotic relationship between the two, which cannot be ignored.
End-users have to analyse the current stage of the locality's development and find out the
projected time for it to achieve full development with necessary amenities.
You will also have to decide if you are willing to reside in such a locality or wait until it is fully
developed.
Investors should check whether the locality will develop within the period of your investment
horizon. To estimate the development potential of the locality, look for very strong cues such asupcoming metro lines, monorail, flyovers, office complexes, shopping facilities, private
hospitals, etc.
4. Choose what is right for you from the lot
There may be multiple options available for investment at a single point of time. But you will
have to look at various parameters, compare the available options and choose the best suitable
property. While an under-construction property is available at a cheaper rate, a resale property
might be expensive, since it already has all requisite clearances and is ready to be occupied.
At the same time, a very old property may be available at a very cheap rate, but it may require a
huge investment for updating. If there is a wide range of property options available in a micro-
market, it is possible that one can get a good housing unit at much cheaper rate. So make sure
that you do enough research and do not hesitate to negotiate.
Properties are available at different stages in the market like: a) Ready to move in properties b)
Under construction properties and c) Resale properties.
Buyers should look at amenities available in the project and possession time line if the property
is under construction. Compare all aspects with other available options in the market.
Other important aspect is to think ahead of time. The property you buy today should come with
updated amenities and specifications so that it can attract buyers even few years later.
5. Gauge the developer
One should do a proper market research on the reputation of the developer and his past
completed projects, if any. This provides a better idea about the capability of the developer and
the construction quality he would deliver. Beware of fly-by-night developers and do not get
carried away by their dazzling presentations and jazzy brochures.
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Go for a site visit and check out the project site carefully to avoid future complications. If you
are buying an under construction property, try to check the financial capability of the developer,
particularly new developers.
The credibility of the developer can be known by enquiring with brokers, going through the
developer's website, knowing the awards and affiliations received by the developer, and
browsing through various blogging websites. Apart from seeing all the above, investors shouldcheck the rental values fetched and the capitals gains received by the past projects of the
developer.
6. Know your house before it is built
Check the specifications and the quality of the property. Sometimes, the standard material
specifications shown in the plan and brochure are replaced with cheaper materials in reality.
Same goes with sanitary ware and plumbing too.
In the areas where electricity is a problem, the developers promise to provide 100 per cent
power back-up which does not convert into reality.
Approvals by the concerned government and local authorities must be checked. In some cases,
sample houses may prove to be misleading as they are created on a plot away from the actual
construction.
The sample units may differ in size /dimensions and furniture design and placement might be
done in a way so as to make it look spacious. It is advisable to double check the dimensions of
the plan given in the brochure vis-a-vis the sample unit built.
While checking the area of a unit, it is important to have a clear idea about the carpet area,
built-up area and super built-up area. The carpet area is the private space inside the house that is
available to use (where carpet can be laid).
Built-up area is the total space including wall areas (Usable Private + Non-usable Private).
Super built-up area is a combination of all the area available (Usable Private + Usable Common
+ Non Usable Private).
End-users often get tricked by developers with regard to built-up area versus super built-up area
versus carpet area. Find the real truth: know how much area you are getting exactly.
Ask for sample boards for finishing materials and for plumbing/electrical materials being used
in the project.
The properties that are garden-facing, pool-facing or offer a good view are usually considered
better than other properties from the same lot. They are also charged slightly higher than the
other units.
Checking the quality of property is important for investors too as selling a low-quality unit in
future would be complicated. Make sure that the property design lies within the tolerance of thelocal culture and norms.
For example, in some Southern India markets, buyers prefer houses with vastu-compliance;
anything otherwise is not at all accepted.
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7. Inclusive of all charges!
Charges quoted for amenities and facilities vary from developer to developer. These charges
include External Development Charges, Internal Development Charges, parking charges, one-
time club-membership charge, security deposit, water charges, etc. Out of these, the charges
levied by the local authorities can be easily checked with them.
For example, one can find out what is the EDC rate charged by the local body in a particular
locality and if it is the same for other projects in the same locality. The parking charges can be
compared with what other developers are charging.
One time maintenance is again the most important component of the total house cost. One
should ask the developer as to how this money will used, maintained and transferred in the
future to the maintenance body.
Buyers can ask the developer for a clear breakup of all the charges and also for the details of all
additional charges like stamp duty, registration charges, etc.
Be informed about the timeline for paying these charges. Investors should also possess a clear
idea of all the charges and know what one-time charges and annual charges are.
Check for transfer fees for transfer certificates which can be levied in case you want to sell the
property to another party.
8. Bank requirements
The loans given by banks generally do not exceed 80 per cent to 90 per cent of the cost of the
house.
It is always good to go with a property which is pre-approved by reputed banks. As an end-user,
you should be aware of the amount of loan you are eligible to get for the property.
Necessary documents required to obtain a loan should be gathered simultaneously. It is also
important to work out other source of finance for the amount other than loan.
For an investor, the most critical part would be to calculate tax benefits in case of home
loan. Time period of money being locked for is as important to consider besides taximplications on second home.
9. Buying an old property?
Buying a property in the secondary market involves a lot of checks such as mortgage on the
property, previous dues with the association, etc. Sometimes, it may so happen that the property
is in dispute. And for such properties, one should hire a good property lawyer.
In resale transactions, it is always good to seek a title clearance certificate.Mother Deed is a must. A 'mother deed' contains the chain of titles of the relevant
house/apartment/flat and of the land on which it has been constructed. It traces the original
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ownership of the property and all subsequent transfers which must be seamless and
uninterrupted.
Other relevant documents to be acquired in such transactions are: Tax paid receipts, non-
encumbrance certificate, sanctioned plans, approvals and clearance certificates and occupancy
certificate.
You have to find out the reason of selling the property. And importantly, before signing anydocument, check with your bank as to how much loan can be approved for the selected property
because many banks do their own property valuation before disbursing the loan which may
differ from the market value.
Check on the amount of cash required by the seller to complete the deal vis a vis your own
portfolio.
10. Legal aspects of property buying
It is the most important part of a property transaction. Before proceeding for sale agreement,
one has to be aware of certain issues such as clear and transferable title, record of right and title,
encumbrance charge etc. for the property.
One should also make sure that the property is not under any kind of requisition or acquisition.
The property should have all the statutory approvals and power of attorney should be obtained
from the seller.
The sale agreement has to be registered on a stamp paper as described by the government. As a
buyer of the property, one should check for registration charges applicable as per the currentstate to get the property registered on government approved stamp paper.
No objection certificate in case of pre-owned property and membership document and no due
certificate in case of co-operative society should also be obtained.
The investors in particular must also check whether the existing association has any restrains for
issues like renting to bachelors, using the property as serviced apartment or guest house etc.
Probational NOC is a must to obtain for investors.