Need for ratings in realty sector

Nov 10 2012, 09:53 IST
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SummaryMost property buyers take a leap of faith while buying their dream home.

Most property buyers take a leap of faith while buying their dream home, digging deep into their savings and taking on significant loan liabilities to make it a reality. It is a tightrope walk where they need to strike a balance between their aspirations and risks, and many buyers walk into a deal blindfolded. The biggest issue facing the buyer is lack of transparency and awareness.

In an unregulated industry, the need of the hour is to have a credible, third party evaluation of real estate projects to assure the customer before he decides to take a plunge. The evaluation must be holistic and closely look at every possible aspect of a realty venture.

Construction Quality

Leaking roofs or damp walls are not what a buyer bargains for while paying a premium price for his dream home. But it is near impossible for him to gauge the quality of an under-construction project while making the purchase.

However, he does not need to worry on this count if the project has been rated by a third party, which will assess the brick and mortar structure in detail to ensure that it is not only fit but also matches the specifications shared with the buyer like structural quality, infrastructure quality, technology and design used, integrated facilities offered, pre- and after-sales services, warranties, etc. A project gets a tick mark in the quality of construction box only if all the commitments are met.

Lopsided agreement

Buyers often do not read the fine print in agreements to spot the devil lurking in the detail. Even if they do, lack of understanding of legalese prevents them from identifying the pitfalls which make the agreements loaded in favour of the developer, leaving the buyer out in the cold. Despite verbal assurances from the developer, a buyer may find himself at a disadvantage if there is a dispute.

There have been instances of a buyer being denied a partial refund for delay in handing over property, or of agreements which do not even have an exit clause for a customer who changes his mind after paying the advance. Also, a buyer is often not sure about the papers and clearances he needs to seek from the developer and is satisfied by the assurance that the project has been approved by a housing finance company or a bank.

While the financiers do their own due diligence, having another credible agency look at

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