10 things to check when booking an apartment in a builder project

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Call it practices or malpractices; real estate in India is riddled with cases where buyers have been taken in for a ride. And in this environment, buying an apartment is not as easy as it may sound. Whether you are an end-user or an investor, you should pay attention to the following 10 items when booking a flat. These 10 items are categorized into two principal checklists namely Project details and Apartment details:

Project Details

• Land Titles

When making real estate investments, buyers of property typically want assurance that they will become the legal owner of the property and that the seller is lawfully possessed and has the right to convey title. When a real estate developer has “Title”, he is said to have all the elements, including the documents, records, and acts, which prove ownership. Therefore, a buyer should insist on documents that clearly demonstrate Land Titles.

Some of these builder projects are approved for home loans by banks or lending institutions. These lenders are also concerned about title assurance because the quality of title affects the collateral value of the property in which they have a secured interest. Therefore, if you as a buyer lack the capacity to verify Title certificates by yourself, you should at least check and verify with the list of banks that have approved the project for home loan grant.

• License Grant

The Town and Country Planning (TCP) Department grants license to private developers owing land for converting it into a colony or a group housing society. The license is granted upon fulfillment of parameters laid down by the TCP Department.

Ask for the License number from your developer and verify it at the TCP website.

• Intimation of Disapproval (IOD)

Check if the builder has received the IOD from relevant authorities (Town and County Planning Department). IOD lists out the conditions based on which the building should be constructed. It is usually valid for one year and has to be re-validated thereafter.

• Master Plan

A master plan typically demarcates city or region’s future development including residential, commercial, industrial, and recreational facilities. Visit the City Development Authority website and verify the claims made by the developer while selling the project.

• No Objection Certificates (NOC)

In addition to the License number granted by the TCP department, a builder should also possess NOC from environment, fire fighting, electricity, water, airport departments. Check these NOCs.


Apartment Details

• Location

First thing first, location is the key differential in selecting or rejecting a project. Make sure, you book an apartment in a project which is well connected by road to city’s CBD (Central Business District). In addition to that, look around for the presence of social infrastructure such as schools, shopping malls, college, etc.

• Floor Plan

You are going to live in this apartment. Therefore, pay attention to the floor and unit plan. In one particular project, we noticed there were about 14 apartments on one single floor and that was a big dampener in otherwise a good project. In an under construction project, it is very difficult to assess the floor plan and unit plan. Ask for the approved floor plan and unit plan from the developer and analyze these plans for open spaces, lobbies, lifts, etc.

• Amenities

After a long and hard day at office, one would like to relax and rejuvenate. Buy an apartment in a project which offers state of the art amenities such as park, jogging track, swimming pool, clubhouse, etc.

• Kitchen

Many people overlook the Kitchen; however, make sure Kitchen is not only spacious but also properly planned. Many developers in Gurgaon offer the option of Modular Kitchen, however, check if the same can be developed from outside suppliers at lower prices. There are numerous vendors of Modular Kitchen in Gurgaon, visit them and inquire about the quality and total price. Thereafter, one can compare and take a final decision on the modular kitchen offered by the builder with the one offered by outside vendors.

• Apartment specifications

Specifications comprise of kitchen fittings, bath fittings, flooring, electric work, walls, etc. Visit the sample flat prepared by the developer and assess the specifications first hand. Make sure that specifications provided in the brochure and shown in the sample flat are part of the builder buyer agreement.

• Carpet Area/Sale-able Area Ratio

Most builders would charge you on the basis of sale-able area. Ask for the efficiency of the apartment or in other words carpet area of the apartment. In most cases, ratio of carpet area to sale-able area is 75 to 80%. If possible, get that included in the builder buyer agreement.

We are sure you will have your own stories to tell, your own issues with real estate projects, your own experiences of buying an apartment with a builder, and your own follow-ups? Share them here with the larger audience and let’s help each other.

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Looking to invest in real estate? Here are a few guidelines you must follow

Investing in the realty sector can be a good decision if done wisely. Most people channel all their savings and take out loans to purchase a property hoping that it will give them a good return on investment. Hence, this has to be done cautiously to make sure that the money invested bears fruit.

• Set a budget:

Budget is the most important thing you should take into consideration before buying a property. Set a budget and make sure your finances are in order. For many, Paying EMI is not an easy option. Paying EMI empties out their pocket by the end of the month. It would be wise to ensure that the EMI does not exceed 40% of your monthly income. Make sure that you don’t overestimate your financial capabilities.

