It is new year, new hopes and new dreams for all of us. Some of us would have planned to or would be in the process of making plans to get ourselves that new abode we promised ourselves silently. But buying a property/real estate is also one of the biggest decisions of our lives for some of us. With so many options and choices how do we arrive at a decision? More importantly, would it turn out to be the right decision?
Those of us who are in metros would have definitely thought of a flat albeit with a room more or less. Where would be want to buy the same? Should it be the address, the locale, the ambience or some thing else? Your colleague X had recently booked that stylish villa that is being advertised so well! Should you or would you want to be left out? What is your criteria?
May it be that these are some of the points but we have enclosed herewith some more important aspects to be considered before deciding on the real estate these days. These points are definitely aimed at protecting your hard earned money. So we suggest that you have a real hard look.
Importantly, this planning and criteria must be run through and decision arrived at much before paying any kind of consideration as Advance or token money or what so ever to the seller/builder.
01. Documentation establishsing ownership: In reality you are not buying the Real Estate but you are buying the documents pertaining to it and their veracity. Rather you should be buying the documents that establish both your ownnership as well as the ownership of the seller as per the law of the land. There is a term often used in the Real estate parlance called -Clear Title. It need not be emphasized here that do what ever you can, but after shelling out the money including the complete taxes, if you are unable to get the Registration or equivalent documentation (Some geographies give you a 49/99 year Power of Attorney) you are no where with respect to the said property.
But your broker or sales advisor is breathing fire down your neck that the unit you have fallen in love is sought by one and all and it just going to go, go and away. Not an issue. You can always get another good flat but not your money back so easily in real estate.
02. Registration or Power of Attorney or any other instrument: Is the property registrable? There are some properties which are under Power of Attorney only, for 99 years (mostly in Delhi). Some commercial property in NCR (particularly Noida) too is available on a 49 year Power of Attorney. For some of the properties which may be available on a PoA, banks may not even grant loans. Some banks do help you out by doing a due diligence about the veracity of the property and also its documents.
However, there are some important steps to be observed here too. Whether the building space or construction space is actually owned by the builder? How do you verify this? You can actually ask for these documents (photocopies) which establish the ownership of the builders direclty or through a chain of documents.
Well! As we said earlier, these are the steps to be taken before you disburse your down payment or the advance token payment. Do not lose hope if the builder is too big and refuses to share the details. Your banker whom you are approaching for a loan can always help you with this information as we mentioned earlier by charging a small fee for the same. And once they do it and clear the property for you, any responsibility about the authenticity of the property or its documents can be pegged with the bank.
03.Regulatory approvals for already constructed: Ok, So it is a registrable property? But does this have Compounding? No, but wait a minute! What is Compunding? Never heard of it? Compounding can be an issue even for an existing property. For eg. in a multi storeyed complex the builder could have obtained permission to construct till nth floor and you have been offered the n+1th floor. Compounding, broadly is the government approval toregualrise a construction that is otherwise constructed without prior approvals. We know of significant number of cases both in residential and commercial property cases where loans from reputed Banks have been rejected due to lack of compounding for that specific floor.
04.Proposed construction or nearing completion/completed: Real estate companies and their brokers mostly sell the plan lay out. Needless to say, these sales are effected through ultra glossy brochures which can straightaway put Taj Mahal to shame.Further these so called projects are pitched by sweet talking ultra polished sales guns in immaculate suits or sophisticated english speaking female telemarketing army who can coax the people with tightest financial control to
part with their money and invest in their projects.
Here is an important consideration. As per all the available information on Real estate industry including reports from leading MNC real estate consultants, this segement (Real Estate) is still expected to be down and low on sales for at least the third consecutive year. Which means the existing investory of real estate is not selling as they usually say about it-like hot cakes. Further, if you are planning to make your investment anywhere in NCR and Mumbai, there is significant
amount of unsold investory in terms of Sqft. Of this, NCR alone is supposed to have 1 million sq ft of unsold (Brand new) real estate space. So does it really merit buying into a project which is-to be or would be constructed?
However if you are planning to buy a unit in a to be constructed project then there are few more criteria for your decision making:
4.1 Is the builder coming into the market for the first time or is he an established and reputed builder? If he is an established builder then he must be knowing the rules of the game and must have done the leg work to obtain his approvals. However, you need to check this and should not rely on a previous project rolled out by him. You must endeavour to obtain all the documents that establish his ownership of the property.
4.2 If he is an established builder how does his reputation stand out? A quick dip stick and connecting with his existing buyers as references will help you out. You should not drop your guard as there are many buyers with grievances against established and even so called reputed builders.
