Home buyers' decision: To book or to buy

Apr 26 2014, 09:29 IST
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It makes a compelling case for choosing a resale property over one under construction, given uncertainty in delivery in real estate sector. It makes a compelling case for choosing a resale property over one under construction, given uncertainty in delivery in real estate sector.
SummaryHome buyers in metros are making significant shift towards buying older flats in resale transactions.

useable carpet area he gets. For example, the buyer pays for total 1,400 sq ft on booking while he gets a carpet area of 980 sq ft, which might be mentioned in the agreement for sale.

This loading on carpet area is called ‘super built up’ or ‘saleable’ area. There is no fixed chart for such loading. Every inch of common area is also included. In many cases this extortion could go up to 60-80 per cent of the carpet area. “However, the resale deals are usually done on ‘as it is where it is’ basis. In Mumbai, the price is either quoted lump sum on ‘all inclusive’ basis or calculated usually on carpet area. The buyer knows how much area he gets,” adds Ranka.

In an under-construction property, the buyer pays for super built-up area, but while selling it, he is forced to charge only for carpet area, as that is the figure mentioned in all documents. But a flat bought in resale is on the basis of carpet area, and when resold, it would be on the same basis, which means there is no loss in the sale.

There is another risk in under-construction projects. Compliance with regulatory requirements could be sketchy, going by several cases that have rocked major markets especially Mumbai and Delhi-NCR, involving prominent developers. These developers do not reveal the correct status of their projects to the buyer. It is several years later, or when construction is mid-way that the buyer comes to know of the real status. The land may have no clear title, or some approvals may be missing. At this stage it becomes too late. The structure could come under either the court seal or the civic bulldozer. Another possibility is that the buyer again pays a penalty to regularise the structure.

“In resale, the buyer can approach the society and cross-check all details regarding legal status of the building, society as well as that of the particular flat he wishes to purchase. He may check all the official records online. He can hire a professional to verify all the documents and get the search report of the earlier ownerships and transactions. All this is possible only in resale even before you pay a paisa. In usual under-construction deals, even the agreement draft in some cases is not shown without the booking amount,” says Shefali Madan, an advocate at the Bombay High Court.

Even

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