• Research:

Once your finances are in order, the next important thing for you to do is research. You should work with the localities which match your requirement. Some of the criteria which one should consider while looking for a property are:

1. Locality
2. Accessibility and connectivity
3. Presence of social and physical infrastructure
4. Proposed infrastructure developments
5. Safety and security
6. Livability

It is always advisable not to invest in localities which lack basic amenities such as road, water supply and drainage system. Never get carried away with the promises of upcoming infrastructural developments and do not invest your money on those promises. Infrastructure takes time to be built and a few even fail to take off.

For guidance, you can visit IndiaProperty.com as this site provides expert analysis of localities through the micro market research reports and the locality pages.

• Check the builder’s credibility:

The real estate market is vast and the industry has both reliable and unreliable builders. Do not blindly invest your hard earned money after seeing a too good to be true offer from a small time builder. Make sure you check on the trustworthiness of the builder by visiting their previous projects. This will give you a clear idea about the credibility of the builder and then you can decide whether to invest your money or not.

• Verify legal documents:

For any property related transactions, title deeds play a crucial role. Check whether the seller has a strong title deed, if not, do not purchase the property. Here are some legal aspects to keep in mind while purchasing a property:

1. The title deed is an important document without which you will have legal troubles in the future.
2. Make sure you get the original title deed verified by an attorney before buying the property.
3. Before acquiring the property, confirm that all the clearances for the property are in place.
4. If you are planning to buy an under-construction property, do not forget to get the allotment letter and the development agreement from the builder.
5. The allotment letter has details about the project such as the price of the property, floor plan, delivery date and liability details if there is any delay in delivering the project, whereas the development agreement has the details of the terms and conditions under which the landowner has allowed the builder to use his property.
6. Make sure that the taxes related to the property are cleared before you buy the asset.
7. Never hesitate to get an expert’s help if you have doubts.

This is a guest post by Amy Anstey Seelan J

Must-ask Questions Before You Finalize on a Luxury Apartment

Now, that you have decided to buy a luxury apartment, it’s important to invest your time and carry out the necessary homework around the luxury real-estate market. Firstly, the easiest way to do research is using the internet. There are many real-estate discussion forums and groups in social-networking sites such as Facebook or Quora, where you can post questions related to the luxury home market. All you need is basic networking skills, and you can easily evoke informative answers from “virtual” friends.

Apart from posting online queries, it’s important for you to have in-person interactions with people in real estate. For example, you can set appointments with sales people from various real-estate companies and get a quick view of the prices and deals.

Besides, it’s important to draw impartial advice from people who are experts in the market. In that respect, you may meet real-estate advisers, brokers and agents who are known to enlighten many on the market and share a few tips on finding the best deals in the city.

All the interactions, be they virtual or in person, will help you to avoid apprehensions about the big investments you’re about to make. However, there are ways in which you can prepare yourself and ask better questions to understand the market of luxury apartments.

Before the final plunge, let's quickly run through some common questions that come to everyone's mind…

1. Is the project title clear? 
2. Has the project got the required approval? 
3. What is the total cost of ownership? What is the monthly maintenance cost?
4. Which other costs are included along with the registration fee?  
5. What are the highlights of the project? 
6. How great is the aesthetic value of the building? Is the building design in sync with your concept of a luxury building? 
7. What are the key amenities showcased by the builder? 
8. According to you, what are the most desirable amenities of a luxury apartment?
9. How good are the views from balcony and living room?
10. Are concierge services available? 
11. How far are the conveniences?
12. Is the price affordable for you? 
13. What’s the overall reputation of the builder in terms of deliverability, quality and finish?
14. What’s the actual size of the house? 
15. Is there a model apartment or an occupied flat that you can visit?  
16. What is the compensation offered if the possession gets delayed?
17. Is there an option to customize the interiors when the building is in construction phase?
18. What are the luxury amenities provided by the builder? Are they at par with amenities in luxury projects being built by other builders?
19. What is the overall prospect of the price trends in the given locality?
20. What is the probable return on investment for the given project?
21. If the apartment is already occupied, can you check the opinion of current owners about the property?
22. How is the locality connected to other parts of the city? 
23. Is there easy access to public transport facilities?
24. Apart from the main features, what are subtle aspects of the project which make it unique? For example, the floor-to-ceiling height, common wall sharing, number of apartments in each floor or block, number of elevators in each block, fire safety precautions, etc.

Closing note...

Here is one suggestion to prospective luxury home buyers – don’t believe everything that sales reps say. Try to go beyond their words and the glossy brochures. Carry out a good research on your future home as the pay-out is big and it’s an important decision in your life.

This is a Guest post by Seema Mohta, who has over 7 years of experience within Real Estate Industry. She has worked with Various Real estate companies and has Good knowledge about property trends, Investment, Apartments in Sarjapur

Selling tricks used by real estate developers and how to avoid them

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

With the festive season around, the spirits are high. Most of us buy big-ticket items during this time of the year. The big-ticket items may vary from buying a house, car, gold, etc. It is also that time of the year in India when marketers will come up with sale offers; discount offers to lure customers in making a purchase decision.