4.3 Is there a track record of their having completed projects on time? If not-do not fall for the promises for this project. At the end of the day it is your hard earned money.You run the risk of a double whammy of paying the EMI s to the bank and your rental too.
4.4 Please read the Sale deed completely. We are aware that Sales guy is breathing fire down your neck and is scaring you of the probability of losing the coveted unit. Go back and read para 2 of point 4 above, again. There is significant amount of Unsold inventory-lying out there. You can always get another coveted unit which could be better.
4.5 Most important: We have complaints received on this very site that the builder has changed the unit after the sale deed has been done and after the payment of few instalments.Not only that-there are cases where the area of the flat has been increased citing increase in Common Area and additional charges demanded from the
customer.
4.5 Regualtory clearances.Including environmental clearances. Does the project have them? Of late, many a real estate construction in and around the ecologically sensitive zone around NOIDA were brought to a halt.
4.6 Farmland versus Land cleared for Residential projects: Please run your mind through the plight of the Consumers in their case versus the Builders, Noida Farm Land owners. While the Apex court has upheld the case of the Farmers for a time, the Banks were relentlessly extracting the EMI s from the hapless consumers.
4.7 Possibility of Fraud: All of us are aware of a recent case in North India where the same flats were sold to multiple people by some smart and smooth talking operators resulting in the case being shifted to the Economic Offences Wing of Delhi Police.
Our recommendation: Do not even see the property till it is in a ready to move in stage.
05. Safety of Structure and auxillary infrastructure: Is the project in a seismic zone-frequently prone to earth quakes? Have the safety precautions been taken? Is the structure earthquake proof? Is there fire safety and fire fighting equipment? Does the plan of the structure have a seperate evacuation route in case of fire? There are even alarm and warning systems including hooters that alert the residents of fire, earth quake etc. May be it would be worth the while to consider projects which have integrated these into their offerings.
06. Black and White: No, we are not talking about the TV technologies or the skin tone of any heroines. By the way Black is a beautiful colour and it suits us Indians particularly very well. But we are talking about the colour of money, of yours and the builder. Here we are very racist and anti black. It is a common norm where in most builders demand this-in a more sophisticated way. Cash! And Customers too many a time fall prey to this and pay significant portion of the money by cash or Black to avoid the additional cost of taxes and registration fees.
The choice is completely yours whether you want to undervalue your property. But we can tell you this! People who declare the full value of their property have a one time issue to face. And then they and their dear ones are blessed with a peaceful sleep later on for the rest of their lives. RTI, Anna Hazare, Arvind Kejriwal.... should we say any more???
07. Assured rental value on delay of projects: Many vendors today are offering an Assured Rental Value to their flat/property buyers if they are unable to handover the flat on time as promised. Some of them even offer a said number of PDCs to their customers. We feel that this is definitely a good move by some of these vendors and that finally they are coming to have a concern and respect for the consumers. However this may not be totally fool proof. It is advisable to get into a legal agreement with the builder that if the said property is not delivered on time, the Assured Rental Value would be paid out till the time of possession.
08. Charges for Parking and other facilities: We have covered in our first article that the Builders cannot charge any space open to the Sun or even stilted space as parking lots to the buyers. There seems to be some change in that and apparantly there are some geographies which are allowing the charges for the same.This needs to be verified before the payment is made out.
09. Miscellaneous: It is almost impossible to find a perfect builder or the complete dream home. So we need to pin down our priorities. What are we looking for? Is it a nice sweet dream home that we would like to enjoy during a long stay with our dear ones, is this being planned as an investment with a resale value, are we eyeing the rental income, how long do we plan to stay, the hygiene of the surroundings etc.Now a days almost all new projects are offering video survellance, anti-theft electronic burglar alarms etc including bio metric based access systems etc.
Of course you do not need us to tell you about the issues to be kept in mind such as the surroundings, proximity to necessities, transport and proper facilities etc. These are an absolute must now a days.
There are many advertisements that cry out lucky bumper draws of luxury sedan cars in return for a flat booking from a proposed construction. And many more goodies such as LCD flat panel TVs, refrigerators etc etc. But our advice is this: Let us get the home in our hands first. And fully registered in our name. Once that done, these little goodies will follow later, for if you wanted to buy a Sedan car you would have visited the Sedan car show room-is that not right?
We recommend that it is always safer to pay 10-15 % more for a clear titled property, registrable and which is ready to move in!!
Real estate is indeed the most valuable investment but it will remain so only if it truly belongs to you in form and spirit. We sincerely hope these pointers will help in taking some important decisions. Better, we will be very happy if even one customer gets benefited by this.
In the process of disseminating some well researched information to you, our users, we intend bringing out some more indepth articles. Please let us have have your valuable feedback on the same, including mentioning your areas of interest.