Everyone wants to buy a dream home and we all know that it is one of the biggest decisions we take in our life. No one wants to invest their life savings somewhere and then repent. Do you know, the small mistakes you make can cost you your dream? To avoid any mistakes you need to do good amount of research before investing your hard earned money in your dream.
So you are wondering, what factors you must take into account to make sure your asset doesn’t become a liability. In this article I will be telling you about what you need to check before buying a property in a new/upcoming project.
1. Market Rate:
There are multiple rates for a particular project in a market, one being the developer’s inventory rate, second being the re-sale properties by owners in the same project and third investor’s property. Often investor’s inventory is the lowest rate on offer. Do always look for investor’s property in your project of interest.
2. Builder’s credibility:
Always do some background research on both your land, the appreciation it may give in future and the builder’s reputation, to make sure you are safe. You can check developer’s previous projects for delivery and quality before going ahead and purchasing a property in his project.
3. Liquidation clause:
Checking on the liquidation clause of the property not only ensures resale value and opportunity but also validates investing in it and counting on it as an asset. Always check on the lock in period before buying a property in an under construction or pre-launch project.
4. Transfer clause:
While buying a property, always check on its transfer charges. These are the charges to be paid to the developer when you are selling the property for transferring it to the third party. The property may have appreciated a lot, but at the time you plan to sell it, the transfer charges may take a big chunk away from your profit you have made, leaving you with hardly any. Make sure to check the transfer charges to be paid to developer before investing or buying in a new property.
5. Hidden clause:
Developers often don’t account for certain costs in their primary proposal to the client. This means that maintenance, floor rise, club membership fees, development charges, electric & water connection charges, parking spot charges, etc. are omitted while pitching it to the buyer, thus bringing up the original cost at the time of final purchase. Do ensure you check all additional charges and taxes before investing in a property.
6. Possession Guarantee:
Do always check the promised possession date while investing in a under construction property. Always tally it with the date mentioned in the agreement before signing it and ensure there is a clause of repayment if in case the property is not handed over on the mentioned possession date.
7. Approvals and Licenses:
These mostly consist of : -
a. Title Certificate
b. Intimation of Disapproval (IOD)
c. Commencement certificate (CC)
d. Land use verification and local body approvals
8. Loan approval from banks:
Check if banks have approved of the project for loan. If banks have pre-approved the project it means they have done the necessary documents check before approving loans for the same. If the project is approved by SBI bank, it ensures that the project title is clear in all aspects. However certain banks excuse some documents for e.g. - ICICI Bank approves of a ready project even if the OC (Occupation Certificate) is yet pending from the Local Municipal Corporation.
9. Actual size of the apartment:
Often the brochures list the built-up and super built-up area of the apartment, which may be almost 30-40% less than the actual carpet area. Also some developers mention “Usable Carpet Area” to prospect buyers instead of actual carpet area. Usable carpet area incudes flower beds, dry area etc. which are free of FSI, hence check the carpet area mentioned in the agreement as it is the actual carpet area. Checking on these will make sure you don’t have to overpay for the area.
10. Future infrastructure plans:
Metros, schools, highways, monorails etc. can tremendously boost the appreciation value of the property, if located close enough to it. Many a time’s future infrastructure development around the project mentioned by the developer is unrealistic or exists only on papers. Kindly verify the same with the local body authorities.
11. Check the site:
Site visit is a must, you can check the construction quality, sample flat, distance from major transport systems, infrastructure around like schools, colleges, markets & roads leading to the project etc. Taking photographs of the sample flat may be a good idea since you can compare them with your own flat when it is ready.
12. Help of legal advisor/agent:
Due to the large amount of legal proceeding and paper work and the long term consequences associated with purchase of property, it’s always advisable to get professional help by consulting a property advisor or a legal advisor to go through the agreement and other proceedings carefully and give you their detailed and informed opinion.
With these tips we hope to make your home buying a sweet and memorable experience.
If you have any queries or questions regarding the same you can ask Mr. Ashish Ramrakhiani (Managing Director, DGM Property Solutions Pvt. Ltd.) in the comments section below. Alternately you can also reach him on - 9768641973