In view of some recent developments in the real estate sector, buying a home has become risky these days. Here's what you need to do before buying a flat.
Project delays combined with a few recent incidents of some builders becoming bankrupt have shaken the confidence of homebuyers. Many buyers have been waiting for their dream home for years and years, and still nobody is sure when will one be given the possession of one’s flat. In fact, over the years, the real estate sector has acquired a stamp of notoriety, with unscrupulous players polluting the market, much to the plight of hapless home-buyers. Still there is some hope. The government’s thrust on affordable housing alongside RERA and lowering of interest rares has ushered in an air of jubilation for buyers. However, before buying your dream home, keep the following things in mind:
1. Go for a RERA-approved project: Buyers should ensure any under construction property they buy now is RERA registered. In respect of the ongoing projects that have not received a completion certificate, developers have to get them registered too. Once registered, they too will have to follow the rules. “RERA provides several safeguards for prospective home buyers such as promoter’s promise, sacrosanct possession date, clear title, escrow account for proceeds from buyers and punishment for errant builders,” says Arun Ramamurthy, Director, Credit Sudhaar.
2. Check the track record of builder: Only opting for a reputed builder is not enough as many such builders have been found becoming bankrupt these days. Therefore, “you should always check the track record of the builder before buying an under construction property,” advises Ramamurthy.
This is very important as India’s real estate industry is still inundated with unscrupulous players. Although RERA will hopefully take care of them, however, it will take some time. Meanwhile you have to be careful.
3. Check the agreement: Buyers should check if the agreement that they are signing is with reputed owners. Sometimes it is found that while the name of the project might sound appealing, the actual contract is with special purpose vehicles owned by unsavoury individuals. Avoid signing such an agreement in any case. Also take the services of a good lawyer to see if the agreements being signed are fair and well understood.
4. Verify the documents: It is also important to check the credibility of the documents and also the fact whether all necessary approvals have been obtained or not. If not, the buyer of the flat may land in trouble later on. Therefore, get the certified copies of all documents that prove the undisputed ownership, non-encumbrance etc. The help of a good lawyer is needed here too.
5. Go for bank-financed projects: These days in view of mounting NPAs, banks have become very careful and finance a project only after doing a certain amount of due diligence. Banks do all the document verification and follow legal procedures before making any investment. Therefore, it is relatively safe to buy your flat in a project that has been approved and financed by some leading banks.
6. Take a home loan: If you are unable to find out whether a project has been financed by some reputed bank or not, then you should try to a get a home loan by a leading bank or housing finance company. Banks give loans only when a project has been approved by them.
7. Calculate the total cost: Often brokers just mention the basic cost and not other factors such as internal/external development fees, preferential location charges, parking/club/statutory charges, and service tax, which shoot up the total cost. Hence, “it would be a wise move not to trust their words blindly. Ask pertinent questions and estimate the final cost,” says Dr Anil Jindal, Chairman, SRS Real Estates.
8. Verify various offerings: Never buy a home just by taking a look at the sample flat or getting influenced by what has been written in the sales brochure. Check in detail the various offerings – such as swimmig pool, children’s park, club house, etc — provided by the developer and get everything on paper. This will help in resolving a dispute in case that arises later on.
9. Go for a ready-to-move-in apartments: Instead of an under-construction home, it is relatively safe to buy a ready-to-move-in flat these days as you won’t have to wait for taking the possession of the flat after buying it. These days there is no dearth of such flats and they are not very costly too. You will also be able to check what you are actually getting.
10. Take an informed decision: Your decision to buy a flat shouldn’t be based on the advise of someone else or the recommendation of a broker or the builder’s sales team. Remember that you are not going to buy a TV or refrigerator. It’s your home which will be the biggest investment of your lifetime and you can’t buy a home again and again. Therefore, always take an informed decision after keeping the basics in mind and reading the fine print.