What you should ask real estate developers?

Like any another purchase, buying a property has its own confusions and risks during decision making. A home buyer has to be sure that he/she chooses the right builder and the right location within the right price. From a personal point of view, every buyer does his/her best to verify the property and have the best pick; however, we still see a lot of cases wherein the buyer is duped and is eventually dissatisfied by the purchase. Following the customer feedback, in this article, Makaan.com lists a few questions that you can ask the real estate developers and then shortlist the property.

Use of land

What is the use of the land on which the project is being developed? Is it for residential or commercial property; floors or plots; how many floors does it permit etc. It has been seen that often developers begin a project and start to sell properties before land acquisition is over. A portion of the land acquisition may be pending and might impact your apartment; therefore, make sure to ask the developer and verify the land acquisition documents. A homebuyer should verify the papers demonstrating the builder’s ownership of the land. You could also hire a lawyer to conduct the title search and to find out whether there is a legal dispute over the land.






















What about the approvals?
A home buyer should check all the approval documents prior to finalizing the deal. Check for the developer’s licence in order to check the permission from the area’s town planning authority to develop the project and approvals for building plan, water, environment and pollution, and height clearance. If the approvals have not obtained, it is suggested that a homebuyer should not invest in that project as delay in approvals is of the major causes of project delays.

Payment Plan
In the application form, pay attention to the payment plan. One should not pay a large portion of the cost of the property at initial stages. It is suggested that one should stick to a construction-linked payment plan or one in which a portion of the cost has to be paid after possession. Another area of concern is that the builders often include a cost-escalation clause in the builder-buyer agreement, which states that the developer has the right to increase the cost of the project in case the cost of building materials goes up. Enquiries regarding the builder’s track record as to whether he has implemented the escalation clause in the past can be made or finalise a developer who does not include an escalation clause in the agreement.

Delivery and its terms
Most of the agreements mention a time frame within which the developer will give the possession of the property; however, the trick is that the agreements do not mention the start date of the time frame. Enquire about the start date and if possible get it documented. Also check whether the agreement has a penalty clause under which in case of a delay in possession, the developer will have to pay a penalty to the buyer. If the clause is there, find out how much penalty he will pay and whether he has paid it in the past.

Change in layout plan
Often builders bring about changes in the layout plan and show them as beneficial for the buyer; however, the buyer should not be lured by the increase in area of the property, instead at the time of booking, should find out whether the builder has changed his plans in the past and what were the terms of that. For example, if the area of the property increases, the buyer will have to pay according to the original booking amount or the current rate?

The extra charges
Check out the various heads under which the developer may ask the home buyers to pay, for example, preferential location charges (PLCs), external and internal development charges (EDC and IDC), advance maintenance fee etc. Calculate what will be the purchase value after adding all these charges and buy only if the sum falls within budget. There can also be a case when the buyer falls behind in paying an installment; in that case the buyer should be clear about whether the developer will give extra time to pay up, what will be interest liability etc.

Record of the developer
The record of the developer includes his financial status and his reputation as a developer. The buyer can verify a developer’s financial status by asking for his company’s balance sheet. Do not invest in the project if his company is over-leveraged because it increases the probability of delay in project completion. Moreover, find out how many projects the developer has completed, whether there were legal issues in his past projects, whether the projects were delayed, are the current occupants satisfied with the construction etc.

