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.

as the current market condition remains sluggish, developers are in no mood to reduce prices. They complain of being cash-strapped, which affects delivery. But then they are seen spending huge amounts in exhibitions, and advertisements, but would not grant the buyer a discount.

But in a resale transaction, a seller would negotiate and grant a good deal. One must note that bank loans are available for resale transactions too.

Besides, some under-construction projects offer unnecessary amenities which entail high maintenance costs. There are amphitheatres with no performances, multiple pools with hardly anyone using it, golf courses with nobody to play. The buyer has to pay for all these in advance while in resale, if these non-essential amenities are not available, the price is obviously lower. The buyer saves his capital for the same size of the flat in the same or a better location. Besides, the recurring cost of maintenance is also comparatively much lower in resale flats.

Some may argue against resale transactions since one has to pay 100 per cent upfront which is not the case with under-construction. “Currently, the buyer has to pay almost 90 per cent in under-construction deals during first two years of booking, yet he does not know when it would be ready. In resale, one gets the keys of the flat upon payment. Loans are anyway available in both the cases,” says Narendra Mehta, a Mumbai-based property consultant.

Besides, if the flat is purchased for investment purpose or if the buyer is unable to move in immediately, then it could be leased out and the income can offset the home loan payment or society maintenance charges but the same is not possible in under-construction project. Given the current state of real estate, buying a resale flat is like buying peace of mind.

- Anshumali Ruparel

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