Home Buying: Alerts and Critical Points
10 May 2016
In early 2007, me and my family had planned to buy a big house in a new property so that we all can live comfortably under one roof even after my marriage. However, when we went around seeing houses, we realized most of the good ones were outside our budget. We eventually settled for an additional smaller house in the same building were we used to stay and thus, we now had two flats, one above the other. Though it was not a duplex!
In 2010-11, we started discussions about how the prices of the same homes that we didn’t buy in 2007-08 have increased by 4-5 times. Any thoughts of buying another big house were rejected with the same reason - "We cannot afford buying a house currently, though we should have stretched a little and invested way back in 2007-08".
The idea behind this example is that hardly anyone can wait for the right time to buy a house. Real estate prices are such that, they always seem out of reach for the common man, and you will never feel you have enough money to combat the existing real estate prices. So, the best thing to do is do some research, and take views of smart real estate investors to know about the points that need to be considered while buying a house. Once you do that, you will be able to take the decision to buy your first home, or a second larger house, or a residential property for investment purpose.
You should always remember that the house you are buying may not be a permanent one, as your needs may change after few years. So, you need to buy a home, by taking into consideration that reselling it won’t be easy. Hence, it is important to buy a home thinking about how much would be its resale value after several years. Most importantly, do not rush while purchasing a home, as real estate transactions should be done very carefully and by taking your own time.
Some other key points to remember while buying your ideal home would be as listed below:
- Do a thorough background check of the builder. Do not rush to buy a home, just because a friend is buying in the same building. Check the track record of the builder, his past and current projects, and comments about him in real estate forums from people who live in houses developed by him.
- Make sure that all the paperwork of the building in which you are buying a flat is in place. The builder responsible for development of your property needs to have all the environmental clearance licenses, local body approvals and government approvals. You need to check for other certificates like title deed (indicating whether the builder owns the land or has development rights for the same), release certificate (if it’s a resale house to indicate that the loans have been repaid), encumbrance certificate (ensuring no legal dues pending on the land), property tax receipts (for resale property to ensure all bills are cleared), original agreement, and so on.
- Renowned banks get associated with a new real estate project for offering easy financing options, if most of the approvals and documents are in place. So, it is necessary that you find out which banks offer loans for your property, even if you do not require a loan. It is just to verify that the building has been approved by some reputed banks.
- Always enquire about the total cost of your property from different sources, instead of just relying on your agent or the person reselling a house. There may be several hidden costs in the form of maintenance, parking and club charges, external development charges, service tax, etc., which may not have been revealed to you earlier. This could shoot up your budget considerably.
- Get better clarity about the total space / area you will get for your flat. A lot of developers specify only the super built-up area in their brochures to attract customers. And you would do well to know that the super built-up area sometimes may include common areas like lobby as well. So, you should always check out the carpet area offered for your house, and this will always be much lesser than the super built-up area.
- Never buy any property expecting heavy appreciation, just because there are speculations for some big infrastructure development near that building. Unless and until the construction for any mall, metro station, connecting road, etc. has completed, never trust such news. Instead buy a home that has good infrastructure connectivity already in place.
- Check out all the various payment options, and hidden clauses, so that you are totally clear about the exact outflow of money from your end on a regular basis, with regards to payment for that property. Do take into consideration the charges applicable for registration and stamp duty.
- If you are buying a house in a building that already has several occupants, make sure that you go and meet some of them to know about any issues that they may be facing with regards to electricity outages, water supply shortages, noise issues, neighbourhood, etc. Also, by talking to residents you get an idea about existing rates of properties in that building, which helps you to ensure that you do not get an expensive deal from your agent / broker.
There are many other points that one needs to be aware about while purchasing a home, but, the above mentioned ones are definitely some of the most important points. Take your time, do your research, take second and third opinions - as you do not buy a home regularly; it’s a rare event!