The year 2013 was an eventful year for the Indian Real Estate sector with the introduction of Real Estate Regulatory Bill and Land Acquisition Bill in the parliament. On the home buyers’ side, the year can be best described as a lackluster year with high property prices and home loan interest rates that kept the buyers waiting on the sidelines. As we move into 2014, it is important to gauge the mood of home buyers in terms of their desire, aspirations and fears from the upcoming year. For this purpose, Makaan.com, India’s fastest growing property site, conducted a research, “Property Forecast 2014”. The research was conducted in November 2013 among 2058 home buyers across Mumbai, Delhi NCR, Bangalore, Chennai, Hyderabad, Pune, Kolkata, Ahmedabad, Chandigarh, Indore and more. The main highlights of the research: 1) Property market in 2014 will be driven by end users: Speculators and Investors have been riding the property market since a long time; however, they will make way for end users in 2014. Majority of home buyers want to purchase a property in 2014 for self use as they are currently staying on rent. An almost equal number of home buyers want to buy property to meet the growing family requirements and for long term investment. The analysis show that the year 2014 may experience a very positive shift from the earlier years and will bring in the much required stability in the property market. As the property transactions have fallen over the past 12 months, speculators and investors are finding it difficult to exit the market. 2) Residential property prices will either stabilize or will appreciate marginally in 2014 Property prices have remained stable over the past few months and the mood of the market suggests a continuation of this trend. 26% of home buyers feel that the residential property prices would remain stable over the course of 2014. 46% of buyers expect the prices to go up from the current level with majority of them expecting an appreciation of up to 10%. This should bring some relief to the buyers in 2014 as generally more than 10% appreciation is expected on a yearly basis. 28% of buyers are advocating for the prices to go down from the current level. 17% of them are expecting a drop of over 10%. Property budget of Home Buyers is likely to remain the same in 2014 There has been talk of a slowdown in the Indian economy with all economic indicators showing a negative trend. This, however, has not dampened the spirit of the Indian home buyer. His budget for buying a property in 2014 will not be affected by the slowdown. This reinforces the confidence of the home buyer in real estate as an asset class. There are 23% of buyers who have reduced their budget allocation while there are another 19% who are ready to dish out more money for property buying. 4) Apartment is the preferred choice of home buyers In 2014, majority (65%) of home buyers will be looking for apartments or flats. Residential plots (15%) also emerged as the preferred choice for a few home buyers. Apartment is the preferred choice for people in Delhi, Mumbai & other such cities that have high property prices and scarcity of land. Security and community living also contribute in making apartment the preferred option. Service /Studio apartment have gained popularity; however, they still account for a very small portion (3%) of the overall demand. There is an interesting overall shift in the property type preference; a decade back or so, quite a lot of the people preferred an independent/builder floor; however, now the preference for the same remains only 4%. 5) Property investment budget for home buyers is 0-40 lakhs Owning a house has been a priority for Indians since ages; it is treated as a symbol of financial stability and social status. Affordable housing i.e., housing between 0-40 lakhs will continue to be a preference for majority of home buyers with almost 60% buyers opting for this. Mid segment housing (40 lakhs to 1 Crore) will be the preferred budget category for 34% of home buyers. High end housing (1 to 2 Crore) will be preferred choice for 6% of buyers whereas only 1% of buyers will be looking for luxury housing (over 2 Crore). Location and Price will be the top purchase considerations in 2014 “Location” will be the top most purchase consideration for home buyer in 2014. The preference for “Location” is even higher than “Price” that was the biggest influencer for property purchase over the last few years. This is an important shift in behavior of the home buyer. Other factors that will influence purchase decision are Price (24%) and Connectivity (18%). Around 13% of home buyers will give higher importance to “neighbourhood” and proximity of the property to hospitals, schools and offices. It is interesting to note that only 2% of home buyers rate size as the top purchase consideration, which implies that majority of the locations have each property type available for purchase. 7) High Property prices will be the main hindrance for home buyers in 2014 The phenomenon of exponential jump in property prices has been prevailing in the Indian real estate market since 2009; however it is for the first time that the high property prices (61%) has been identified as the single biggest hindrance in buying property in 2014. With more than half of the homebuyers considering high property prices as a hindrance, it can be inferred that most of them are unable to justify or afford the high prices being asked from them. Other dampeners are that the home buyers are unable to find their dream adobe closer to their preferred location (11%) and with the appropriate connectivity. They are either forced to compromise with an area or postpone the purchase of the property. High home loan interest rate (11%) is another reason because of which home buyers might decide not to buy a property in 2014. Therefore, when it comes to choosing between available options, projects with economical budget and superior location & connectivity will win the race in 2014.

Read more at: http://www.moneycontrol.com/news/real-estate/property-forecast-for-2014-makaancom_996387.html?utm_source=ref_article