However, buying a home is a lifelong commitment and you will be paying EMIs for several years and therefore don’t fall in the trap of these discounts, offers, schemes, etc. Instead, you should do your due diligence so that you do not repent later.

We have put together a list of 9 things that the sales executive of a real estate developer will throw at you in order to close the deal. Make sure to research all these 9 things just like this smart buyer has 

So, Are you a smart buyer???

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How to check for legalities, cost, penalty clauses, and available financing options for a real estate project in India?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Are you looking to buy property in India? Have you decided on the location, or choice of builder? Are you satisfied with your research of similar offerings available in the market? If you answered ‘YES’ to these questions, then there is all the likelihood that you may be about to make the booking amount to the real estate developer. But, hang on; despite making all the efforts to research for the right property, right builder, location, and budget, there is still a possibility of things going wrong. What else can you do to minimize such risks? Well, conduct a thorough due-diligence including verifying the legalities of the residential project of your choice, It’s pricing, penalty clauses to the developer, and available financing options for the project.

It’s not that difficult a task, just be more open and ask a set of questions from the developer, and bank. This is to make sure all bases are covered in case something goes wrong with the project. We have put together a detailed list of “TO DO” things for you to verify before you pay the booking amount for a property of your choice.

Here it is:

Process to check for legalities, costs, penalty clauses, and financing of a real estate project in india from Green Realtech Projects Pvt. Ltd

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Due - Diligence: A must do exercise before investing in a property

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta
 

Sumit Sharma was ecstatic having done renting vs. owning and home loan analysis and was now all set and ready to go for his dream home. All of a sudden he got to know from various sources such as newspapers, radio and his colleagues about some cases where builders have failed to deliver the project on time, or there were litigation issues and deviations in homes from what was promised. That was a cause of concern and since, buying a home is a lifelong decision and therefore nothing should be left to luck. He decided to go for a comprehensive check with the help of a real estate agency. The agency adopted the L BID (Lets Break It Down) approach and came out with following verification:

Verification of the Project:

1. The agency got the copy of most important documents in verification of a new project such as Copy of intimation of disapproval (IOD) and commencement certificate (CC) from builders. Only after complete verification, they recommended the client.
2. They asked for and studied the copy of approved drawings of the project for an under construction project and recommendations were made accordingly.
3. Land title verification is crucial in a sense that land should be free of litigation and any kind of associated debt. The agency with a team of legal professionals verified the land documents.
4. They also checked the copy of functional water connection, electricity connection, and occupation certificate in order to make sure that deal was hassle free and transparent.
5. The agency also checked if the property to be bought is mortgaged with the lender (such as bank, or housing finance companies). If that was the case, they asked for a NOC (no objection certificate) from the lender.

Verification of the price of home:

1. In addition to the base selling price, there are other additional costs associated with the project. The agency hired by Sumit Sharma also verified the total cost of home in addition to project verification.
2. Stamp duty verification: to check if the rates quoted by builder are on the super built up area or carpet area.
3. Registration Fee: to check if the rates quoted by builder are on super built up area or carpet area.
4. Floor rise: to check for the prices with the builder
5. PLC charges: to check for the prices with the builder
6. Infrastructure development cost (IDC): to check for the prices with the builder
7. External development charges (EDC): to check for the prices with the builder
8. Car parking charges: to check for the prices with the builder
9. Society and club membership: to check for the prices with the builder
10.Electricity and water charges: to check for the prices with the builder
11.Power Backup charges: to check for the prices with the builder
12.Lease Rent one time: to check for the prices with the builder
13.Interest Free Maintenance Security (IFMS): to check for the prices with the builder
14.Fire Fighting Charges (FFC): to check for the prices with the builder
15.EEC: to check for the prices with the builder
16.Extra space in storage rooms and lawns: to check the prices with the builder

The agency verified all these charges with the builder and asked for them to be included in the builder buyer agreement in order to avoid future escalation of the price.

Verification of other important elements:

1. Monthly maintenance charges
2. Ratio of carpet area to super area
3. Delivery date and what are the penalties if project is delayed?
4. Penalties for deviation in size of the house
5. Who is the supervisory authority and legal dispute authority?
6. Possibility and ratio of loan availability.

The bottom-line is to carry out property & builder assessment, verify the charges, legal terms and get them included in the sale agreement.

So friends, have a look at this checklist and if need be take the services of a professional real estate agency or lending institutions in order to make sure that your lifelong savings are being invested in the right property.

