Friday, August 25, 2023

The hidden details while buying an under-construction property

 The hidden details while buying an under-construction property

         Here are some vital ways through which you can safeguard your interests while purchasing an under-construction property from a real estate developer

               Before one even begins their home buying journey, homebuyers must make a crucial decision - purchase a home in an under-construction project or look for a ready-to-move-in (RTMI) home.  And more often than not, this decision is influenced by the finances at hand.  If a homebuyer has more than 20 percent of the total property amount ready to pay as a down payment upfront, chances are they would pick an RTMI home.  However, under-construction homes offer the flexibility of paying the down payment in tranches, i.e., the payment is linked to project completions, and thus you can pay in phases.  This convenience often leads one to pursue an under-construction project and if you are one of them, read on to know the key things you must check before investing.

The floor formula

          In a bid to ensure that the project is completed on time, and you get your possession on the promised date, invest in a project that is already 50 percent completed.

         “If a project is supposed to be 10-storey tall, then buy only if the developer has finished constructing at least five floors.  You can easily ask the developer about the number of floors or check the RERA website to know the project details.  This rule works well because once the project is 50 percent complete, the completion generally does not take more than two years.”

Who is your developer?

      Although this is the most obvious thing to check, many people barely scratch the surface when it comes to researching the developer’s background.

Conduct a social experiment by asking your friends and family who recently bought a house with the same developer the following questions:

1.       How many projects has your builder previously completed?

2.       Are there any litigations going on against your developer?

3.       How is the construction quality of his other projects? Do residents have any complaints?

4.       Has your developer explained the difference between super built-up, built-up, and carpet area?

5.       What is the importance of a sales agreement when you buy a home?

    Regardless of whether your friends and family were able to answer the above questions, you must ensure that you know all the answers before investing in the project.

    In the age of the Internet and easy access to the RERA website, not conducting a background check on the developer is almost inexcusable.  “Check the state’s RERA website and read up on all the available information.  Go through all the data available on the previous projects delivered by the developer.  If possible, get in touch with someone who already stays in one of the developer’s past projects.  This will give you additional information about the developer”.

The per-floor calculation

     A floor-rise premium is an industry norm, and developers slash this premium usually during the festive season or when they are trying to negotiate a deal.  “However when it comes to under-construction projects, as each floor is completed, the cost of the property is hiked by around one percent.  Thus, when you are negotiating the price, do take into consideration at what stage the project currently is at”.


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