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What are the lessons that we as buyers can learn from Campa Cola fiasco in Mumbai?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Campa Cola is in news and thankfully Supreme Court has stayed the Campa cola society demolition. The next hearing is on November 19, 2013. But what went wrong? The society was built in 1980s and the plan for 9 buildings of 5 floors was sanctioned. However, rules were flouted and only 7 buildings were constructed. 4 of those buildings were of 6 floors, 2 buildings of 20 floors, and 1 building of 17 floors. BMC seeks to demolish these buildings in order to set a precedent that such unauthorized construction will not be tolerated. BMC and the residents are against each other for last decade or so. One can surely ask BMC a question, why the hell did you allow the construction of these apartments in first place? And why didn’t you penalize the builders then and there? We can ask many such questions to BMC, and maybe the local politicians.

However, we will focus our attention on buyers in this post. We need to learn the lesson and learn it quickly. The primary lesson that we as buyers can learn is to be demanding, to be an extrovert property buyer, and asking questions. At the end of the day, you are going to invest your lifelong savings and none of us want to go through the pain that Campa cola residents have gone through. So, what are the things which we should be vary of before investing in a residential project? We have put together a comprehensive list and it surely does make sense to ask these questions from the real estate developer.

7 easy steps to buy property in india with clear title and no encumbrances from Green Realtech Projects Pvt. Ltd

Thanks and all the best!

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Pre Launch Property - Shall I go for it or not?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

• What is a pre-launch offer?

These days, we are all accustomed to getting pesky SMS and emails about pre-launch offers of builder projects in India. What are pre-launches? Well, as the name suggests, these are projects launched by builders before the official launch of a realty project. Pre-Launch projects are usually launched by the builders to generate demand and assess market acceptability of their project.

• What allures customers to pre-launches?

As explained earlier, pre-launch projects are launched by builders to see market reaction for their project and therefore are priced below the launch price and also below the current price prevailing in the market for other similar projects. That’s the catch, this only attracts buyers (should we just say investors or flippers) to pre-launches wherein buyer/investor hopes to make decent amount when the project is launched officially at a higher price point.

• What are the risks attached with pre-launches?

Some of the risks attached with pre-launches are:

1. The builder may back out of the project due to financial constraints.
2. For pre-launch projects, the approvals from relevant authorities have yet not been obtained and therefore there is a risk of official launch getting delayed or in some cases the competent authority may altogether reject the project proposal.
3. The market may not value the project as expected by the developer and therefore the project launch price may not be as high as expected by the investor. In that scenario, relatively lower gains are offset by the selling costs, transfer charges, etc.
4. Pre-launches are illegal in nature. As per the norms in certain states, a builder is not authorized to sell any part of the project before officially getting all approvals.

• Why do builders go for pre-launch of a project?

Well, there are in-numerous reasons for builders to go for the illegal yet prevalent practice of pre-launching of their projects. Real estate is a capital intensive and risky business and regardless of the state of the economy, inflation, prevailing interest rates in the market, market pulse, and funding trends, real estate developers need to generate initial capital to successfully launch and complete a project. And as we see these days, lending to real estate sector by formal financial channels such as banks, private equity, and bond market is in decline and therefore developers need to raise initial corpus of money and they do so by pre-launching their project to their cozy circle of brokers and investors. And in most cases, this cozy circle fall prey to these offers in order to realize quick returns. Needless to say, the returns realized are in form of cash and those cash returns are again ploughed back into other real estate projects or pre-launches and the whole circle keeps on turning.

• Are all builders pre-launching their projects or there are some exceptions to the rule?

Recently, a reputed developer with interest in other consumer businesses such as body care, furniture, consumer electronics, etc, declared in the media that they have been able to sell all of about 600 housing units of their new project in Gurgaon in a single day. Interacting with service professionals gives one the feeling that they could have done so because of their brand and perceived ability to deliver what is being promised. However, the truth lies elsewhere; the very same project was being promoted by this reputed developer within their cozy circle of brokers and investors for about 5-6 months before the official launch. The developer himself did not put anything related to the project on website or in any other marketing media. The project was promoted by this cozy circle of brokers and investors by word of mouth and email medium. And needless to say, our press covered it as a success story.

• In a nutshell, is this a good or bad practice?

For investors or flippers, with high risk appetite, it gives them the opportunity to realize substantial returns on relatively small portion of their equity (after all, they book the property with about 10% of the total property value).

For end-users, the pre-launches are highly risky and they need to conduct the property due diligence and verify lots of things such as IOD, CC, and Clear land title before going in with the flow.

As far as, the practice of pre-launch is concerned, the big developers with their previous track record and reputation in the market can successfully bring in necessary approvals and not default on their promise of officially launching the project. However, some of the other developers may not be able to do the same. Therefore, it puts the onus on big developers to lead the way with fair processes and practices for the entire industry and safeguard the consumer interest first.

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